Finance News: CIFs set to 'come to the fore again'

Common Investment Funds could become the "medium of choice" for significantly larger numbers of charities, delegates at last week's Charity Finance Directors' Group investment conference were told.

"CIFs might be about to come to the fore again," Richard Maitland, head of charities at investment management company Sarasin Chiswell, predicted.

Maitland argued that even larger charities, which have traditionally shied away from pooled vehicles, could turn to CIFs, which were improving their reporting abilities and offered better diversification of assets.

He said CIFs had been viewed as "not the sharpest tool in the investment toolbox". But he claimed they had evolved to offer charities an experience similar to that of investing in a segregated portfolio.

Elsewhere, Chris Hills, chief investment officer of Carr Sheppards Crosthwaite, warned delegates that investment management fees were rising as firms were putting a greater emphasis on profitability.

Hills said it was not easy for charities to calculate the extent of their fees because they were often hidden, for example, in commission on transactions and the pocketing of interest on cash held as deposits.

Fees were becoming more significant for charities because they were no longer getting the 15 per cent returns on investment they received in the 1990s.

"When you're getting 5 per cent, not 15 per cent, the difference between fees of 1 per cent and 1.5 per cent is quite big," he said.

KEY POINTS

- Common Investment Funds may become the "medium of choice" for a number of charities

- CIFs have shed their "worthy" image and now offer a better diversification of assets.

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