Fund management is the professional management of various securities and assets on behalf of a charity client.
At the heart of the fund management business are the managers who invest charities’ endowments or reserves.
A fund manager should carry out an assessment of each client’s individual needs and risk profile and recommend appropriate investments to structure a portfolio.
In structuring a portfolio, a fund manger considers asset allocation – the process of deciding how an investment portfolio should be invested. This includes –
It is said that asset allocation can improve both diversification and performance, through an investment spread across a wide range of markets and securities and identifying markets or sectors that are undervalued as a whole.
Fund performance is the litmus test of fund management. Institutions measure the performance of each fund under their management, and performance is also measured by external firms.
Generally speaking, it is appropriate for a fund manager to persuade its clients to assess performance over longer periods (three to five years) to smooth out very short-term fluctuations in performance and the influence of the business cycle.
A Dutch foundation that funds culture, heritage and nature conservation has become the first charitable foundation in Europe to appoint a fiduciary management firm to oversee the management of all its assets, liabilities, investments and risks.
The Tate Gallery responded to 2008’s market turmoil by completely eliminating its exposure to hedge funds, having previously held 23 per cent of its allocation in this class.
The government is to give its policy response to the Charity Pooled Funds Consultation as part of the 2010 budget, which is expected to take place before the general election.
Charles Mesquita has confirmed that he has joined Newton Investment Management as a director.
Common investment funds (CIFs) should not be replaced by a new form, but be made exempt charities and regulated by the FSA, a working party of the Charity Law Association has argued. In its response to the Charity Pooled Funds Consultation, the group outlines a range of criticisms of the proposals for a charity AIF (authorised unit trust), in particular a lack of consideration of the costs and complexity of such a change. As a result, it suggests primary regulatory responsibility for CIFs and CDFs (Common Deposit Funds) could be given to the FSA by making them exempt charities and making the FSA it the ‘principle regulator’ under section 13(5) of the Charities Act 2006.
A record number of firms participated in the 2009 Charity Finance Fund Management Survey, which is based on information from 49 fund managers with a combined total of £40bn of charity funds under management.
Epworth has launched the UK’s first corporate bond common investment fund - the Affirmative Corporate Bond Fund, worth £106m and yielding 5 per cent. An Epworth spokesman said it’s been created in response to direct demand from charity investment advisers and clients and to increase investment opportunities for charities facing low interest rates and drops in government bond yields.
The Charities Property Fund has bought a B&Q warehouse in Worcestershire for £16.3m, making it the largest asset in a property portfolio now worth £229m. The Fund acquired the 102,500 sq ft retail warehouse from global real estate investment managers PRUPIM for a net initial yield of 7.5 per cent, although this reflected a yield of 7.9 per cent to the Fund as it is stamp duty-exempt.
One good thing about a near-death experience is that it is usually followed by a sense of euphoria arising from the knowledge that you have survived and that your worst fears did not come to pass. This slightly giddy joy is putting a youthful, carefree smile on the face of many in the City at the moment, hugely relieved as they are that the terrifying apparition of economic devastation staring us in the face in March has turned out to be just a particularly frightening Halloween mask after all.
With CIFs on their way to the FSA, Gareth Jones asks where this leaves specialist pooled funds for charities. This year our pooled funds focus comes at a transitional moment, with the future of the two charity specific forms, Common Investment Funds (CIFs) and Common Deposit Funds (CDFs), currently up for consultation.
Darren Ruane reviews the outlook for the UK fixed interest market over the next year. Bonds constitute an important part of many charities’ investment portfolios, helping to preserve capital during economically turbulent times and providing a stable source of income that allows investors to plan future spending. However, events over the past year have called into question some of the investment beliefs previously associated with bonds.
A CAF Bank survey of 280 charities has revealed that 42 per cent are struggling to deliver services because of the low interest rates.
The collapse in the value of the pound on international money markets has cost Christian Aid around £15m, or 25 per cent of the value of its money, according to its director Daleep Mukarji.
Nick Hurd, shadow minister for charities, has called for a short-term Treasury loan fund to help charities which face financial difficulty as a result of lost bank deposits.
Charities Aid Foundation chief executive John Low has called for clearer communication from the government on financial support available for the third sector.
Woolworths Kids First (WKF), an independent children's charity which has a corporate relationship with Woolworths Plc is to get back all the charity money that was tied up after the collapse of the retail chain.
Cats Protection is contacting up to 99 charities that may have money deposited in the Iceland bank Kaupthing Singer & Friedlander in a bid to convince them to support its demands for charity representation on the creditors committee.
Julian Rathbone attempts to keep up with markets. There are unprecedented times and incredibly fast markets so as I write this in mid-November, please forgive me if events have moved on significantly by the time this is published. Will recent central bank and gov-ernment actions prevent us from slipping into a deep and prolonged recession or worse, a deflationary spiral.
What is trustees’ liability for stock market losses? With stock markets plunging, surging and plunging again around the world there will be many trustees of charities anxiously concerned at falling investment portfolio values and dividend cuts. Can trustees be liable for losses which may arise from dramatic falls in capital values or loss of income, if they have appointed an investment manager? Where trustees have appointed a manager to carry out investment functions on a discretionary basis the trustees have delegated decisions to someone more experienced than themselves.
Ian Allsop struggles to make light of turmoil in the financial markets. Confucius once made some widely quoted comments about how fortunate people who live in interesting times are. Two and a half millennia on, I am sure the original Chinese takeaway-a-quote machine would be amused to find his words being used as an ironic description of the current global financial woes. I can think of many descriptions of how history might judge this period, most of which will end in "ck up", but I doubt interesting will end up as the definitive one.
Charities will become "very important" during the coming recession and should brace themselves for huge demands on their resources, the Lib Dems' finance spokesman told charity finance professionals last week.
A toolkit to hammer out the complex relationship between local authorities and their charities.
Futurebuilders expects to do away with application forms and invite prospective lendees straight to interview, according to its chief executive Jonathan Lewis.
The new chief executive of Futurebuilders, Jonathan Lewis, has denied claims by NCVO chief executive Stuart Etherington that plans to process loan applications more quickly could lead to a "sub-prime market in the voluntary sector".
How liquidity funds offer an alternative vehicle for cash management
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Why the business world and third sector are 'all part of one reality'
NGOs are less constrained by lack of money than the ability to use it effectively
