Church investment arm prepared for weaker returns

THE head of the investment arm at the Church of England has flagged that its £7.9billion fund will fail to match the stellar returns logged in 2016, but said ethical policies were not to blame.

While the fund managed to rake in a bumper 17.1 per cent return on the back of a strong performance in equities in 2016, it sold down its stock holdings by around 17 per cent or £500million to help rebalance the portfolio during the same year, meaning a smaller boost from a further rise in stock prices is expected from 2017.

Andrew Brown, secretary and chief executive of the Church Commissioners, said: “Like all investors we were faced in 2017 with a number of headwinds. Equities had the strongest year in 2017, but equities make up about 40 per cent of our fund, so we’re heavily diversified.

“So 2017 is not going to be such a strong year as 2016.”

It means expectations for income growth will have to be managed, as the fund helps provide about 15 per cent of the Church of England’s annual operating costs. However, Mr Brown said the weaker performance was not due to the Church Commissioners’ responsible investment policy, which excludes stakes in companies that do business in areas involving pornography, tobacco, gambling, high interest rate lending, human embryonic cloning and oil sands extraction.