INVESTMENT POLICY

1. Introduction

This policy sets out the principles and ethos of the University’s asset investment practices. It ensures compliance with the Trustee Act 2000 and satisfies the guidance laid out by the Charities Commission (CC14).  This policy is concerned with long-term assets managed by investment managers, whereas the short-term investment of operating cash, in bank deposits and Money Market Funds, for example, is covered under the separate Treasury Management Policy.

2. Basis of investment

Under the terms of this policy, investment funds will be held under the management of external fund managers, as the University recognises that it does not need to have the in-house expertise or capacity to enable it to effectively manage these funds. Under the terms of any agreement with the University, the fund managers will take appropriate actions to ensure that all investments comply with the rules regarding Qualifying Investments in respect of charity investments. All investments held by fund management should be held in a nominee company owned by the University, unless otherwise agreed in writing. 

3. Risk attitude

The University’s attitude to risk is that it should be minimised wherever possible. The target is to maintain its capital investment whilst providing income to sustain the value of the investment over time. It recognises, however, that there is an element of risk inherent in any investment, and more so where a return can be achieved in excess of that available from bank deposits. The University also recognises that it is possible to minimise the risk in these areas by diversifying the type of asset class in which the investment is made and by diversifying the sectors in which the assets are based.

On selection of the fund manager, the University will discuss the options available in respect of risk diversification for both asset class and sector and agree an appropriate strategy.  Ongoing asset allocation will be reviewed and agreed annually with the CFO. The purpose of this attitude to risk is to enable the fund managers and the University to manage its investment assets in such a manner which allows flexibility to react to changes in the market conditions from time to time.

4. Socially Responsible Investment

The basic premise of any asset investment is that the returns on the investment provide sustainability to the asset class. The aim must be to provide as high a return as possible, in any given market conditions, whilst having due regard to social, environmental and governance considerations. Whilst the investments will be managed by external independent fund managers, the University will ensure that the appointed managers encourage good behaviour or discourage poor behaviour through their own investment screening processes.

These processes should consider the University’s own investment preferences in respect of social, environmental and governance issues, as well as considering good practice. The University considers that the appointed managers should consider the following criteria when assessing the appropriateness of any investments they undertake on behalf of the University: 

Positive screening

The University considers that, where possible, all investments should be in companies which are transparent – that is, they should have clear recognisable policies and have a culture of openness.

The University is committed to ensuring that companies in which it invests adopt high ethical standards and responsible attitudes towards the environment. To this end, the University expects its investment managers to have adopted the UN Principles for Responsible Investment and through stewardship encourages them to hold companies to account by active engagement on corporate governance and strategy and use shareholder voting rights to influence company behaviour. The University believes this will raise standards in a way which is consistent with University values and with improvements in long term shareholder value.

Negative screening

The University would expect its investment portfolio to exclude investment – as far as is identifiable – in any company where more than 10% of its income is derived from any of the following activities:- gambling, tobacco, pornography, adult services, third world commodity extraction and child labour.

The University – through the CFO - will also consider expressions of concern, where it is indicated that an investment is wholly contrary to the University’s objects. To be properly considered, the complaint must be received from a representative body – e.g., trade union, student union – with clear evidence as to why it is being brought to the attention of the CFO All amendments to the prohibited investments noted above will be notified to the fund managers in writing.

5. Taxation

When considering the appropriateness of any investment and measuring the returns thereon, the fund manager should consider the fact that the University is exempt from Corporation Tax for Qualifying Investments, under the definition of the Income and Corporation Taxes Act 1988. This means that the tax deducted from dividends is not recoverable, whereas interest and gains can be received on a gross basis. Additionally, the University will not be able to recover VAT on any taxable charges made by the fund manager and, therefore, the cost of administration will be the gross charge (that is, including VAT).

6. Funds Liquidity

While these investments are held for the long-term, to mitigate liquidity risk any funds must be held in a form which enables liquidity and settlement of the investment within a minimum of four weeks, unless otherwise agreed with the investment managers in writing.  The University currently invests in the Charity Property Fund.  While this fund does hold an element of cash and aims to settle withdrawals within a four-week period, there have been occasions when net redemptions have caused this timeframe to be extended to 12 weeks.  These are notified to Unit Holders by the Fund and are remedied as soon as possible.  The relatively small size of the holding in this fund (~£3.2m) mitigates the liquidity risk on these occasions.

7. Performance target

The University benchmark for its investment assets will be the ARC Sterling Steady Growth Charity Index, or another benchmark relevant to the University’s peer group, and will be agreed with the fund manager on appointment. This will be reviewed as part of the annual reporting process.

