Trustee’s Report (continued) Review of Investment Activities
Figure 1a Total portfolio net returns (£)
Trailing one year
Trailing three years Trailing five years Trailing ten years Since October 1985
Nominal 1.9
5.8 4.3 6.0
13.8 Trailing one year
Trailing three years Trailing five years Trailing ten years Since October 1985
Nominal 1.9
18.6 23.7 78.3
2,791.0
Figure 1b Total portfolio net returns (blended £/$)
Annualised return in blended currency (%) Nominal
Trailing one year Trailing two years
1.4 5.9
UK/US CPI 3.4
2.9
Note: With effect from 1 October 2009, a 50/50 UK/US blended CPI has been used as a comparator for real portfolio returns in blended currencies.
Real
(2.0) 3.0
Annualised return in £ (%) UK CPI 4.1
3.2 3.1 2.3 3.0
Cumulative return in £ (%) UK CPI 4.1
10.0 16.3 25.8
114.9 Real
(2.2) 2.6 1.2 3.7
10.8 Real
(2.2) 8.6 7.4
52.5 2,676.1
Having advanced almost 20% between October 2010 and May 2011, stock markets stalled and then sold off sharply in the last quarter. Fears grew about the cohesion of the Euro, the pace of the US recovery and the impact of inflationary pressures on faster growing economies, notably China. Most stock markets declined over the full year.
Our portfolio return was gently positive (Figure 1). As UK and US policymakers have permitted inflation to rise, we remain more than ever committed to investing in assets with growing real cash flows. However, as company valuations have declined and many investors have sought to reduce their risk profile, total returns from stock markets have been lacklustre over five years (+10% in £) and ten years (+43%). Hence in order to maintain our charitable spending power, it has been important that we have consistently performed more strongly, returning 24% over five years and 78% over ten years (Figure 1a). At the same time, the reported volatility of our returns (Figure 3) has fallen to less than half that of stock markets.
16 | Annual Report 2011
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