Finance and investment

Our income comes from the interest on our investments. We do not fundraise or receive funding from the Government. We are financially and politically independent. 

Our approach to investing

Our long term approach to investing is based on keeping a liquidity buffer in short dated gilts, which when combined with portfolio income, will provide five years’ spending cover. This is invested for security first, then liquidity and last of all, return. With that sum assured we invest the balance for a maximum return (notwithstanding the associated volatility) in global equities and private equity/venture capital. Spending is calculated using a Constant Growth method linked to the indexed value of the endowment 2018 spending was 5.3% of the net asset value.

We invest in public equities using five global managers, each with the same mandate but who are selected to be uncorrelated to the others, and we regularly rebalance between them, taking from the best performers and giving to the others in order to maintain an equally balanced portfolio. The private  equity/venture capital portfolio is deliberately concentrated on funds of usually less than $500m. The short dated gilts portfolio is managed internally.

In 2015, Trustees decided to reduce the risk profile after many years of above average returns. This decision has given the organisation increased stability while it introduced a step increase in its spending plans.   This included a time-limited Hedge Fund experiment. We therefore have both a strategic asset allocation and a de-risked allocation.

Asset allocation at 31 December 2018 Actual De-risked Strategic
Global equities 59% 60% 70%
Private equity/venture capital 16% 15% 20%
Short dated gilts 19% 19% 10%
Hedge funds 6% 6% -
  100% 100% 100%

Summary of Financial Objectives and Investment 2018