FINANCE NEWS: Losses on equity returns begin to slow down

Julie Pybus

There are tiny indications that charity investors could have a better year during 2003, according to data which indicates that tumbling equity returns are beginning to lose momentum.

Figures for the first quarter of 2003 from WM Company, which researches charity finance, show that the total return of charity investment funds, including property, was -4.2 per cent. Although charities are still losing money, the falls in returns are much less dramatic than over the past year.

North American equity returns for the first quarter of 2003 were -1 per cent while the returns for the entire 12 months until the end of March 2003 were -31.8 per cent, demonstrating that the most bruising losses took place last year.

UK equities give a gloomier picture with returns of -7.1 per cent for the first quarter of 2003. However, Peter Warrington, executive director of WM, pointed out that since the end of March the UK markets have picked up.

After three consecutive years of negative returns from equities, few people believe that there will be a fourth. Some opportunistic fund managers considered that the market reached its lowest level at the end of 2002.

They subsequently moved funds out of bonds and cash and into equities in the hope of making money when returns rise again.

Some asset classes gave positive returns during the first quarter of 2003. The best performers were overseas bonds which returned 5.1 per cent and in second place came index-linked bonds at 3 per cent.


- Total charity investments dropped 4.2 per cent in first quarter

- UK equities down 7.1 per cent in first quarter

- Returns on property up 1.9 per cent in same period.

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