Investment Report

  • Gareth Howlett

  • Trustee & Chairman of the Investment Strategy Group
  • “The Trustees believe that the investment portfolio is well placed to face the challenges of the future.”

Principal investment objective:

The principal investment objective of the Trustees is to invest the funds received in such a way as to maximise the likelihood that the Trust’s assets will be sufficient to meet the costs of all pre-paid funeral plans as they mature.

In pursuit of this objective the Trustees keep under constant review, both the estimated real value in today’s terms of the Trust’s assets, and its liabilities for all future anticipated payments on maturing plans.  Over the past several years, thanks to the investment strategy employed by the current and previous Trustees, and to robust investment performance, the Trust has achieved and maintained this critical measure of financial health.

Investment strategy:

The 2017/18 financial year saw the culmination of a series of changes to the investment strategy which were set in train in 2015 when new trustees with specific investment expertise were appointed to the Board and to our Investment Strategy Group sub-committee.

Based on the advice of the Investment Strategy Group, the Board of Trustees have diversified the Trust’s asset allocation and increased the number of external managers in order to take advantage of investment and expertise in different areas. Our current target is now to hold 50% of assets in index-linked gilts, with the other 50% divided between global equities, diversified growth funds, long lease property, infrastructure assets, corporate debt and cash.

During the year we completed the transfer of our holding in index linked gilts from Royal London to Legal & General. Index linked gilts are the largest single part of our investment portfolio and the “passive” management of Legal and General, whose aim is to replicate the performance of the wider asset class, will give better protection against the risk of underperformance of this asset class than the active management of Royal London, as well as realising a significant saving in management fees.

Investment managers:

Last year I reported that the Trustees had taken the decision to replace Royal London with Aubrey Asset Management as independent fund manager of the Trust’s only direct asset, its 100% shareholding in The Golden Charter Trust Limited which holds the various investment portfolios of the Trust. This decision was taken on the basis that this role, which is required for regulatory reasons, should not be held by any of the investment managers of the underlying investment portfolios.

Aubrey’s mandate is to give an expert, independent view to the Trustees on whether the principles of diversification and effective asset selection are being observed. I am pleased to report that Aubrey’s first report for the year to 31 March 2018 confirmed that these principles were observed.

A new investment manager, Hermes was appointed in the year with a specific mandate for investment in corporate debt. This brings the total number of underlying investment managers to eight, compared to only four in 2014 and reflects the growth in the size of the Trust and the increasing investment diversification I referred to above.

The investment managers are invited regularly to ‘face to face’ meetings with the trustees of the Investment Strategy Group and this helps both to monitor performance and to understand the thinking and decisions behind the management of these large financial institutions.

The allocation of the Trust’s investments by investment manager and asset classes at 31 March 2018 is shown in the charts below.

Investment performance:

The performance of the Trust’s underlying investment managers is measured against specific benchmarks and monitored by the Trust’s investment advisers and by the Investment Strategy Group. Each month, the investment advisers provide the Trustees with a statement of the overall performance of the Trust and of the individual underlying investment managers. The Board of Trustees formally review performance at least four times a year.

After some years of exceptional returns, the performance of index-linked gilts as an asset class was effectively flat. In comparison, most of the underlying investment managers performed well relative to their specific benchmarks and the Trustees remain satisfied that the diversification strategy remains appropriate.


The early results of the significant changes to the investment portfolio undertaken over the past three years have, on the whole, been encouraging. Those changes took place during a period when conditions in the investment markets, for the most part, were relatively favourable. The next few years may not be quite so benign, but the Trustees believe that the investment portfolio is well placed to face the challenges of the future.

Gareth Howlett
Chairman of the Investment Strategy Group
March 2018