Finance: Charities raise equities holdings as stock market revivalgoes on

Charity investors are returning to equities after the recovery from the stock market crash, latest figures show.

The Charity Fund Partnership's annual 2005 survey of charitable funds has found that a quarter of charities increased their holding of UK and overseas shares over the past year.

In 2003, charities were still selling shares - a JP Morgan Fleming survey found that 37 per cent had reduced their allocations of equities at the tail end of the three-year stock market slump.

But despite a bullish market now - the FTSE hit a 33-month high last month - some charity investors remain nervous about committing to equities.

While 25 per cent were buying into equities, another 10 per cent were reducing their reliance on them, according to the poll. The average holding in UK equities is 54 per cent of a portfolio, up from 52 per cent in last year's survey. One hundred and eighty nine organisations, with total assets of nearly £10.5bn, took part in the survey.

As equities have increased in popularity, fixed-interest investments have declined. Of the charities surveyed, 19 per cent have reduced their allocations of bonds and gilts, and only 8 per cent have increased their fixed-interest content.

Another 6 per cent have increased their investment in property common investment funds, and 3 per cent in hedge funds, which rises to 7 per cent among the largest respondents.

John Hildebrand, head of charities at Investec Asset Management, said: "Bonds do not look particularly attractive at the moment and recent returns from hedge funds have been fairly lacklustre, whereas companies have had strong results and have been rewarding their shareholders with good dividend increases. It is consequently not that surprising that charities, and particularly those seeking a rising income over the long term, have been adding to equities."

The survey also revealed that satisfaction with investment managers is on the rise. The average score for service satisfaction was 1.01 (on a scale where 2 is excellent and -2 is poor). This is up from 0.98 in 2004 and 0.72 in 2003. UBS scores highest for service satisfaction among individual fund managers followed by Sarasin, Chiswell, Rathbone, Newton, HSBC and Carr Sheppards Crosthwaite.


- A Charity Fund Partnership survey has found that a quarter of charities increased their holding of shares over the past year

- Despite the current bullish market, charity investors are still nervous about committing to equities

- Of the charities surveyed, 10 per cent were actually reducing their reliance on equities

- Fixed-interest investments have declined in popularity, the survey found

- The survey also revealed that satisfaction with investment managers is on the increase.

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