Asset AllocationMay 27, 2014

Church of England to Boost Private Equity and Infrastructure after Strong 2013

<em>The Church Commissioners Fund plans expansion of private equity holdings and defensive equity managers.</em>

Reported by Featured Author

(May 23, 2014) — The investment fund of the Church of England has laid out plans to boost its private equity and infrastructure holdings following a strong 2013.

The £6.1 billion fund produced a 15.9% return during 2013, according to its annual report, helped by strong equity and property performance. This comfortably beat its target of 5 percentage points above the UK’s retail prices index, which came in at 3.3% in 2013. The fund has beaten this target in one, three, five, 10, and 20-year periods.

The commissioners of the now-closed fund—which pays pensions to clergy for service up to the end of 1997—said they planned to “expand the allocation to [private equity] significantly over the next few years”, joining a growing number of institutions boosting exposure to this sector. In 2013 the fund added £54 million in private equity holdings, including participating in the sale of a portfolio of former Royal Bank of Scotland branches. Over the course of the year the private equity section of the portfolio gained 13.4%.

During the year the Church Commissioners Fund also made its first foray into infrastructure, investing $50 million (£30 million) with a “US energy manager targeting predominantly credit market investments”.

“We intend to continue to review market opportunities over the coming few years, making investments in a measured way,” the commissioners said.

The commissioners also said they were planning to add two more managers to their defensive listed equity allocation during 2014.

Elsewhere, the report stated that the commissioners aimed to increase the fund’s non-pension distributions to an average of £94.6 million a year for 2014, 2015, and 2016—up from £86.3 million in 2013. The non-pension payments include wages for clergy across England, ministry costs for bishops and some smaller churches, and “mission work”.

The fund’s investment chief Tom Joy took home the prize of CIO of the Year at this month’s aiCIO European Innovation Awards in London.