Charity funds produce an impressive 10% average return says State Street

UK charities made an average investment return of 10.4% over the 12 months to 30 June, according to the WM Charity Fund Monitor from State Street.

The annualised return for the three years to the same date was 7.9%.

The best-performing asset class was property, returning 17%, while UK equities made 13.1%.

Overseas equities were the next best performers, returning 9.7%, while alternatives returned 8.9%, pooled bonds 5.3%, overseas bonds 5.1% and UK bonds 4.6%.

The worst performer was cash, returning only 0.4%.

David Cullinan, a consultant at State Street Global Services, said: “Returns for the average charity fund for the one year have been very robust at around 10%, led by the performance of risk assets – principally equities – which comprise the bulk of funds’ assets.

“Monetary asset returns – Gilts, for example – have been much more pedestrian.”

Cullinan noted that the second quarter of 2014 saw markets globally recording modest, but positive gains.

"On the back of a relatively flat first quarter, returns for the year to date are just over 2%,” said Cullinan.

The WM Charity Fund Monitor is based on 230 UK charity portfolios worth an aggregate £8.5bn (€10.6bn) as at end-June.

The latest figures are based on results up to end-March 2014, while returns for the following quarter are obtained by applying the asset mix of the universe to the returns from standard market indices for that period.

The biggest single asset class held by charity investors is UK equities, which made up 34.8% of charity portfolios as at 31 March.

The next biggest class is overseas equities, with a 27.5% allocation in portfolios.

The largest segment – 9.6% of total portfolios – is held in North America, with 6.4% in Europe and 6% in emerging markets.

A further 11.1% of portfolios is held in alternatives.

The bond component is much smaller, with 6.3% in UK bonds, 2% in overseas bonds and 1.1% and 0.7% in pooled and index-linked bonds, respectively.

On longer-term performance, Cullinan commented: “Three-year returns have averaged 8% per annum and five year returns a very significant 12%, led again by the performance of equities, which have rallied strongly from the depths of the global financial crisis.”

    Share Story:

Recent Stories

How your property strategy can help beneficiaries in the long-term
In this podcast, editor Lauren Weymouth is joined by Jonathan Rhodes, national head of valuation at Cluttons and Nick Sladden, head of charities at RSM, to discuss how the current economic climate is impacting the property market for charities and how to implement a strategy that puts beneficiaries first.

Better Society