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Church Commissioners damp down expectations of stellar returns in forthcoming annual report

02 March 2018


Disinvestment from fossil-fuels, tobacco, and gambling companies is not to blame for the shortfall in 2017, says the chief executive of the Church Commissioners, Andrew Brown

Disinvestment from fossil-fuels, tobacco, and gambling companies is not to blame for the shortfall in 2017, says the chief executive of the Chur...

THE Church Commissioners will fall short in their forthcoming annual report of the unprecedented return on investment that they achieved on their £7.9 billion portfolio in 2016, their secretary and chief executive, Andrew Brown, said this week.

In an interview with Press Association (PA) on Saturday, he said: “Equities had the strongest year in 2017, but equities make up about 40 per cent of our fund, so we are heavily diversified. . . So 2017 is not going to be such a strong year as 2016, I am sorry to say.”

The Commissioners reported a 17-per-cent return on investment in 2016 — a growth of about £900 million (News, 26 May 2017). But Mr Brown said that the Commissioners had chosen to sell a proportion of their stocks by the same percentage that year to balance their portfolio and offset an expected rise in stock prices in 2017.

Disinvestment from fossil-fuels, tobacco, and gambling companies was, therefore, not to blame, he said. “Any decision to reduce a benchmark of an investability will, in some years, have a negative effect . . . [but] there have been other years where actually rather than a headwind, an ethical slant to our fund has meant that we’ve benefited.

“We are a long-term investor, a perpetual endowment, and it is undoubtedly the right thing for us to do to invest in that way, which means excluding those companies which, some years, have very good years.”

The Commissioners’ annual report for 2017 is due to be published in May.

The interview appeared after PA reported last week that the Commissioners had criticised the working practices and conditions at the retailer Sports Direct during a string of controversies about the company in recent years (News, 23 February).

Sports Direct later accused the Church of England of hypocrisy, noting that the Commissioners’ 2018 policy was not to vote in favour of nomination committees if fewer than a quarter of the board’s members were women.

Mr Brown told PA this week that the Commissioners were committed to gender diversity. “It is top of mind for our trustees. There has been substantial progress in recent years. The number of women in ordained ministry in the C of E is at a record high — a third of the total number of active clergy — and last year women made up the majority of people entering training for ordination.”

The Church of England Pensions Board reported last year that it had failed to meet its targets for returns in 2016 (News, 4 August). The Board controlled assets worth £2.3 billion in 2016 — up 35 per cent from a total of £1.7 billion the previous year — which delivered a total return of 21.2 per cent. This failed to meet the return benchmark of 21.4 per cent.

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