Church Commissioners see positive returns


31 May 2023

The Church of England’s endowment fund delivered a good return thanks to its diversification and allocation to real assets, finds Andrew Holt.

The Church of England’s endowment fund delivered a good return thanks to its diversification and allocation to real assets, finds Andrew Holt.

The Church Commissioners for England, which manages the Church of England’s £10.3bn endowment fund, delivered a 5% return in 2022.

In its annual report, the Church Commissioners cited a number of reasons for delivering a positive return despite the challenging market environment.

“Our dynamic investment risk management and hedging, across interest rate, equity risk and currency, added significant value during the year. Our absolute return managers had a very strong year. Our genuine diversification and high allocation to real assets also contributed positively,” the report stated.

It also highlighted that its “swift reduction” of foreign exchange hedges in the first quarter of 2022 meant that the Church Commissioners captured the majority of the gains as a result of sterling weakness.

The Commissioners longer-term performance, which is important to determine the distributions to the Church, also remained strong. Its three, five, 10, 20 and 30-year returns are either in line with or ahead of target.

Alan Smith, first church estates commissioner, said: “Our aim is to support the mission and ministry of the Church of England through providing as much funding as we can on a sustainable basis, year in, year out, come rain or shine – and achieving these returns in a year of double-digit inflation, an unprecedented cost-of-living crisis, and Russia’s invasion of Ukraine, is truly a testament to the skill and dedication of our investment professionals.” 

As a result of its strong returns over the long-term, the Church Commissioners were able in 2022 to announce an increase in its distributions to the Church to £1.2bn over the next three years – a 30% increase over the previous three-year period.

“Our focus on the long-term and genuinely diversified approach allowed us to be resilient in the face of strong economic headwinds in 2022,” said Tom Joy, Church Commissioners for England chief investment officer. “Considering that equity and fixed income markets were under considerable stress, this is a very creditable result – and marks the fourteenth consecutive year of positive returns,” he added.

Joy also noted that despite a very challenging environment for markets, 2022 marked the fourteenth year in a row the Church Commissioners delivered a positive return.

In addition, the Church Commissioners for England manages the endowment fund of the Church of England in a responsible and ethical way.

“We believe that taking account of environmental, social and governance issues is an intrinsic part of being a good investor. We hold this belief for both ethical and financial reasons,” noted the annual report.

The Church Commissioners for England’s portfolio is diversified across a broad range of asset classes to mitigate risk, and assets are invested with a long-term outlook.

This approach has enabled the Church Commissioners to deliver an average annual return of 10.2% over the last ten years.


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