^{Source: Bloomberg, Cazenove Capital, 28 September 2020. Forecasts are not guaranteed and should not be relied upon.}

Last year, we cited private markets as an area offering diversification and alternative sources of return. Private assets have not been immune to volatility this year. For example, real estate has also seen polarised performance with sectors such as high-street retail being hard hit while warehouses and industrials have benefitted from the rise in e-commerce.

Importantly, the long-term case for investing in private assets remains and historically, times of crisis can be a prime time to invest in private markets. 2008 and 2009 were some of the best years to invest in private equity in some cases, with volatility creating opportunities. In 2020, private equity has provided a crucial lifeline for many private companies this year and looking ahead, we believe private markets have an important role to play in charity portfolios.

3. Investing sustainably

There has been step change in sustainable investing this year and sustainability is increasingly important for investors, companies and regulators alike. With greater expectations from society for companies to show their impact on people and the planet, we have seen a rising number of ESG-related regulations, which has led to greater disclosures from companies (often in the form of CSR reports). Furthermore, companies which are putting all their stakeholders, not just their shareholders, at the centre of what they do have outperformed.

Today, 77% of charity investors have chosen to adopt a policy to link their mission to their investments, which compares to 59% in 2015, according to our recently-published research, Intentional Investing. Moreover, fewer charity investors think that responsible investment reduces financial returns, with more expecting an increased return. There are a number of ways to approach sustainable investing and while most charity investment policies seek primarily to avoid harm, there has also been an increase in those charities striving to have a positive impact with their investments.

4. Focusing on value for money

The investment landscape has continued to evolve this year and with yields at record lows and equity markets increasingly polarised, focusing on value for money has never been more essential. At Cazenove, we offer a range of investment approaches, all of which firmly focus on achieving the best outcomes for our clients, at a reasonable cost.

Our portfolio for the next decade: taking stock

This year has been incredibly challenging, especially for our clients where this market volatility has coincided with increased demands on spending and greater challenges to fundraising. We believe taking a global approach to equities, including alternative sources of return, investing sustainably and continuing to focus on value for money will ensure your portfolio is well-positioned for the decade ahead.

To discuss any of the themes mentioned in the article, please contact your Cazenove Charities representative.

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