Investment Management for Charities

Cantab Asset Management has a dedicated service for UK Charities and Foundations. Each Charity is unique with specific objectives, goals, and aspirations. Our teams work closely with Trustees and other advisors. Absolute discretion and trust are the watchwords for our service.

We work closely with trustees and advisers to provide the advice and expertise required.

We assist in the structuring of investments and the cashflow planning to address particular circumstances. We provide the professional skills to tackle the wide diversity of interests, trusts, and charitable activities which may be involved.

What does the Charity Commission have to say about Trustee Responsibility with respect to handling investments?

Should (or can) Trustees make all the Investment decisions?

Making investment decisions for a large and potentially complex set of assets owned by a charity can be difficult, and the interests of the charity are best served if someone with appropriate knowledge and experience is consulted in the course of making those decisions. Usually, having such knowledge and expertise will entail being an investment professional. It is not required by law that Trustees seek the advice of a professional who is not a Trustee; a Trustee is allowed to provide the advice. However, such a Trustee should be aware that they are liable to the charity regarding their advice as they would be to any other client (receiving no additional protection from being a Trustee as well as an Adviser). Therefore, in most cases it will be appropriate and recommended for Trustees to take professional advice from a Non-Trustee.

Why Impartial Advice?

Trustees are advised by the Charity Commission to ensure the advice is impartial because that is in the best interests of the charity. If advice is impartial then Trustees can be sure that the Adviser is looking after the interests of the charity. For truly impartial advice, the whole of the relevant market needs to be considered in order to select the best option from all those available.

How can an Investment Advisory firm like Cantab help?

Cantab will consider the objectives of the charity and the attitude to risk of the Trustees before making recommendations regarding investments. Income and growth requirements are considered when developing an investment strategy. Cantab will assist Trustees in the development of a financial plan to meet objectives. In certain circumstances, Cantab will run multiple portfolios for charities to address different requirements.

The Charity Commission publishes guidance to Trustees specifically dealing with the handling of investments.
This advice is extensive but two key points can be distilled from it:

When making investment decisions, Trustees should usually take professional advice
Trustees should ensure the advice they receive is impartial *

* (Charities and Investment Matters: A guide for trustees p 19 (written by Charity Commission)

Establishing a Relationship

Initially we work to assess a charity’s current position, and understand its aims. We take into account Trustees’ time horizons, attitude to risk and capacity for loss alongside their objectives and discuss options before proceeding with recommendations. Charities have bespoke needs and aims, and we service this requirement by providing bespoke investment advice to each charity client.

Research and Analysis

Our experienced Investment Committee meets regularly to discuss economic conditions and provide guidance as to how this should impact on our advice. We use a suite of resources to monitor and research investment options.

Our risk-rated model portfolios are structured and managed by our in-house investment team under the guidance of the Investment Committee to meet various core investment strategies.

Each Client Director, together with their team, follows our laid down investment advisory process and is responsible for the advice provided to clients. The investment team provides research and valuable insight into the investment markets which guide the recommendations to clients for their portfolios. The Cantab Research team conducts in-house quantitative and qualitative analysis of funds, investment trusts and individual equities and bonds. In addition, the team receives research from external organisations which is absorbed into the overall analysis before recommendations are made.

Managing Risk

There are many types of investment risk, and whilst effective planning may manage or minimise overall exposure, risks cannot be avoided completely. It may be that trying to avoid or minimise certain types of risks leads to greater exposure to others. For example, one may avoid putting capital at risk by holding cash on deposit, but there is a real risk of high inflation and low interest rates eroding its purchasing power.

One way in which we manage investment risk is via asset allocation. The asset allocation decisions on the model portfolios are formally made on a quarterly basis as a result of the deliberations of the Investment Committee and adjusted as appropriate in monthly reviews.

Investment Structures

Our core approach, appropriate for most investors, is to use collective funds such as unit trusts and open-ended investment companies (OEICs). However, we also advise on investment trusts and direct holdings, such as individual equities, bonds and gilts.

In addition to providing full investment advice and management, we are also able to provide a consulting service for large institutions. This allows them to obtain a second opinion before making investment decisions.

Like many other professionals, our annual management costs are calculated based upon time expended, transaction speeds, complexity of work and the amounts invested. Regular reviews are important to ensure that investments remain appropriate, and to ensure that our understanding of each client’s situation remains up to date.

It is important to note that investment performance can result in many percentage point differences in returns but charges, in general, are measured in fractions of percentage points. Thus we encourage the focus for clients to be more on investment returns rather than on charges, albeit these should be carefully monitored.

Conflicts of Interest

Cantab has developed an Open-Ended Investment Company (‘OEIC’) to benefit clients with additional structural options for holding investments. Cantab does receive an investment management fee from the OEIC and so has a ‘conflict of interest’ which is declared and transparently addressed in the Client Agreement.

ESG and Responsible Investing

Cantab is a ‘responsible’ investment manager, taking great care in the selection and recommendation of investments. Cantab has regard in its investment process to Environmental, Social and Governance criteria.

Alternative approaches

Cantab Asset Management is creative and flexible and can provide trustees with innovative solutions to challenges that are faced as the interests of the charity are considered now and in the future.

As you would expect from Cantab Asset Management, we will provide the professional skills and the business analysis and research to assist you to achieve your objectives.

Investment Management

We provide both advisory and discretionary investment planning and management services.

Find about more about Cantab's Charity Service

Wisdom is with those who receive counsel.