Dear Friends,
Thank you for investing with Friends Fiduciary. This is your third 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 Fall season!
Friends Fiduciary Visits Congress
Last month Friends Fiduciary made two trips to Congress to advocate for shareholder rights. Amid threats to our ability to engage in dialogue with portfolio companies about addressing critical risks, Executive Director Ethan Birchard attended a hearing of the House Financial Services Committee entitled “Proxy Power and Proposal Abuse: Reforming Rule 14a-8 to Protect Shareholder Value.” With key logistical support from Friends Committee on National Legislation (FCNL), Ethan then met with both majority and minority committee staff.
In his meetings with the House Financial Service Committee, and in additional discussions with Congressional staff, Ethan explained why faith-based investors depend on the shareholder proposal process as leverage in exercising our freedom of religious speech. He illustrated how Rule 14a-8 allows us, as company owners, to advocate for universal, human values that are also good business values, for example in combatting human trafficking, or the illegal weaponization of technology.
A week later, Senior Shareholder Advocate Amy Carr and Senior Investment Analyst Aangoo Tucho joined investor advocacy groups including the Interfaith Center for Corporate Responsibility (ICCR), the Principles for Responsible Investment (PRI), and Ceres to speak with Senate staff about the draft legislation. Both urged Senators not to take up legislation that would give the SEC, and even companies themselves, dramatic additional discretion over who is able to file shareholder proposals and which proposals come up for a vote at corporate annual meetings.
Friends Fiduciary entered written testimony into the record for the hearing of the House Financial Services Committee as well, which can be found here.
2025 Third Quarter Summary
The stock market rally sparked from the April tariff rollout lows extended through the third quarter, fueled by optimism of increased easing of monetary policy and renewed investor appetite for risk in the markets. Investors have become increasingly more confident that we are in a new monetary easing cycle as recent economic reports show a cooling in the once- hot employment market. Data from the Bureau of Labor Statistics (BLS) shows workers increasingly electing to stay in current roles for longer and total job openings decreasing to pre-COVID levels. In response, the Federal Reserve cut its benchmark rate by 0.25% (25 basis points) in September as Chairman Powell acknowledged the shifting economic landscape and signaled more policy cuts may be on the horizon. Interest rate cuts are a positive signal for the economy as lower borrowing costs typically lead to lower interest expense, increased business investment, higher demand for workers, and generally higher consumption. This increased confidence has propelled the S&P 500 to all-time highs with lofty expectations that future earnings growth will justify current equity valuations. At a price-to-earnings (P/E) ratio of 28x, the market is trading well above its ten-tear average of 22x, and as history has shown us, during periods of such exuberance it is essential to remain invested in a diverse set of assets capable of delivering sustainable growth across both boom-and-bust cycles.
International equities maintained their strength in the quarter, with the MSCI ACWI ex-US (representing global equities excluding the U.S.) returning over 8%. This performance has helped extend the year-to-date outperformance of international equities over the domestic S&P 500 to levels not seen since 2009. Both domestic and global bond markets have delivered their best year-to-date performances since the turn of the decade, reflecting a global effort by Central Banks to unwind rate hikes that accompanied the inflationary shock of 2022.
Below are unit value changes for FFC’s five primary funds in the third 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.
Shareholder Engagement
With the 2024-2025 proxy season behind us, we’ve had a chance to analyze our proxy voting record for the season. Quaker values continue to guide our engagement efforts and our proxy voting policies. We have our own tailored Quaker-aligned proxy voting guidelines that allow us to continue to witness to Quaker values in the companies we hold. We continue to support shareholder proposals focused on improving corporate impacts on the environment and people. This proxy season we supported 100% of the shareholder proposals in support of corporate diversity as well as proposals in support of sound environmental stewardship. In addition to this, we also voted against excessive executive compensation at 360 companies and against directors at 363 companies due to a lack of diversity on their boards.
Charitable Gift Annuities & Year-End Giving
Maximum payout rates for charitable gift annuity (CGA) contracts remain at their highest level since 2007. Current high rates and year-end giving opportunities make this a perfect time to establish a CGA.
If you would like more information, you can access a gift calculator on the FFC website that provides the 2025 charitable deduction, rate, and annual payout associated with your gift. The only information that is needed to make the calculation is your age and gift amount.
*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