Charities should think very carefully before they are lured into investing in alternative asset classes such as hedge funds and property, a leading sector investment strategist has warned.
Fund managers Cazenove launched a common investment hedge fund for charities last month, but the head of investments at Charities Aid Foundation John Rogerson has warned the sector to be aware of the inherent risks involved.
"They appear superficially attractive as they promote the idea of a constant positive return in falling markets. But to deliver such returns investment managers have to take risks. Past evidence suggests that big risks can be taken and the fallout can be substantial if these bets go wrong,
Investing in property was also viewed as dubious because the market is liable to dip after a period of sustained out-performance, Rogerson said.