Investment Report

  • Gareth Howlett

  • Trustee & Chairman of the Investment Strategy Group
  • “There has been a significant improvement in our funding position over the past several years. Our priority now is to defend and build on this success”

The Trustees’ principal investment objective is to invest the Trust assets in such a way as to maximise the likelihood that the assets will be sufficient to meet the costs of all pre-paid funeral plans as they mature. The investment strategy is therefore geared towards achieving the required rate of investment return not only to enable the Trust Fund to meet its objective in the long term, but also in a manner that deals with maturing funeral plans in the short and medium terms.

To meet the principal objective, as noted in the Chairman’s Statement, the Trustees regularly review the Trust’s investment strategy throughout the year.

Following the most recent review, and taking advantage of the ability to transfer surplus funds to the newly incorporated company, the Trustees implemented a change in its asset allocation strategy. The Trust Fund’s long-term strategic target now is to hold 55% of assets in index linked gilts, with the balance of 45% divided between global equities, diversified growth funds, long lease property, infrastructure assets and cash. This approach has been adopted by the Trustees under guidance from the actuaries and investment advisors, in the belief that it is the most suitable way for the Trust to meet its principal investment objective.

The Trustees, in conjunction with their investment advisers, monitor the actual asset allocation of the Trust Funds, and, if necessary, instruct the investment advisers to rebalance towards the strategic benchmark either by redirecting incoming or outgoing cash flows, or by an internal reallocation of funds between different investment mandates. Monthly valuations are obtained from the fund managers to enable the actual asset allocation to be determined.

Currently, the Trustees employ Royal London Asset Management, Aviva Investors, Partners Group, Columbia Threadneedle, Artisan Partners, Newton, Baillie Gifford and Legal & General as their fund managers.

Therefore, in addition to a diverse asset allocation strategy, the Trustees also spread the investment amongst different fund managers. The Trust Fund’s allocation by fund manager and asset classes at 31 March 2016 is shown in the charts below.

As stated in the Chairman’s Report, and in the Actuary’s Report, the Trust assets are over 100% of the funds required to meet future funeral costs covered by the plans in the Trust. This has not always been the case and the significant improvement in the Trust’s funding position over the past several years is a tribute to our advisers, to our investment managers, and to those Trustees who devised and implemented the plans which led to success. Our priority is now to defend and build on this success, in a difficult and uncertain investment world.

Gareth Howlett
Trustee & Chairman of the Investment Strategy Group
March 2016