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Benchmarking

The benchmarking of a portfolio is a key part of monitoring a charity’s investment objectives. It is a way of comparing the performance of your portfolio against an agreed marker.

Benchmarking performance for charities

For most charities, we recommend adopting three benchmarks. This allows you to maintain perspective over the long-term objective, as well as helping you to monitor our performance against the markets and industry ‘peer’ group.

The Charity Commission for England and Wales’ guidance on benchmarking performance (CC14) states that:

  • trustees should agree performance measures so that all parties know what is expected of them
  • establish monitoring and review arrangements to make sure the charity continues to be satisfied with performance
  • information on how investments will be managed and measured should be set out in a statement of investment policy.

More detail can be found in the Charity and Investment Matters guide for trustees on gov.uk

For charities not based in England and Wales, we would recommend adopting this as best practice.

How we set up benchmarks

When we set up benchmarks it is important that the charity is happy with the proposed comparators. We will always talk through these with the trustees to agree a suitable and mutually acceptable benchmark.

We always show performance net of all fees and costs against benchmarks to show the returns achieved for the charity net of all costs.

Relative

Compares the performance of portfolio asset and stock allocation decisions to see if the manager adds value.

Peer group

A peer group measurement so that trustees can evaluate our performance against other charity investment managers.

Inflation plus objective

Preserve the real value of investments (in line with inflation) and generate a return greater than this over the longer-term.

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