38
Annual Report and Financial Statements 2015–16
Investment policy and performance
Our investment objective for the Charity’s financial assets is to maximise long-term, total
return with appropriate attention to risk management and our likely liquidity requirements.
The asset allocation targets that have been set by the Board are:
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Equities: 45–65%
Fixed income: 15–30%
Property: 5–10%
Alternatives: 5–15%
Cash: 0–10%
The actual allocations are shown in Note 17, which demonstrates that the asset allocations at
year-end are within the target ranges shown above. The Board of Trustees has set the fund
managers a series of additional limitations on the way the portfolio is managed, as follows:
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Fixed income assets should have a minimum rating of BBB with assets rated BBB not
representing more than 10% for the fixed interest portfolio.
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Fixed income assets should have a maturity of seven years or less with a weighted
average of no more than five years.
We expect and encourage our fund managers to take social, environmental and ethical
considerations into account when assessing the suitability of investments, and when
exercising the rights attached to our investments. The Board has an Investment Committee
that reviews fund manager and investment performance on a regular basis.
Fund managers are assessed against a performance benchmark set by the Board of
Trustees. The performance benchmarks are:
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FTSE All-Share Index: 40%
FTSE World (ex-UK) Index: 20%
FTSE Gilts 0–5 Year: 20%
IPD UK all Property: 10%
LIBOR +3%: 10%
Cash: 0%
Overall, the year to 31 March 2016 has been a difficult year for investments, with a -0.23%
total return for the year, compared with a benchmark return of 0.62%. The external
conditions remain volatile, and the Trustees intend to keep the investment approach under
particular scrutiny during the year to 31 March 2017.