Charity investors record negative returns in 2018

14 Feb 2019 News

Charity pooled funds achieved negative returns for the 12 months to December 2018, according to newly published data.

Figures published by Charity Finance magazine found that 28 of the 36 funds which are exclusive the charity investors and which submitted data for January to December 2018 achieved a negative return.

Separately, ARC Charity Indices' Sterling Steady Growth Charity Index, which incorporates portfolio performance data from over 30 charity investment managers, also showed a negative return.

This is the first time the majority of funds have shown negative annual returns across a calendar year since 2011.

In terms of the best performers, all three property funds achieved returns of more than seven per cent for the year, while five others funds recorded low but positive returns.

Figures for the quarter to December 2018 were also negative, with 27 of the 37 funds that provided data for the quarter achieving negative returns.

However, all the funds that provided data achieved positive returns in the longer term – in the three years and five years to December 2018.

Longer-term trends positive

Gareth Pearl, investment manager at Rathbone Investment Management, said that 2018 had been a “difficult year” as investors had become increasingly concerned about the likelihood of an economic recession in the US and Europe, as well as a sharp slowdown in China.

However, Pearl said he expected charity funds to produce positive returns in 2019, and that a reversal had already begun.

He said: “Markets have bounced back sharply since the start of 2019, reversing a substantial part of last year’s losses.

“We do not see any major signs of an imminent global economic recession on the horizon, and it is rare to experience a ‘bear’ market in equities (defined as a 20 per cent fall) without one.”

He said that the FTSE All-Share has only produced consecutive years of negative returns once since 1986 (in 2000-2002), and that it would take “a serious deterioration in economic conditions” for that to be repeated.

But he added: “That said, investors should not expect an immediate return to the strong equity market performances of 2016 and 2017. Whilst we expect returns to be positive in 2019, they are likely to be muted.”

Charity Finance is the only magazine for charity finance professionals. Find out what's in the latest issue here.

 

 

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