CofE’s fund performance either luck, judgement or divine inspiration
GlobalCapital Securitization, is part of the Delinian Group, DELINIAN (GLOBALCAPITAL) LIMITED, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 15236213
Copyright © DELINIAN (GLOBALCAPITAL) LIMITED and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement
People and MarketsCommentGC View

CofE’s fund performance either luck, judgement or divine inspiration

Sun 230

The strong performance of the Church of England’s investment fund over the last decade either proves that the Church Commissioners have worked out a prudent investment formula, predicated on patience or they are benefiting from the aid of the ultimate market mover.

The fund’s results are undeniably impressive. Its 17.1% return last year made it one of the best performing endowment funds in the world.

Last year’s rally post-Brexit contributed to the number but there are other facets involved which ensured that the fund had a decent base to grow from. Sir Andreas Whittam Smith, first church estates commissioner credits the success of the fund to a combination of patience and active management.

However he notes that the most important facet of management is the overall value of the fund over a long period rather than its standout performance in 2016.

The fund has achieved 9.6% annual growth since 1987, a period including the financial crisis and a time in the early 1990s when Church Commissioners “lost substantial sums of money on unwise real estate investments.” 

Given that the fund is the beneficiary of a perpetual endowment it can take a long term position on a number of illiquid assets.

“So we are prepared to hold assets that are relatively illiquid and not traded on stock exchanges,” Whittam Smith writes in this year’s report. “Thus almost 30% of the fund is invested in real estate, which in turn is a mixture of commercial, residential, and rural property and what we term 'strategic land holdings', where planning permission for housing is being sought.”

Unlike faster money funds, the church commissioners keep roughly a third of assets under management in illiquid but safe assets like property and land, allowing for a substantial safety net when securities markets take a turn for the worst.

The fund also combines multi-asset strategies and what it calls “defensive equity positions”. Beating the market is fine, but pulling off value on a consistent basis is difficult to do.

It is easy to take a long term position when you are dealing with a large endowment and a single client, but should other funds be boosting their allocations to illiquid real assets for a more consistent return? 

Or maybe the church is simply benefitting from some help from the man upstairs.

Gift this article