Dear Friends,
Thank you for investing with Friends Fiduciary. This is your second quarter update with important news and information about Friends Fiduciary and your account with us. We wish you and your loved ones a healthy and enjoyable Summer!
2025 Second Quarter Summary
In a stark reversal from market lows observed during the peak of the Trump administration’s tariff policies, markets witnessed a historic rally to conclude the first half of the year. Market participants responded to ongoing positive signals regarding trade negotiations, continued resilience of economic data, and anticipation of impending Central Bank interest rate cuts. Propelled by these factors, the S&P 500, a broad measure of the U.S. stock market, gained nearly 11% in the second quarter, a rally that fueled a notable shift in market sentiment towards greater risk, with the S&P 500 Growth Index outperforming the S&P 500 Value Index by over 16%, the widest quarterly outperformance in the history of the two indices.
Aggressive market rallies sometimes lead to investors venturing into speculative stocks. As of the end of June, 858 unprofitable companies within the Russell 3000 Index (which encompasses the 3,000 largest publicly held domestic companies and represents approximately 98% of the U.S. equity market), experienced an average gain of 36% since the market bottom on April 8th.
The rally in non-U.S. equities has also been impressive, with the MSCI ACWI ex-US, a measure of global equities excluding the U.S., returning over 12% in the quarter. Beyond its second-quarter outperformance, the MSCI ACWI ex-US also surpassed the S&P 500 by over 12% in the first half of 2025. Driven by stimulative economic policies abroad, global central bank interest rate cuts, and a decline in the U.S. Dollar, this is the largest international outperformance for any half-year period since the early 2000s. Bond markets followed this trend, as sustained economic optimism and easing monetary conditions globally fueled rallies in the Bloomberg US Aggregate and Bloomberg Global Aggregate bond indices by 4.02% and 7.27%, respectively.
Below are unit value changes for FFC’s five primary funds in the second quarter of 2025:
2025 QGI Expense Ratio
As published in January, the Quaker Growth & Income Fund (QGI) expense ratio remains at 0.75% for 2025. One slight change this year will help mitigate risk and create more certainty for our QGI constituents. In prior years, the expense ratio was adjusted late in the fourth quarter to reflect Friends Fiduciary’s actual annual expenses. This meant the ultimate expense ratio could have been higher or lower than what was published at the beginning of the year.
As of 2025, the expense ratio charged throughout the year will correspond to the published ratio. This will ensure that if markets perform poorly or expenses are greater than anticipated, Friends Fiduciary absorbs any increase in the expense ratio rather than passing it on to our constituents. On the other hand, if markets perform well and/or expenses are managed efficiently, any additional revenue will be allotted to initiatives designed to drive down the QGI expense ratio in future years.
We hope this updated approach to the QGI expense ratio, which is typical for pooled funds, will help further shield Friends Fiduciary’s Quaker constituents from risk and simplify your investment planning.
Annual Meeting
The theme of Friends Fiduciary’s 2025 annual meeting, held on May 29, 2025, was “The Power of Engagement: Why Corporate Dialogue is More Important Now than Ever.” Alongside updates from Friends Fiduciary’s investment team of Richard Kent, Chief Investment Officer, and Aangoo Tucho, Investment Analyst, attendees heard from Amy Carr, our Senior Shareholder Advocate, and Ethan Birchard, Executive Director. The event also featured a panel discussion with Lina Blount, Director of Strategy & Partnerships with Earth Quaker Action Team (EQAT), Lauren Brownlee, Deputy General Secretary of Friends Committee on National Legislation (FCNL), Amy Carr, and Jaylen Spann, Lead Research Associate at Whistle Stop Capital. You can view a recording of the annual meeting at this link or click to watch below:
Shareholder Engagement
This 2024-25 proxy season, Friends Fiduciary has continued its active shareholder engagement to improve company policies and practices for a more equitable society. This season FFC engaged over 50 companies on issues such as human rights, climate change, and sound governance. This includes an engagement with State Street seeking the separation of the CEO and Board Chair positions to ensure effective board oversight. Separation of these positions has been widely accepted as best practice, with investors continuing to show support for such a leadership structure. Despite friendly dialogue, we filed a shareholder resolution at State Street, receiving a 25% vote FOR the proposal, indicating solid support from State Street investors. Look for a more complete write-up on this engagement and others in the FFC’s semi-annual newsletter.
Charitable Gift Annuity – “The Best Deal in Town”
On May 19th, the American Council on Gift Annuities, the national non-profit that determines Charitable Gift Annuity (CGA) lifetime payment rates, reaffirmed the rate of return assumption that has been in effect since January 1, 2024. Maximum payout rates for charitable gift annuity contracts will remain at their highest level since 2007.
At a time when our Country’s political and social landscape is characterized by deep divisions, which can impact economic policy and stability, the ACGA has recently reviewed the assumptions that underlie rates more frequently. These are compelling reasons to consider establishing a CGA sooner than later to take advantage of high lifetime payment rates. If you would like more information, you can access a gift calculator on the FFC website that provides the rate and annual payout associated with your gift. The only information that is needed to make the calculation is your age.
2025 Standard Distribution Rate – Quaker Growth & Income Fund
The 2025 standard distribution rate for the Quaker Growth & Income Fund is 4.0%, the same as 2024. June 2025 per-unit distributions were $1.22/unit. Constituents may take more or less than the announced standard distribution rate. To request a distribution rate other than the standard rate, please contact Tim McElroy at tmcelroy@friendsfiduciary.org or 215-241-7272 x 101.
*REMINDER* Please Tell Us When Your Officers Change
Please tell us when you have a new treasurer or other authorized individual who will have authority over your account(s) at Friends Fiduciary. To notify us of a change, please complete an Account Authorization Form found on our website and email to info@friendsfiduciary.org or via US Mail to our office.
Thank you for choosing Friends Fiduciary for your investment needs. We are committed to providing rigorous Quaker values-based investing, strong performance, and excellent customer service, at cost. If you have any questions or concerns, please contact me at 215-241-7272.
Sincerely,
Ethan Birchard,
Executive Director