Charities net a 9% return on investments for 2007

Charity funds closed up 6 per cent at the end of 2007 despite gaining only 0.5 per cent in the final quarter, according to new results from State Street Investment Analytics.

The return for the past three years of nearly 13 per cent per annum represents a real return of approximately 9 per cent per annum for the average charity, with inflation taken into account (Third Sector Online, 11 January).

"Given the crisis in the banking sector and the strength of markets over the past few years, a return of 6 per cent-plus seems quite reasonable," said John Hildebrand, head of charities at Investec Asset Management.

"The fact that just over half this return came from income, and that the income from portfolios generally rose, highlights the importance of investing in stocks that can pay out rising dividends over time."

He added: "For UK investors, overseas equities ended the year on a reasonable note, helped by the weakness of sterling."

Hildebrand said Far East and emerging equity markets had performed very well, with Chinese equities rising in anticipation of this year's Beijing Olympics."

Ruth Murphy, director of investment at Newton Investment Management, said: "The figures serve as a reminder of the importance of a global approach."

Key points

- Charity funds closed up 6% for the year

- Pacific (excluding Japan) and Emerging Markets equities returned more than 30%, ahead of North America (7.5%) and UK (5.3%)

- Overseas bonds returned 9%, ahead of Conventional UK government bonds (5.3%), Index-linked UK government bonds (8.4%) and Corporate bonds (2%).

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