A Report
from the
Chairman
of the
Investment
Committee
Andrew Joy (C, 1970-74)
On a like-for-like
basis, the rural estate
produced a total
return of 22.9%.
48 The Wykeham Journal 2014
The returns on the College’s Endowment are going
to play a crucial part in enabling bursary provision
to be substantially increased, which, as everyone
knows, is a central aim of the School. The Investment
Committee oversees investment of the Endowment,
with a strategy of growth over the long term without
taking excessive risk. It also recommends how much
of the Endowment should be used year by year.
The principle is intergenerational fairness: not to
extract so much short term that it deprives future
School generations, but, equally, not to build up
capital for its own sake when good use can be
made of it now.
The investments of the College can be thought of in
three parts: the agricultural and residential properties,
the financial investments, and the land at Barton Farm,
Winchester, on which planning permission has been
received. Additional comment is made by the Warden
earlier in the report. The agricultural and residential
properties, excluding Barton Farm, comprised some
77.1% of the Endowment, and enjoyed an excellent
year. On a like-for-like basis, the rural estate produced
a total return of 22.9% and the residential properties
11.4%. In both cases the principal driver of returns was
the revaluation by external valuers, largely driven by
rising rents. In the agricultural holdings specifically,
a significant number of farms had rent reviews.
The strong returns this year are a continuation of the
excellent performance of previous years. This cannot
be expected to continue indefinitely, with returns to
farmers under pressure from lower wheat prices and
land prices already reflecting record low interest rates.
The remaining 22.9% of the Endowment, again
excluding Barton Farm, is chiefly invested with
Ruffer LLP, whose strategy is defensive. That is to say,
they pride themselves on having a far lower propensity
to lose money in any given year than is the norm.
The corollary is that in years of strong performance
in market financial assets, their performance will
tend to lag the markets. So it turned out this year,
with the financial assets portfolio recording a total
return of 1.9% net of costs.
With more than three quarters of the Endowment
in the strongly performing agricultural and residential
portfolios, it was another good year overall, with a
total return of 14.6%, before gains on Barton Farm
are included.
Because receipts from the sale of Barton Farm,
as and when received in coming years, will need to
be reinvested, after reviewing options the Committee
appointed Cambridge Associates to help guide
decisions on future Asset Allocation in relation to
the likely enlarged Endowment, taking account
of the School’s plans, for bursaries in particular.
The Committee has already had two separate
meetings with Cambridge Associates, and will
be in a position to propose a long-term policy
in 2015, well in advance of the first receipts
from Barton Farm.
As Charles Sinclair wrote in last year’s report,
this was Mark Loveday’s final year as Chairman of the
Investment Committee, a post and indeed committee
that he created, and it was a sad moment when he
stepped down at the end of August. Hugh Priestley
also came to the end of his tenure on the Committee,
and we will miss his wise counsel and long experience
in the equity markets. The Committee continues to
benefit from advice from its non-Fellow members,
comprising Andrew Sykes, Rupert Sebag-Montefiore,
Patrick Disney and Roger Gray, and we are extremely
grateful to them, particularly given the increased
workload as we plan ahead for the post Barton
Farm portfolio.
The Wykeham Journal 2014 49