M&G Charity Multi Asset Fund – Investment update in the wake of Covid-19

Sadly, the pandemic crisis has sent global stock markets sharply in to reverse.  This, coupled with a badly timed spat between Russia and Saudi Arabia that has caused a severe drop in the Oil Price, has also had knock-on effects on other markets, such as bonds, currencies and commodities.  However,  it is important to stress that this does not threaten either liquidity or provision of income from the fund; a 20%+ fall in capital does not automatically result in a similar hit on income, as many investors tend to assume.

While there will undoubtedly be a near term impact on earnings and distributions for corporations, the manager’s sense was that moves in March bore the hallmarks of ‘episodic’ behaviour: panic, and a focus on short-term price rather than long-term returns, which manifested themselves in rapid and correlated declines across most assets.

These price moves offered the opportunity for longer term investors to gain exposure to assets at compelling prices. The fund’s response was to add to equity positions and particularly areas with a ‘quality’ bias via the M&G Global Select and Positive Impact Funds. These new additions to the portfolio are funds which focus on companies with strong balance sheets and, in the latter case, offer solutions for long-term social and environmental challenges. In the near term, these should be somewhat more resilient to disruptions caused by economic lockdown.

We can expect to see deeply negative economic data being released over the next few months, including very scary unemployment numbers. The question is whether these numbers hold any information about the long term or are simply a reflection of a short term, self-imposed pause in activity. Policy makers around the world have taken a range of measures to support households, companies, and markets, often looking beyond the traditional emphasis upon interest rates. At the same time, recent data out of China is suggestive of a potentially rapid return to growth. That said, it seems likely that there are areas within economies that will never recover, and we do not know whether nations will face ‘second waves’ of outbreaks as is already being feared in Asia, or how far different policy responses in the initial phase will lead to differences in outcome over the longer term. More importantly for investors, how markets respond to developments is equally uncertain.

It is in just such emotionally challenging situations that the value of having a clear framework for dealing with uncertainty is necessary. The events so far in 2020 have shown yet again that seeking to gain an information edge in forecasting fundamentals is a dangerous approach. This is why our experience of managing multi asset strategies has reinforced our faith in adopting a reactive approach; seeking to capture the opportunities created when behavioural volatility does emerge.

In summary, our firm view is that the best opportunities for return today involve tolerating some additional volatility relative to our benchmark* (via higher equity exposure) and demonstrate the extreme rise we have witnessed in general asset volatility.  During the first quarter of 2020, The M&G Charity Multi Asset Fund posted a total return of -21.9%; we recognise how uneasy this has made investors feel.  However, this should be set in proper context; we have lagged our published market benchmark* (-16.3%) during the quarter, but this is largely accounted for by our higher relative weighting in global equities; we have succeeded in offering some relative protection when compared to the UK market over this period; the FTSE All-Share Index return for Q1 was -28.2%. 

Finally, for those investors keen to seek reassurance on the income outlook, we are pleased to report that at this stage we foresee no reason why the fund cannot maintain the same level of income in 2020/21 as we delivered last year.  At present valuations, the fund’s yield is now approaching 5.0%; this is attractive both for those seeking a strong income cashflow, and as a significant contribution to future total return.

If you have any further questions regarding performance and portfolio positioning on the M&G Charity Multi Asset Fund, please contact Richard Macey, Director of Charities, on 020 3977 3623, or via email at charities@mandg.co.uk

* Blended market benchmark is a representative composite mix of :- 45% FTSE All Share Index (UK equities), 30% MSCI AC World Index (global equities), 12.5% FTSE All Stocks Gilts Index (UK Gilts), and 12.5% BAML Non-Gilt Investment Grade Index (corporate bonds).

—Richard Macey, Director of Charities | M&G Investments

Posted 21 April 2020

Key Decisions made at the most recent Almshouse Association Board Meeting are posted on ‘Latest News’ on our website for all registered member charities to access.

At the Board Meeting held on 11th March 2020 at the NCVO in London, the following Key Decisions were made:

1. Delegated authority was given to NP to cancel or continue events based on evidence at the time.
2. The Board approved/adopted the Annual Accounts for 2019 and the Annual Report subject to minor amendments discussed.  The Board approved the letter of representation to Buzzacotts.
3. Delegated authority was given to board members to register the name change from ’The National Association of Almshouses’ to ‘The Almshouse Association’ with the Charity Commission in advance of the filing with Companies House.
4. Authority was given to recruit regional champions for 9 months and to roll out nationally in 2021.
5. The new branding and logo was approved and endorsed by the Board. Roll out timing as CEO sees fit.
6. Following demand for loans and grants exceeding funds budgeted the Board approved an increase in the budget available to provide restricted funds for the provision of loans up to £1,000,000 and grants up to £250,000 for 2020.

A record of all Key Decisions made at Board Meetings (from June 18 onwards) can be found in ‘Current Issues’.

Posted 14 April 2020

What to do if one of your residents dies

Unfortunately, with the outbreak of coronavirus, you may find yourself having to deal with the death of a resident. We have summarised the information in Standards of Almshouse Management and Support and Care to guide you through what to do in this situation.  

Please note: This guidance was published on 7 April 2020

When a Resident Dies

When a resident dies, it is the next-of-kin who is responsible for dealing with all the affairs associated with the death unless the death is intestate (there is no next of kin).

If the death is intestate, it would need to be referred to the local Social Services office who will deal with all the issues: funeral, financial, wills and clearance of the flat, subject to funds in the estate.

