FINANCE NEWS: Charity investments recover as equity markets take an upturn

Mathew Little

Charity investments maintained a healthy positive return during the summer, latest figures show.

The average charity fund rose in value by 3.5 per cent in the third quarter of the year, according to preliminary results from the WM Company.

Though lower than the second quarter increase of 11.1 per cent, it means a return of 10 per cent so far during 2003.

WM consultant George Urquhart said: "The recovery seen in equity markets during the second quarter of the year has extended into the third quarter of 2003. This alleviates some of the pressure put on charity fund finances as a result of the negative returns in 2000 to 2002.

"Confidence in the markets is growing, fuelled by a recovering global economy and generally favourable company results. Some of the highest returns have been recorded in the minor Far East and emerging markets, areas that tend to benefit first from a pick-up in the global economy."

Equities achieved the highest return, of 4.5 per cent, outperforming the other asset classes of bonds, cash and property. Japan was the best performing equity market, with returns of more than 21 per cent. The UK reported equity returns of 3.9 per cent, Europe of 3.4 per cent and North America of 2 per cent.

Bonds posted a negative return of 0.4 per cent, while cash grew by 0.9 per cent and property rose by 2.4 per cent.

The latest results mean that the total return on charity funds has risen by 15 per cent over the past 12 months. But over the three-year period ending September 2003, average charity returns are still in the red, with a return of -6.5 per cent per annum.

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