CAF improve its investment service

Following a review of its investment products and the evolving marketplace, the Charities Aid Foundation (CAF) has released details of changes to its investment portfolio for charitable organisations and CAF Trust clients.

The changes, which are based on client feedback, offer greater choice and flexibility and are designed to lessen volatility while aiming to increase the potential returns on investment.

CAF is partnering with Octopus Investments to deliver the new service.

CAF, through its specialist financial services subsidiary CAF Financial Solutions Ltd, will be offering the new funds as well as, for the first time, ongoing portfolio management and access to personalised advice.

This advice will be provided by Octopus Investments’ team of specially trained investment advisers.

Key changes centre around the way the new funds are managed.

Rather than the traditional single-manager single asset class approach taken through Common Investment Funds (CIFs), Octopus Investments will use a multi-manager approach through Open Ended Investment Companies (OEICs) which include the option to blend asset classes.

This means that instead of a single manager of the funds, the OEICs will be a series of “fund of funds”, drawing from the expertise and experience of multiple investment managers in different asset classes while applying stringent cost controls.

The new funds will be managed by multi-manager investment specialists Octopus Investments and overseen by an independent investment monitoring committee.

The fund will be exclusive to charities and other not-for-profit organisations and come under the supervision of the Financial Services Authority (FSA).

CAF clients, whether charitable organisations or individuals who have a CAF Trust account, will be able to choose from a range of new investment products:

Four multi-manager foundation funds (UK Equity, Fixed Income, Global Equity and Alternative Strategies) [which draw from a single OEIC].

A discretionary portfolio management service offering 10 risk profiled portfolios using a blend of the foundation funds.

Three multi-manager, multi-asset risk rated funds (held in separate OEICs).

Two of CAF’s current CIFs, the ‘CAF UK Equity Growth’ and ‘CAF Bond Income’ will be wound up and the current holdings in each of these funds will be migrated to two of the new foundations funds, UK Equity or Fixed Interest, respectively.

CAF has written to existing investors in these CIFs notifying them of these changes.

Those not wishing to migrate to the new funds will have the option to withdraw their investment.

Subject to FSA approval, CAF then aims to open the full investment portfolio offering to new clients in March 2011.

CAF’s two other existing funds will continue in their current form.

These are:

CAF UK Equitrack CIF, which is a passive UK stockmarket tracker (managed by Legal and General)

CAF’s Socially Responsible Portfolio (managed by F&C Investments).

Commenting on CAF’s new investment service, John Low, chief executive of CAF, said: “The investment of charitable funds is an important decision. I hope these changes, which are based upon extensive feedback from existing clients will make investment decisions easier.

"The new funds will enable charitable organisations and CAF Trust account holders to create a tailored portfolio from a wider range of asset classes with different levels of risk and reward, depending upon their investment needs.

“We’re very pleased to partner with Octopus Investments who have worked with us to create a bespoke solution for the full range of not-for-profit investors. They are experts in multi-manager investments and their success as a business has been demonstrated by ten years of continuous growth.”

Guy Myles, managing director Octopus Investments, added, “This new agreement with the Charities Aid Foundation allows us to marry our investment expertise with CAF’s knowledge and experience of the charitable sector to offer a truly cutting edge suite of multi-manager investment products.

"It’s an exciting market to be moving into where we have designed a bespoke solution for a specific client segment. We very much look forward to working with CAF and its clients.”