8. Selection of fund manager

Fund managers will be selected by the CFO from a shortlist proposal prepared by the Head of Financial Accounting. The number of fund managers used is at the discretion of the CFO and is dependent upon the value of the fund at the time of the review.  However, the following criteria should be met as a minimum: fund managers must have a minimum of five years’ proven track record and have experience of management of similar customers and a proven track record of managing similar customers sustainably invested portfolios of the scale required for the University’s assets.  Specific experience within the education charity sector is highly preferable.

9. Divestment of investment assets

The University intends to evaluate its investment assets over at least a three-year period, but reserves the right to divest an investment for any reason including:

i) investment performance that is significantly less than anticipated or where there is an unacceptable justification of poor results;

ii) failure to adhere to this investment policy in regards to communication or reporting requirements;

iii) significant reputational damage due to the investment company’s wider actions;

iv) liquidity requirements necessitating additional funds.

The divestment of investment assets shall mirror the financial regulations in relation to the disposal of land and buildings, the other long-term assets of the University, which are as follows:

• below £1,000,000 are subject to the approval of the VC and CFO or Nominated Deputy
• above £1,000,000 but below £2,000,000 are subject to the approval of the PPRC
• above £2,000,000 are subject to the approval of the GC

This shall be judged on the estimated value of the investment at the time of disposal.

Where divestment is for a specific purpose, e.g. to fund strategic expenditure, funds will be held in an identifiable account and expenditure will be reported to PPRC/GC as appropriate.  If the funds are not required in full, this will be reported to PPRC/GC for a decision on whether to release remaining funds to general operating cash, or to re-invest.

10. External reporting

Investment managers will be expected to report quarterly as a minimum to the University as follows:

(a) Investment returns – a summary of the performance against agreed benchmarking for the quarter, the previous 12 months and the previous 5 years or since appointment (as appropriate).
(b) Investment criteria – an outline of the stock selection decisions in relation to the investment criteria agreed with them on appointment or via annual review.
(c) Transaction reporting – a schedule detailing purchases, sales, rights issues, nonmarket transactions, capitalisations or any other transactions. This should include details of all cash transactions.

In addition, to aid compliance with the Economic Crime and Corporate Transparency Act 2023, with particular reference to the Failure to Prevent Fraud Offence, investment managers will provide on an annual basis a copy of their internal controls report relating to the prevention of fraud. This will allow the University to gain assurance over the risk of fraud being carried out to benefit the University in the investment manager’s capacity as an agent of the University.

An annual report should be provided, co-terminus with the University year end of 31 July, which provides details of the investment asset valuation, annual returns, and a review of the performance by the fund manager.

In all cases, these reports should be available within 14 days of the quarter or year-end date. In the spirit of promoting environmental good practice, the University would expect the quarterly reports to be sent by e-mail only, to a named contact. The University will expect to annually review the fund managers’ performance in a meeting.

11. Internal Reporting

The Head of Financial Accounting will report on the in-year performance of the investment assets at a summary level at each PPRC and Governing Council meeting to which a Finance Update is provided. Any performance issues will be highlighted via the Finance Update at these meetings.

In addition, the CFO shall report on overall performance to the Governing Council on an annual basis, in line with the presentation of the annual financial statements. 

12. Remuneration

The basis of the fund manager’s remuneration will be that detailed at the time of the appointment. One month notice should be provided to the University in the event of any changes to the fee and commission regime of the fund manager.

13. Discretionary powers of CFO

Where considered necessary, the CFO has the power to alter the terms of this investment policy. All amendments will be provided in writing. If, at any time, the investments are found to be in breach of University policy, the CFO, upon being made aware of the breach, can either request rectification or, if immediate rectification will cause financial loss, temporarily allow the breach by identifying this acceptance in writing. PPRC and GC will be informed on a timely basis if this is necessary.

Last reviewed: September 2025

Policy Owner: Finance

Supplemental Information

Current Investment Funds 2025-26 - Ethical Approaches

The University currently holds investment funds with Sarasin and the Charities Property Fund.  In line with the University’s investment policy, all providers have active ESG policies which exclude investments in companies that fall under specific categories or have revenue exposure over a threshold in specific areas (as shown below). 

Additionally, all fund managers use their investment portfolio to actively encourage better corporate behaviour to change the way companies act and report, for example by engaging directly with management or actively deploying shareholder votes; and by deliberately promoting investment in companies that have an ESG purpose. 

Sarasins

Savills Investment Management