Church Of England Cuts Exposure To Equities

Church of England

The Church of England has an investment fund valued at £7 billion.

The Church of England sold £250 million (€316.91 million, $358.79 million) worth of equities, which equates to about 6 per cent of its total equity portfolio in March 2016. The Church said the decision was made because it feared of declines in the global economy while governments failed to bolster growth.

The Church has an investment fund amounting to £7 billion, £4 billion of which was in equity holdings and the remaining £3 billion placed in non-stock-market holdings such as land, forests, and property.

While last year’s returns on the church’s investment fund appeared to have outperformed the London stock market, the returns were down to 8.2 per cent in the same year, compared to the average annual return of 9.7 per cent in the last 30 years. The church commissioners, who are responsible for managing the church’s fund, predicted that it could drop further in the future.

In the annual report of the church commissioners, Sir Andreas Whittam Smith, the first church estates commissioner recorder and the founding editor of the Independent newspaper, said, “Unfortunately, it may be harder in the future to achieve such a satisfactory performance. My message to the wider church is: don’t count on it.

“The nervousness of investors is explained by the feeling that governments have lost the power to reverse any slowdown in economic activity. In earlier times they would reduce interest rates, but now that rates hover around zero, that remedy is unavailable. And it’s hard to believe that negative interest rates can provide the necessary boost, or that governments would let the supply of money expand,” Whittam Smith further explained.

Whittam Smith concluded, “In other words, the risk is that economic activity slows down across the world and remains stuck at a low level.”

Meanwhile, in times of global economic turmoil, the church’s commissioners increased their investments in areas “that are not subject to every twist and turn in stock market prices,” Whittam Smith said. “This is why we increased our commitments with private equity managers during the year.”

The Church of England was under pressure in the past to offload investments in order to reflect its values, a commitment to focus on climate change. In 2015, the church commissioners took on a new climate change policy and decided to distribute its stocks from tar sands oil and thermal coal—the first time they imposed investment limitations on environmental grounds.

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