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It would not be unusual for most charity portfolios to include a mixture of some or all of the above. Trustees and/or there investment advisers will need to consider how suitable each type is for their charity together with the need to have a mix of investment types to protect against volatility and reduce risk of loss. They may also wish to consider ethical requirements (see previous).
CAN WE DELEGATE INVESTMENT DECISIONS AND USE THE SERVICES OF A PROFESSIONAL INVESTMENT MANAGER?
As noted above, investment management is one area where the law expects charity trustees to seek advice unless they can justify that they have the required skills and expertise amongst their number to take investment decisions without seeking professional advice.
Regardless, however, trustees must always remember that they retain overall control of decision making and have complied with their duties. In order to assist with this, some religious institute charities have established investment sub-committees comprising a number of trustees but also external advisers who may assist with the assessment of the charity’s investment performance and that of its investment managers. Where such sub-committees are established, it is important that there are clear terms of reference.
Most religious institute charities will employ the services of a professional investment manager to manage their investments. Professional investment managers may be used simply as stockbrokers to advise on stock selection etc. or they may be given certain powers to make decisions about the investments on behalf of the religious institute charity i.e. discretionary investment managers. In many cases, the latter will be the scenario.
Where an investment manager manages the charity’s investments there must be:
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A written agreement or contract – this will be the case whether the service is discretionary or advisory
An investment policy clarifying the responsibilities and remit of the manager. The manager must select investments in line with such instructions unless there is good reason not to do so. The preparation of this policy cannot be delegated to the investment manager but it would be usual for the trustees to prepare it in consultation with them