How we reviewed a charity’s investment strategy​

We helped a charity to conduct a holistic review of its investment strategy. This resulted in a strategy that reflected their beliefs, improved the efficiency of their investments and helped to mitigate risks whilst capturing opportunities.​

Background

We were appointed to undertake a one-off investment strategy review project for a charity with three multi-asset managers. Following initial discussion, our relationship was extended to provide ongoing advice, including monitoring, manager selection and appointment and asset transfers.​

Our approach

As a first step, we reviewed the charity's investment objectives and beliefs. This involved an interactive meeting that built on the results of an online survey to help establish the trustees’ objectives and beliefs on several areas (including responsible investment). ​

We then provided our views on the investment strategy, including:​

• A recommended long-term strategic asset allocation, considering the trustees’ investment objectives and beliefs, including consideration of the cashflow requirements and liquidity of assets.​
• Training on new asset classes: unlisted global infrastructure, asset-backed securities and short dated credit.​
• Details of example investment funds to implement the proposed changes to the investment strategy and suggested next steps.​

Following a meeting to discuss our recommendations, we incorporated feedback from the Investment Committee to refine the strategic asset allocation which was then subsequently approved by the Board of Trustees.​

The outcome

The changes to the investment portfolio delivered several benefits:​

• Greater control over the top-down asset allocation, and more diversified drivers of investment returns to capture additional opportunities and mitigate risks.​
• Appointment of specialist investment managers for key asset classes, reducing reliance on manager skill and lowering ongoing investment management fees. ​
• LCP's review increased the charity's investment income from 0.2% a year to over 4% a year, while increasing total expected returns and reducing overall portfolio risk.