The new fund aims to help trustees of UK-based charities balance the funding of their activities whilst safeguarding capital for the future.
UK-based wealth and asset management company Rathbones has announced the launch of the £280m (€322m) Rathbones Charity Growth and Income Fund.
The fund has been launched as a charity authorised investment fund (CAIF), a relatively recent investment structure designed to help trustees working in the UK’s charity sector to balance the funding of their organisations’ activities while safeguarding capital for the future.
Speaking to Impact Investor, Gemma Gooch, head of charities distribution for Rathbones, explained the fund structure, which she said was unique to the UK.
“The fund itself is set up as an investment fund but it is also a registered charity. So, it has dual authorisation from both the FCA and the Charity Commission,” she explained, referring to the Financial Conduct Authority (FCA), the UK’s financial regulatory body, and to the non-ministerial department of the UK government that regulates registered charities in England and Wales.
Gooch explained that Rathbones had transferred assets from an existing fund for its charity clients to this new structure, making it Rathbone’s first CAIF.
“This is a relatively new fund structure for the charity investment market, with the first CAIF launched to the market in 2017. However, given the dual authorisation, and because this structure offers certain tax benefits for charities, it is increasingly the default choice for the sector. It also offers charities simplicity around governance and administration, which is really important for trustees to help manage their time more efficiently,” she added.
Investment focus
Rathbones says the new fund, which invests across equities, which account for 75% of the fund, bonds (15%), cash (5%) and real assets (5%), aims to deliver long-term growth, reliable income and responsible stewardship.
It has adopted a total return approach, targeting both long-term capital growth based on the UK’s consumer price index (CPI) +4%, alongside a planned annual distribution of 3% to provide trustees with cashflow to support budgeting and ongoing expenditure.
“Many charities and endowments will have their investment policy statements and objectives set in that way. Typically, they will look to achieve above inflation capital growth to a CPI+ target. The CAIF also has the advantage that we can take the distribution of 3% from either capital or income,” said Gooch.
Rathbones says responsible investment is also fully embedded in the fund, with environmental, social and governance (ESG) factors integrated into every investment decision. The company’s stewardship team will also engage and vote on behalf of investors to drive positive change.
Gooch says their responsible investment approach is foundational to how the firm manages money across its charitable funds. “That includes looking at ESG when we undertake assessments of individual securities in the portfolio, but it’s also about the way we approach engagement. There is also a wide raft of ethical exclusions within the fund, which includes the worst polluters and weapons manufacturers, among others,” said Gooch.
The fund is being managed by charity fund manager James Ayre, who sits within Rathbones’ multi asset team headed by David Coombs.
“The team led by David has a long track record of managing institutional money using a multi-asset approach for other client types as well as charities,” added Gooch.
