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Charity clients: keeping investments simple


2 min read

Charity clients: keeping investments simple

This is the second piece in the “investment journey for charities”. Last time we looked at the benefits that we believe result from a charity using an Investment Manager. As an Investment Manager and a Trustee, I now want to paint myself as poacher turned gamekeeper.

Rupert Cecil
Rupert Cecil

Presenting to trustees

Let me set the scene – I am providing an investment update to a medical charity client of mine. In this case it happens to be a Hospital Trust. Investments are one small part of the agenda, in fact at the bottom of the agenda, and the trustees have been discussing more relevant, interesting, and pressing matters for over two hours. I have been briefed to keep it short! To my right I have the Head of Midwifery and to my left the Head of Nursing. As soon as I start speaking, I notice their eyes glaze over. I don’t consider myself a boring person (happy to stand corrected); but investments can be a boring subject, especially if you are not particularly interested or the delivery is complicated with financial jargon - a favourite pastime of people in the industry.

I ask myself what do I know about nursing and midwifery? Exactly. So why should charity investment managers expect trustees to understand their world. The financial crisis 2008/9 proved to be something of a graveyard of investments for many high-profile charities. They had been attracted by promises of high returns and sold complicated solutions without any mention of the counterparty risk or what synthetic products are. If they were lucky enough to avoid losing a large part of their money, they were gated in illiquid investments and unsure when future access would be granted.

Selecting the right investments for your charity

In my humble opinion, a charity portfolio need not be complicated. The needs and objectives of charities can be met by avoiding complex, expensive and illiquid investments like many alternative products. I really don’t believe that most charities are missing out if they focus on investments that they understand - equities, bonds, cash and alternatives like property and infrastructure funds.

In my opinion, if an Investment Manager gets to the end of the presentation and there are no questions, he or she is either a genius when it comes to explaining the investment world or more likely has failed to do so and has lost the audience in their desire to move on to the next subject and get to lunch.

If you are a Charity Trustee do look at your investment valuation. If you find something you don’t understand why not ask your manager to explain to you what it is, how the portfolio benefits from holding it and perhaps the cost in doing so.

If you would like to us to comment on your current investment portfolio, we would be delighted to do so. Having a second opinion I am sure you would agree is reassuring, and one wouldn’t hesitate to do it if it was a medical issue. Perhaps the same should apply when it comes to managing your charity assets.

Past performance is not a reliable indicator of future performance, you may receive back less than you invest.