FINANCE NEWS: NSPCC to phase out equity stake

The NSPCC is to withdraw completely from equity investments over the next five years.

Trustees approved the change to the charity's investment strategy at a meeting at the end of June. It will involve liquidating its equity portfolio, currently worth around £26 million, at the rate of 1 per cent a month.

The move follows a review of the NSPCC's investment strategy, conducted with investment manager Hendersons.

John Graham, finance director of the NSPCC, said: "The review demonstrated that our investments are held in the event of a serious and sudden decline in income.

"In such an event, funds will need to be immediately available at short notice. Our investment advisers have confirmed that the asset class best meeting our needs is cash and short-dated bonds."

The current portfolio mix is 60 per cent equity and 40 per cent cash and short-dated bonds. The charity will gradually move more into low-risk government gilts that mature in six months.

NSPCC's investments, which are worth £44 million in total, comprise just 1 per cent of the charity's income but two-thirds of its balance sheet value. "We need capital protection rather than income," said Graham.

The children's charity originally decided to increase its equity stake from 50 per cent to 60 per cent of its portfolio in 1998 to provide capital growth and a stream of income to finance the growth of services and to support its Full Stop campaign. However, its fundraising income is now covering its expenditure again.

NSPCC's decision to move out of equities comes as many charities are reinvesting in them because of signs that the three-year bear market is over.

But Graham said the withdrawal, phased over 60 months, would take advantage of the gradual return of value to equities.

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