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Even when using a manager, the trustees must always remain responsible for:
Setting out and reviewing their charity’s policy on a regular basis
Deciding whether and on what terms to delegate management to the manager
Reviewing the suitability and performance of the managers on a regular basis
The trustees must make sure they understand the investment manager’s charges. These can be complex and take many forms – with more than one type of fee being charged. The most usual types include a management fee, commission on transactions, charges related to pooled funds, administrative fees, performance fees (percentage of fund) bank interest deductions, custody fees, and third party fees – including those for research (for example in to ethical issues). Trustees should consider also whether the fees will be subject to VAT and factor that in to the total cost as most religious institute charities will not be able to recover this.
HOW DO TRUSTEES ASSESS THE PERFORMANCE OF THEIR CHARITY’S INVESTMENTS?
Trustees must keep the portfolio under regular review and consider:
How the investments are performing with reference to target returns eg. benchmarks against which the investments and the investment managers can be judged over time. If funds are underperforming the trustees should seek to understand why. Similarly, if investments are over performing on a consistent basis, this may not always be a good thing! It may indicate, for example, that the charity is taking too much risk or that it is measuring performance against the wrong benchmarks
The overall service provided by the manager – the terms on which the service is provided, how well they are performing, their compliance with the written policy supplied to them and, importantly, the relationship. With a religious institute charity this last point should not be trivialised
– if an investment manager is going to perform to a high level and really work in the charity’s best interests, it is crucial that the religious institute charity’s trustees feel able to con de in those managers about future plans – immediate and longer term, their nancial and strategic concerns and the long term intentions
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