Church Commissioners for England, London, returned 7.1% on its investments in 2017, with the endowment fund growing 5.1% to £8.3 billion ($11.2 billion) for the year ended Dec. 31.
That compared to a 17.1% investment return in 2016.
The endowment fund said in its latest annual report that its annualized 30-year return to Dec. 31 was 9.4%, compared with 9.6% for the 30 years ended Dec. 31, 2016.
The best-performing asset classes for the endowment were global equities, U.K. equities and commercial real estate.
The 22.7% allocation to global equities returned 18.6% in 2017, vs. a 32.9% return for its 19.3% exposure in 2016. U.K. equities returned 15.1% in 2017, with a 10.1% exposure. In 2016, the fund's 9.4% allocation returned 15.7%. Commercial real estate gained 10.5% in 2017, compared with 7.9% for the year ended Dec. 31, 2016. The allocation was 3.5% at the end of 2017 and 3.7% a year earlier.
Strategic land exposure of 2.6% returned 8.8% in 2017; a 4.7% allocation to private equity gained 7.2%; a 6.1% exposure to residential real estate added 6.1%; and rural let land, which had a 8.5% exposure, returned 4.9%. The fund's 1.3% allocation to value-linked loans returned 3.5% and the indirect real estate exposure of 1.8% gained 2.1%. The fund's 3.6% allocation to timberland lost 7.4%.
The fund also had an 12.3% exposure to multiasset absolute return, 8% allocation to defensive equities, 8% allocation to cash and cash-like assets, 3.1% to high-yield bonds, 2.9% to private credit strategies, 0.6% to emerging market debt and 0.3% to infrastructure.
The report said that, over the long term, the private equity portfolio "has significantly outperformed quoted equity markets and we are looking to increase our allocation, if we can find managers we like to partner with."
The report said sterling strength had a negative impact on performance, as did the fund's global diversification across multiple asset classes.
"The macroeconomic environment is changing, and anticipating muted returns in the future, we will continue to develop our focus on non-traditional asset classes," said Loretta Minghella, first church estates commissioner, in a statement accompanying the report. "Our perpetual endowment and long-term horizon is well suited to maximizing returns from less-liquid markets including venture capital." The report added that around 23% of the private equity allocation is to venture capital.
Spokesmen could not immediately be reached for comment.
