Church of England generates ‘stellar’ investment returns

Church Commissioners post 17.1 per cent
return for 2016, above Yale University’s top-rated fund

One-Minute Read

Its endowment fund has posted a 17.1 per cent return for the
year, more than double the 8.2 per cent of 2015.

On a ten and 20-year basis, it has earned an average annual
return of 8.3 and 9.5 per cent respectively, says the Financial Times, ranking it ahead of
the top-rated US Ivy League university endowment fund run by Yale
University, which produced an annual return of 3.4 per cent last
year and has averaged 8.1 per cent for the past decade.

However, over 20 years, Yale is still well ahead, with an annual
average return of 12.6 per cent.

“Armed with a long-term mandate and an in-house team of 35
investment professionals, the Church Commissioners [who run the
fund] are… known for taking positions counter to industry
trends”, says the FT.

In one particular respect, they are going against the grain at
the moment: retaining a core belief in the power of active
management to drive outperformance, rather than cheaper index
tracking.

However, criticism has been aimed at the Church’s ethical
investment policies, which in theory stop it taking stakes in
companies that derive above a set percentage of earnings from
pornography, arms sales, tobacco, alcohol or high-interest
lending.

In 2012 the fund was criticised for upping investments in hedge
funds at a time of anger over “corporate excess”, while in 2013, it
was revealed that the Church had invested in payday lender Wonga,
in direct contravention of its policies. It has since left the
lender.

Returns last year were driven in large part by UK equities,
which benefitted from the post-Brexit vote slump in the pound, says
the BBC.

Church Commissioners chief executive Andrew Brown said the fund
contributed £230.7m to the Church of England last year, around 15
per cent of its total income.