HCT had previously invested its unrestricted reserves through “charity-focused” funds managed by wealth managers. HCT wanted to refresh their investment policy and strategy and sought our advice as a second pair of eyes to support this work. This included reshaping the portfolio to better align with HCT’s risk appetite, adopting a more appropriate risk-return profile, and reducing ongoing management fees.
Challenges:
- Fee transparency: HCT initially expected the fees to be incurred to be around 0.7% per annum. Our investigation on HCT’s behalf revealed that the total annual fees associated with one of the funds were materially higher than the base estimates (almost 2x).
- High fees: Higher than desirable ongoing management fees were reducing the net returns on investment and HCT wanted to improve this position.
- Changing requirements: HCT’s investment objectives were evolving. They needed a flexible and adaptable investment strategy that could meet their changing needs whilst maintaining strong rates of return.
“Cartwright have been easy to work with and have supported HCT at an important time. They understood our needs and were able to offer a fresh approach that created a material saving in management costs and optimised our investment strategy.”
Katherine Rodgers, Hyde Charitable Trust Chair of Trustees
Approach:
- Fee analysis and transparency: We conducted a detailed review of the existing investment structure, which showed the detailed level of the management fees being incurred.
- Portfolio review and restructuring: We gave HCT access to best-in-class institutional funds with a particular focus on risk-return profile and reducing ongoing management fees. This allowed HCT to optimise its investment strategy while cutting management fees by c60%.
- Continuous monitoring and adjustments: The refreshed investment strategy and approach includes ongoing monitoring of the funds to ensure they remain aligned with the charity’s objectives and to enable ongoing optimisation. Regular discussions with the client and our ongoing support services help us to identify changing requirements and advise HCT accordingly.
“The regular reporting from Cartwright will provide our Trustees with transparent information ensuring we can stay fully informed as to investment performance. The team have been on hand to support us at every stage, and we can pick up the phone at any time if we need their help.”
Katherine Rodgers, Hyde Charitable Trust Chair of Trustees
Outcome:
- Material management fee reduction: By switching to best-in-class institutional funds and renegotiating fee structures, HCT was able to reduce its management fees by c60%, releasing more funds for its charitable activities.
- Optimised investment strategy: We designed the new portfolio to better align to HCT’s risk appetite and objectives, ensuring that the charity did not have to sacrifice its investment goals in pursuit of lower fees.
- Increased flexibility: Our regular discussions with HCT, means that the investment strategy can be adjusted in line with the charity’s objectives, ensuring long-term alignment with their financial and operational needs.
Conclusion:
This case study highlights the importance of cost management in achieving optimal investment outcomes for charities. By reducing fees while optimising investment performance in line with HCT’s risk profile, we are helping HCT to enhance their returns and gain greater flexibility to adapt their strategy over time. Now, more of the HCT returns can be directed toward its mission, rather than being lost to higher than desirable management costs.
Cartwright Charitable Trusts
Our experience, people and pioneering spirit is what sets us apart.
Cartwright have spent over 39 years honing their unique skill set; to be the ace in the hole for charitable organisations whose unrestricted reserves are on the smaller side.
Cartwright believe less reserves shouldn’t mean less attention. So offer the level of service usually reserved for the big players; innovative, professional and totally bespoke. And, with direct access to a real person, an expert in their field, they help charities nationwide build their financial resilience and demystify the world of investments.
Originating in the pensions market, Cartwright soon realised their wisdom in pension trusts could benefit other sectors too – and began applying the same pioneering spirit and unique know-how to help charities maintain their purchasing power.
This commitment to innovation continues to drive their efforts, ensuring they remain at the forefront of addressing shared issues.
Find out more at charitabletrusts.cartwright.co.uk or email Martin Mercer the Head of Charitable Trusts at martin.mercer@cartwright.co.uk
