Charities more upbeat about investment returns, finds survey

10 Nov 2017 News

More charities are expecting high returns on their investments than last year, according to a new survey.

Newton Investment Management surveyed 93 UK charities, with assets amounting to over £10bn, and found almost two-fifths of respondents expect annual total returns on their investments over the next 3-5 years of 6-9 per cent, more than double the proportion of respondents who said this in 2016.

Some 8 per cent of respondents expect annual returns of 9 percent or more, almost twice as many charities as the previous year.

The number of charities withdrawing 4-4.9 per cent from their portfolio jumped from 16 per cent in 2016 to 22 per cent in 2017.

Charities expressed concerns about Brexit, with more than two-thirds believing it will affect their investment portfolios and almost three quarters of these believing it will have a negative impact on capital, and four-fifths saying it will lower their incomes.

However, the majority of respondents said Brexit would have little or no impact on their charitable activities.

Respondents were asked about the gender balance of their trustees, with women making up 33.8 per cent of the average respondent’s board. However, 41 per cent said they thought there was more to be done in terms of diversity at charities.

Meanwhile over half of respondents said they were ethical investors.

Jeremy Wells, senior client director of charities and institutions at Newton IM, said: “A year of equity markets hitting record highs could be partly responsible for this level of enthusiasm, but it’s important to not get carried away.

“Charities need to remain aware that there are many headwinds on the horizon with unknown outcomes that could affect how their portfolios perform.

“With high expectations, investors could be disappointed by a lull in the performance of their portfolios and may end up taking unnecessary risk in an attempt to deliver the level of annual returns they expect.

“Similarly, increasing how much of their investments they spend on charitable objectives could force their hand to overreach for returns. While it’s not all doom and gloom for investors, reigning in some of the heady expectations may result in better outcomes for portfolios and charity beneficiaries.”


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