Equity Investment

Chart: investment in shares
Investment in Shares by countries, as of June 2021

We also adhere to the principle of the portfolio theory when investing on the stock market. Here too, the objective is to spread the risks and chances on a broad basis in order to achieve a steady increase in value.

At present, equities make up 47 % of the disposable Foundation's assets. A good third of the assets held in the form of equities are from euro-zone countries. The other assets are distributed among shares from the USA, Canada, the countries of Europe outside of the eurozone and various countries in South-East Asia. In this case, external mandates for special funds have been given to various financial investment management companies.

In the interest of diversification, when investing in equities the Volkswagen Foundation attaches paramount importance to being present in markets of different geographical regions. The investments of the Foundation in equities are structured by separate portfolios for the individual market segments. Each portfolio is assigned a certain benchmark. These benchmarks contain typical indices for the corresponding investment sectors, which reflect their development and serve as measures of performance for individual markets.

A passive management approach was selected for most of the special funds, as also for the stock holdings managed by the Foundation itself. Here the fund management is set the task of achieving the corresponding benchmark. Possible negative market trends are taken into account, as these are generally compensated by positive trends elsewhere in the Foundation's portfolio. On aggregate this results in a smoothing of the fluctuations in value accompanied by reduced risks. An exception is a portfolio that contains European Small Caps and is managed actively.

Both for the self-managed equity portfolio and for the special fund mandates, benchmark indices were predominantly selected that pay particular attention to ecological and ethical criteria as well as criteria of good corporate governance in the selection of their individual securities. In addition, the Volkswagen Foundation reserves the right to refrain from certain Investments in individual cases. For example, manufacturers of cluster bombs and land mines are excluded from Investment.

In addition, all the Foundation’s financial assets – in the direct portfolio as well as in the special funds – are subjected to an ex-post analysis with regard to comprehensive ESG criteria (ESG stands for Environmental, Social, Governance). In this respect, a key determinant provides information on the extent to which a portfolio meets the defined criteria.