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| CHARITIES
STILL FEEL THE HEAT DESPITE INVESTMENT IMPROVEMENTS |
15/03/04 |
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Despite
an upturn in fund performance, charities are still facing greater pressure
on their investment income compared to five years ago, according to latest
research.
The 2003 Charity Investment Industry Survey finds that two out of three
groups are still struggling to maintain return levels - the same figure
as in the previous two studies.
The main reaction to this pressure is to adopt a total return strategy,
with 53% of charities taking this option; an increase of 5% on 2002.
Despite this, the survey of 133 major investing charities shows that most
areas are showing improvement on recent years, with increases in pooled
funds (56% f charities use them), equities (only one in three groups are
still reducing their allocation) and overall assets (average increase 7%).
The research, by JPMorgan Fleming Asset Management, also discovers that
more groups now use multiple fund managers for pooled funds, with 26% using
two houses, and one in five using three or more. Only 53% now use just one
manager, a sharp drop from 2002's figure of 72%.
Unsurprisingly, alternative asset classes fare well, with groups investing
in hedge funds of funds growing from 3% to 10%, and single strategy hedge
funds jumping from 4% to 9%. There is also an increase of 8% in overall
use of alternative investments.
Jeremy Wells, charities fund manager at JPMorgan Fleming Asset Management,
says: “We are beginning to see a growing trend in the use of and interest
in alternative investment strategies, particularly hedge funds of funds,
which is the result of a better understanding of alternatives and strong
recent performance.
"Whether this trend will continue, now that stockmarkets have stabilised,
is something we will watch with interest.
“We are also beginning to see a strong movement towards pooled funds - especially
over the last couple of years and, with this, a tendency to combine the
talents of more than one manager to take advantage of different specialisations
and to diversify performance risk.
"We would expect this trend for using a range of fund managers to accelerate
– but there is just as strong a possibility that for larger fund management
houses, the opportunities to excel in providing multiple solutions will
prevail also.”
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