Are you prepared to choose your own asset allocation?
If not, you don’t need to worry as there are a range of multi-asset charity funds available to meet most objectives. Try a Charity Authorised Investment Fund (CAIF); Charity Intelligence is a free online hub where you can review and compare CAIFS, as well as other investment funds and other service providers.
Do you want someone to hand-hold you though the investment process, come to your offices and invite you to nice things?
If you can live without this, CAIFs or even tracker funds might do the trick and probably save you 0.25% in fees (a bigger sum than you might imagine).
Is your attitude toward ethical investing driven by a need to protect your reputation?
If that’s the case, what matters is what others think, so choose a ‘broad spectrum’ Socially Responsible Fund and cut out all the Trustee/Investment Committee anxiety about what to include or exclude.
Can you divide your investments into those you may need within five years and those you don’t? Anything you need within five years just needs a simple, cheap and safe cash fund or deposit account – your aim should be return of capital, not return on capital. If you earn much more than 1% you might be putting some capital at risk.
Set a target for the cash you want from the portfolio, not the income. This enables the manager to sell stocks to raise cash, rather than buying stocks just because the income is high. Don’t let the accounting tail wag the investing dog.
Write out what you want from your portfolio, make sure your manager has a copy. Review your investments against this document once a year to ensure your manager is meeting your objectives (regardless of how well the manager says they are doing against other measures). Too frequent reviews will lead to anxiety. Don’t change manager just for the sake of it, unless something material has happened with your charity or your manager.
If you want independent advice and want your hand held, use a regulated consultant who will charge you a fixed fee when you need it, not a percentage of your assets when you don’t.
At Yoke, we look at investments in a different way to most consultants by starting with the Trustees' perspective and gaining full understanding of their financial strategy. Read more about our approach, including a recent case-study.