Feature – Charities
effects of the pandemic having a lasting impact on their invest- ment policies. Just 18% anticipate that Covid will have a lasting impact, with 65% believing that it will not be negative for their investment policy over the long term. The previous year’s survey saw levels of ‘don’t know’ responses increase dramatically when charities were asked to make pre- dictions about their future. It appears that a significant level of uncertainty remained in 2021 with 17% of those surveyed stat- ing they do not know whether the pandemic will have a lasting impact on policy or not – almost the same number as those that think it definitively will.
Investment shift Interestingly, the 18% of respondents who feel the pandemic will have a lasting impact on their investment policy see poten- tial for significant shifts in the way they invest, with the pan- demic and the disruption it has brought prompting a re-evalu- ation of a range of policy areas.
Almost half of charities that anticipate a long-term change in investment policy are currently reconsidering their asset allo- cation, with a further 40% re-evaluating their reserves policies: 27% of charities are revisiting the level of risk they could toler- ate following a period of significant disruption that has seen many dip into their reserves, while 13% are considering a switch to a total-return policy, rather than relying on the income generated by their portfolio.
Around one in 10 of the charities surveyed anticipate that the pandemic will have a lasting impact on their investment pol- icy and are currently reconsidering their asset allocation as a result. “This may represent a small section of the sample overall, but it represents a significant shift caused by the acute factors of a single event – in this case the pandemic,” reports the survey.
An alternative route
When it comes to the type of investments charities may look at, almost half (43%) of those reconsidering their policies due to the pandemic state they are looking at alternative investments. The same level are reviewing the role fixed-interest is playing in their portfolios, while almost a third of charities re-evaluat- ing their asset allocation are looking to make their portfolios more global. Following the low investment returns reported in 2020’s sur- vey, charities saw their investments bounce back the follow- ing year, recording their most significant performance gains since 2017.
The average performance improvement more than doubled to 11% from 5% in 12 months, while 52% of charities reported gains of 9% or higher in 2021 – a 35% increase, year-on-year.
38 | portfolio institutional | December-January 2022 | issue 109
On the gains made in 2021, Brooke Turner says: “Returns have been generally good but with occasional surprises, such as China or the permanence of inflation. Growing developments and interest in environmental, social and governance (ESG) has also been excellent.” Goodwin is just as upbeat. “It is positive to see that while charities continue to suffer significant disruption from the coronavirus pandemic, this year’s survey reveals a more positive outlook for the majority of charities in their investment strategies,” he says. So, from a specific investment focus, along with the bounce back in investment returns, another big issue for charities is the attention placed on ESG investments coming even further to the fore thanks to Covid – with an even bigger focus on cli- mate change.
“Both have struck strong chords with us because of our chari- table purpose in promoting the wellbeing of society,” Brooke Turner says. “We have begun a process of upgrading managers to ones where ESG is more central to their offer.” On a more concerned level, Broke Turner adds: “I worry that whilst interest in the E will be pretty constant from here, the S will wane. Both are important.”
Climate considerations
The commitment to climate change stands out in the research, with 82% of charities believing it is their responsibility to tackle the issue – a figure which has risen 18% in two years. In fact, charities have never felt it more important that ESG is
The flip side to infrastruc- ture stocks is that many do not score well on an ‘E’ perspective as they have high carbon footprints, so this is something that
needs balancing. Henrietta Gourlay, Grosvenor Family Office
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52
