Insight from the key thinkers at the Charity Investment Forum 2011.

Active vs passive

James Hutton, portfolio director at GAM, weighed up the pros and cons of active and passive investment, saying: “Don’t be wedded to one approach. We may go through cycles where one method out-performs the other.” Nevertheless, he recommended that for the core of the portfolio, charities should opt for active as it will add value over time, adding that the boom in index tracking is making active managers look at the value they are offering.

Emerging markets

Emerging markets are not the exceptionally powerful driver of returns they once were, but are still a good market to enter, BlackRock advised. Vice president David Reid noted that GazProm in Russia is one of the most profitable companies in the world, and that although the Middle East is experiencing turmoil, it is a massive area of opportunity, as are frontier markets such as Nigeria or Iraq. However, he advised caution on China: “It has good reserves. But it is likely to see inflation problems due to rising food prices, and there are also concerns that the Chinese banks have grown lending too quickly.”

Volatility

Alan Goodwin, director of investment management at Newton, challenged the negative connotations associated with volatility, stating that some markets fell sharply as a result of the 2008 crisis but increased shortly thereafter. “Your policy review should be correct at the time, and dictate your level of risk and expectations so you are not forced to review again but instead keep an eye on a long-term view.”

Commercial property

Investing in commercial property gives good exposure to the underlying economy and protects against inflation, according to Oliver Jones- Davies, director of client investments at CCLA. “If the economy does well,” said Jones-Davies, “rental demand can grow. Also income from property protects against inflation – although it is not a direct hedge.”