May 21, 2015

Socially Responsible Investment: Church of England fund does well

The USS trustee has recently said, in a letter to a member, that the scheme's paramount concern is to "manage the fund in a manner that delivers the best possible returns for its beneficiaries consistent with appropriate diversification and prudence". This is good logic but it does not always follow that an investment fund will perform less well if it bases its selection of investments on ethical principles.

The latest report about the Church of England Investment Fund shows it is possible to be ethical and make a good return


- 2 comments by 1 or more people Not publicly viewable

  1. Nick Sparks

    I should have thought that maximising the return to current and future pensioners was an essential condition. After all, if the scheme were required to consider the needs of non-members then it would be obliged to donate almost all its assets to the many millions of people worldwide in dire poverty.

    Another aspect of the Church of England fund, which it refers to as ‘intergenerational equity’, is its policy for balancing the needs of current and future members. The scheme can distribute only as much as to leave the value of the fund undiminished in real terms. This idea has a long philosophical pedigree as Nozicks’s ‘Lockean Proviso’.
    My guess would be that if USS were run on the same lines then it would be in quite good shape. Bloomberg tells me that the FTSE all share is presently 3.58% so the real yield on equities is at least 2.5% (or more depending on one’s choice of inflation indicator).

    28 May 2015, 10:43

  2. Dennis Leech

    Nozick’s Lockean Proviso is hardly relevant to the USS since the USS is cash rich and is growing strongly.

    The figures for the last financial year 2013/14 were (in £millions):

    Income: 1786.9; Expenditure 1588.7; Return on investment (investment income plus capital gains) 2818.4

    This meant it did not have to draw on its investments at all to pay pensions, and the value of its assets increased. It made investment income (company dividends, interest etc) of 1017.2. (on assets worth 42,016.5).

    Your remarks about the FTSE are not really relevant because the USS last year made a return on its investments of 7.6% (1.3% above its benchmark).

    The problem with the USS is not that it is losing money or that its investments are doing badly. Quite the opposite in fact.

    28 May 2015, 11:53


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