We were delighted to welcome Oliver Bates, Sarasin & Partners LLP and Mick Brant, Teknometry to introduce a new charity peer group metric. The presentation is available here.
James Brooke Turner, Finance Director, Nuffield Foundation also shared his thoughts on benchmarking for long term charity investors. The presentation is available here.
The AGM was held at the beginning of this meeting and our new constitution was ratified. The AGM presentation is available here.
Highlights from CIG committee member Andrew Wimble
Introduction: A new charities performance management universe was required following the demise of WM in March 2016. There were several challenges, most notably the collection of data and the distribution of that data once collated. Teknometry, based in Leeds, have 9 (about to be 10) firms committed to the new universe, representing over 1,300 portfolios and assets of £14.5bn
Mick Bryant, Teknometry
The Universe will have five years of data and participants will submit data online direct to Teknometry. Noting a few features within the presentation:
1. Data will be submitted net of fees
2. Maximum of any one firm within the Universe will be 20%
3. Charities must be “in it to use it”, with no distribution rights
4. Investment managers not in the Universe will not be able to use it
5. Size bias: there may well be a ‘cash drag’ effect for smaller charities owing to their relatively high cash allocation
6. Estimated cost per investment manager participant will be £8,500
7. Each performance report should be issued two days after submission deadline, which is on the 15th business day after the quarter end.
James Brooke Turner, Nuffield Foundation
Benchmarks tend to give problems, not answers, and none of the three main benchmark types, below, are ideal, with the selected benchmark tending to push managers in one direction
2. Peer or ‘embarrassment’ index
Some of the basic questions to be asked:
1. Are we maintaining the endowment?
2. Are we doing enough?
3. Are we taking enough risk?
4. Would the portfolio beat a tracker?
Two risks really matter:
CASH = LIQUIDITY
NERVE = GOVERNANCE
The right benchmarks support good governance.