Church Commissioners for England, London, returned 8.2% on its investments in 2015, with the endowment fund growing 4.5% to £7 billion ($10.2 billion) over the year.
The latest annual report for the endowment fund showed that the Church Commissioners’ investment returns outperformed the WM All Funds Universe over the year, which returned 2.9%.
Investment returns were bolstered by the endowment’s private equity allocation, which returned 20.2% in 2015. “Over the long term, our private equity portfolio has significantly outperformed quoted equity markets, and we plan to expand the allocation to the asset class over the next few years,” the annual report said.
The endowment’s real estate portfolio delivered strong investment performance, the report said. Strategic land, which “delivers much-needed housing whilst maximizing the support for the church across the country,” returned 19.8% for the year, while residential real estate returned 19.5%. Commercial real estate gained 13.5%, and indirect real estate — minority investments by the Church Commissioners and subsidiaries in real estate partnerships — returned 12.8%. Rural real estate gained 9%.
“The Commissioners’ fund has grown by an annual average of 9.7% over the past 30 years compared with an annual inflation rate during the same period of 3.4%,” said Sir Andreas Whittam Smith, first church estates commissioner, in a statement accompanying the report. “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 time, they would reduce interest rates, but now that rates hover around zero, that remedy is unavailable.”
As of Dec. 31, the endowment’s allocation was 23% global equities, 12% multiasset, 9% U.K. equities, 9% rural real estate, 8% defensive equities, 8% cash and cash-like assets, 6% residential real estate, 4% private equity, 4% credit strategies, 4% commercial real estate, 4% timberland, 3% strategic land, 3% indirect real estate and the rest in value-linked loans.
