Sector funds on the rise

Charity investments managed very modest gains in the last quarter despite the recent market turbulence, according to figures from financial data analyst WM Performance Services.

Charity funds posted a 0.4 per cent increase in the three months to the end of September after the big stock market losses in August, caused by mortgage holders in the US being unable to meet repayments.

But the rise was well down on the 3.7 per cent increase charity investments experienced in the second quarter of 2007. Funds have now risen by 11.7 per cent in the past 12 months.

Heather Lamont, head of charity business development at HSBC Investments, said: "After the very public turmoil in the markets over the summer, charities will have been relieved that for the most part their portfolio returns remained in positive territory, if only just."

The most popular asset class for charities - UK equities - lost 1.8 per cent of its value. But this was offset by growth in overseas equities. Shares in the Pacific region rose by 12 per cent. UK bonds posted a 4.1 per cent positive return, while overseas bonds registered 5.6 per cent growth. Property was virtually static at 0.2 per cent.

"UK equities didn't have a good quarter," said Lamont. "The fact that charity returns overall were not in negative territory just goes to emphasise the benefits of being diversified into a wide range of asset classes. Even with the charity sector holding 50 to 60 per cent in UK equities, which were down, the highly positive performance from other assets - such as bonds and, in particular, emerging market equities - kept most investors' heads above the waterline."


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