How Many Investment Managers Does Your Charity Really Need?
Managing investments effectively is essential for many charities to achieve their mission, but how these investments are managed can significantly impact efficiency and focus. In our analysis of over 1,600 charities with investment assets over £5 million, we found that around one in eight use three, four, or even more investment managers or funds. This is often driven by a desire for diversification, with some charities splitting funds across managers with similar multi-asset mandates or employing fund-of-funds structures. In practice, this complexity can create significant challenges for trustees and finance directors, requiring time and attention that distracts from core responsibilities like governance, strategic oversight, and driving lasting impact.
At PMCL, we believe there is a better way. By adopting a consolidated approach to investment management, with the support of an external consultant like PMCL, trustees can streamline oversight and focus on strategic objectives, ensuring that your charity’s funds work optimally towards your mission.
Why a Consolidated Approach?
Rather than relying on multiple managers through a fund-of-funds structure, a consolidated approach advocates for appointing one or two high-quality investment managers to oversee a diversified, multi-asset portfolio. For many charities, this shift can provide significant advantages in terms of cost efficiency, simplicity, strategic flexibility, and enhanced accountability.
Let’s explore how a single- or dual-manager model, guided by PMCL’s expertise, could benefit your organisation.
1. Cost Efficiency
A consolidated approach eliminates the multiple layers of fees typically associated with managing numerous investment managers. By working with a smaller number of managers, your charity can benefit from a streamlined fee structure, avoiding the overlaps and duplications that often inflate costs in multi-manager setups. This cost-saving approach means that more of your organisation’s resources can be allocated directly towards mission-aligned activities and long-term growth, which ultimately benefits the charitable causes you serve.
2. Simplified Oversight and Enhanced Accountability
Overseeing multiple investment managers can become a substantial task for trustees and internal staff, often requiring regular reviews and coordination. With a single- or dual-manager structure, accountability becomes centralised, reducing the administrative burden and making it easier to monitor the portfolio's performance and alignment with your charity's objectives.
PMCL can further simplify this process. As an external consultant, we take on the responsibility of evaluating the selected managers’ performance, offering trustees valuable strategic insights without overwhelming them with the operational details. Our approach ensures clear, centralised accountability, allowing trustees to remain focused on high-level governance while we handle the day-to-day investment oversight.
3. Strategic Flexibility and Dynamic Asset Allocation
A consolidated approach offers trustees greater strategic flexibility in managing the portfolio. By entrusting one or two managers with a broader mandate, your organisation benefits from more agile asset allocation. This structure allows managers to respond dynamically to changing economic conditions—such as shifts in interest rates, inflation, or other macroeconomic factors—without the coordination challenges of a multi-manager model.
This strategic agility is particularly valuable in today’s fast-evolving economic landscape. A simplified management structure allows managers to pivot efficiently, keeping your investments aligned with your organisation’s risk tolerance, financial goals, and mission.
4. Reduced Overlap and Duplication
With multiple managers, it’s not uncommon for portfolios to develop overlapping exposures, with each manager investing in similar asset classes or strategies. This overlap can dilute diversification and increase costs unnecessarily. Consolidating to a single- or dual-manager structure can reduce these inefficiencies, resulting in a more cohesive investment strategy that truly aligns with your charity’s unique goals and values.
How PMCL Empowers Charities with Strategic Investment Management
At PMCL, we work closely with trustees to ensure that investment management is both strategically aligned and operationally efficient. By understanding your charity’s unique mission, risk tolerance, and ethical considerations, we help select and monitor high-quality managers who are committed to supporting your long-term goals.
Our established relationships with leading institutional fund managers enable us to negotiate favourable terms and align their strategies with your vision.
By focusing on strategy, reducing unnecessary fees, and simplifying oversight, we ensure your charity’s resources are optimised for maximum impact. This in turn empowers trustees to focus on governance, strategic planning, and driving impact.
Disclaimer:
The information presented is intended for organisations and individuals with professional investment experience. Portfolio Manager Consultancy Ltd is committed to serving professional clients, ensuring our advice and insights align with the sophisticated needs of this group. We encourage those who do not have professional investment experience to seek advice before making any investment decisions based on this update. For a full understanding of our terms and the scope of our advice, please consult the disclaimer provided.