UK must encourage more pooled funds, say experts

By Helen Warrell, Third Sector, 7 May 2008

Financial experts behind a recent survey of charity investment have called for more pooled funds for third sector investors.

The survey, Investment Matters, was prompted by the outstanding success of investment returns on US university Yale's endowment fund. It was carried out by the Institute of Philanthropy and sector academic Beth Breeze.

Researchers polled charities with assets worth £10m or more and found that UK charitable endowments underperformed similar US investments by 3.7 percentage points (Third Sector Online, 1 May).

"We would like to see more pooled funds in the UK, and we would like to encourage more competition between pooled funds," said Nicholas Ferguson, chair of the Institute of Philanthropy.

Researchers proposed a British version of the US Investment Fund for Foundations, which was created to improve the investment returns of endowed charities by providing multi-manager investment products and resources for trustees.

The report also recommended that the Charity Commission's investment guidance should be updated to include advice on alternative asset classes, and that London's Charity Investors Group should be replicated elsewhere in the UK.

It also proposed the publication of trustee pamphlets that outline the elements of investment practice and suggested recruiting trustees with investment expertise.

Speaking at the launch, Danny Truell, chief investment officer at the Wellcome Trust, urged fund managers to strive for better results.

"There is no excuse for the lack of ambition in managing endowment foundations well," he said. "We have to accept that risk is something you need in order to succeed."

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