The new chief investment officer of the $47 billion Mastercard Foundation faces the daunting task of diversifying away from its only holding — Mastercard shares.
John Barker was named CIO of Mastercard Foundation Asset Management Corp. (MFAM) in January, after serving as chief investment officer at Mass General Brigham in Boston and as a managing director at the $50.7 billion Harvard Management Co., which oversees Harvard University’s endowment.
Based in Toronto, MFAM was formed in 2023 by the Mastercard Foundation as a separate asset management company with a mandate to construct and manage a diversified portfolio for the foundation, one of the largest private foundations in the world.
For now, after consulting with the boards of both MFAM and the Mastercard Foundation, Barker plans to sell off 13% to 15% of the portfolio’s stock holdings on an annual basis for the next seven years, according to a nonbinding memorandum of intent between Mastercard and the Mastercard Foundation. MFAM will invest the proceeds to create a diversified portfolio of public and private assets across all global geographic regions, he said.
The investment portfolio will help fund the philanthropic mission of the Mastercard Foundation, which works with about 400 organizations and supports initiatives in 33 countries to advance education and financial inclusion in Africa and among Indigenous youth in Canada.
In an interview, Barker said he relocated to Toronto from Boston because the Mastercard Foundation provided him an “incredible once-in-a-career opportunity” to build a portfolio and build a team to oversee that portfolio. “The icing on the cake was the chance to work with the MFAM board, which is comprised of highly accomplished investment professionals,” he said.
At MFAM, Barker said, he will focus on setting up an organization to provide great risk-adjusted returns.
“By the end of the year, a majority of our assets will still consist of Mastercard stock, but we will have diversified the portfolio to some extent,” he said.
The Mastercard Foundation’s portfolio will measure itself against a globally diverse benchmark, he said, but they are still in the “early stages” of determining which benchmark to use.
Barker’s team currently has about 10 people, with a majority of them on the tech, operations and finance side. But over the next six months to a year, Barker said he will build out the investment side — which will likely consist of 10 to 15 people.
“We will primarily have external fund managers to start with and embrace co-investments with these managers,” he said. “And then we may opportunistically manage capital in-house.”
MFAM will also engage with third-party managers on ESG principles, which will govern all directly held investments, MFAM said in a May news release.
Barker also said his past tenures at Harvard and Mass General, with more than $20 billion in assets, have prepared him well for his new role at Mastercard.
“I have learned a tremendous amount about investing from the many great colleagues I have worked with previously,” he said. “One of the most important things I learned was that long-term relationships with investment managers matter, especially in working through market changes and communicating constantly with managers.”
Toronto, like Boston, has a "very deep well of investment talent and organizations" focused on the long term, Barker said.
Foundations in Canada are run similarly to those in the U.S., he said. “Investment structures at Canadian foundations are not too different from those at foundations in the states.” Moreover, annual payouts at Canadian foundations were 3.5% for many years but recently reached 5%, matching the figure for the U.S., Barker said.
For now, Barker said, he will remain a devoted fan of Boston sports teams like the Red Sox and Bruins, rather than adopt the Blue Jays and Maple Leafs.