On death, the legal title to all of the resident’s property passes automatically to their personal representative(s), meaning their executor if they made a will, or their administrator under the law on intestacy if they died without a will.

Notifying and Registering the Death

The GP has to be informed immediately when a resident dies in the accomodation whether suddenly or following a period of illness or palliative care.  The GP will certify the death and provide the appropriate death certificate and, where specified, a cremation form. If there is any doubt about the cause of death, the GP may summon the Coroner’s Officer to investigate before issuing a death certificate. If it is not possible for the certificate to be issued immediately, the next of kin will need to collect the certificate from the surgery.

If the charity is a registered or nursing care provider, the Registration Authority needs to be informed of the death, including time, date and cause of death and any referral to the Coroner.

The next of kin should be informed as soon as possible if they were not present at the time of the death.

The death has to be registered by the next of kin with the local Registrar within five days, see link:

https://www.which.co.uk/later-life-care/end-of-life/what-to-do-when-someone-dies/registering-a-death-akmbc3g27psq?gclid=EAIaIQobChMIha2Yk96h6AIViK3tCh0jmgUXEAAYAiAAEgJhEvD_BwE

The charity may also have its own internal procedure for informing the Trustees or the Clerk/Chief Executive. 

Advising Staff and Other Residents

There should be a system in place to notify staff, volunteers, as well as other residents, when a resident dies. 

If you believe the resident died as a result of coronavirus, you will need to contact your local health protection team to organise a deep clean of the property. You can find your local health protection team at:

www.gov.uk/health-protection-team

Clearing an Almshouse Dwelling of Personal Possessions

Usually the licence for a deceased resident officially ends when the keys have been returned and the dwelling is cleared of all possessions. Until such time, the WMC and heating charge is still charged to the deceased resident’s estate. The Trustees may wish to reconsider this during the Covid-19 outbreak and one option may be to freeze the WMC at the time of death and review it once it is safe for the dwelling to be cleared. Alternatively, trustees may opt to defer this altogether and carry this as a void loss.

The dwelling should remain locked until the ‘executor’ is able to remove the personal possessions, clear the flat of all furniture and hand over the keys.  By ‘executor’, it is meant the next of kin or if the resident died without a valid will, their administrator as appointed under the rules on intestacy.

Any information held by the charity in relation to the resident’s pensions, benefits should be passed over to the executor/administrator to assist them in winding up the deceased resident’s affairs. The charity will find it useful to note the details of the executor/administrator or family members involved should there be a need to contact them in the future.

Once the government lockdown restrictions have been lifted, it is reasonable for a charity to ask that the accommodation be cleared of personal possessions within one month and all outstanding arrears, WMC & heating charge, be paid out of any money that is left in the estate.

If access is required to the accommodation prior to the keys being handed over, for example emergency repair, it is advisable that two people (trustees or staff) should enter the property and a photo inventory is taken to safe guard the charity against allegations of theft. The executor/administrator should also be informed of the entry: the names of the two trustees/staff who entered the accommodation, the time, date and the reason for the entry.

Where a resident’s death is intestate and following social services involvement, confirming that there are no funds in the estate to pay for the accommodation to be cleared, the charity will have to undertake this task at its own expense.

Who else to inform

The charity should inform the local authority in order to claim exemption from paying the council tax on the vacant flat for up to 6 months – Class B of the Council Tax (exempt dwellings) Order 1992; the benefits agency; other community organisations that the resident may have been involved with and remind the executer/administrator to inform the utility companies and instruct the post office for mail redirection.

For Further Information

Cruse Bereavement Care – www.crusebereavementcare.org.uk

NHS – https://www.nhs.uk/conditions/stress-anxiety-depression/coping-with-bereavement/

Hospice Information Service at St Christopher’s: www.stchristophers.org.uk

Macmillan Nurses: www.macmillan.org.uk

Age UK – https://www.ageuk.org.uk/information-advice/?gclid=EAIaIQobChMIsevSxfij6AIVB7DtCh2qawCWEAAYASAAEgJS3vD_BwE

Posted 7 April 2020 12:45

The Almshouse Association has continued to engage government during the Coronavirus pandemic to highlight the issues impacting the almshouse movement.

This week The Almshouse Association has contacted levels of government to address a number of issues:

• Essential workers – we have requested clarity as to who qualifies for ‘essential worker’ status.  A request has been made for almshouse employees to be considered as ‘essential workers’.

• We have made an appeal for almshouse inclusion in any government support for landlords – whilst Government has made clear a desire to support landlords and tenants  financially through this crisis, it is not been clear who will be entitled to support or how they will be supported.  Clarity has been requested and a case has been put forward for almshouses to be considered within the support package if requested.

• Universal Credit – Some of our member charities have received advice from DWP local offices detailing that charities are unable to provide financial assistance to residents below state pension age without impacting Universal Credit payments. This differs from the guidance issued 2013 (subsection 51413-51416). The Association is appealing for clarity from DWP to allow charities, who are able and wish to, to provide immediate cash support to their residents in need without this counting as an income against Universal Credit.

Posted 30 Mar 2020 ; updated 2 April 20

Covid-19 – Mar 20 Summary

Many important Government measures have been announced and implemented with respect to the Covid-19 pandemic. Those that impact almshouse charities have been included in the Almshouse Association Coronavirus News pages

• Support for individuals and businesses: The government has announced a number of measures designed to support individuals and businesses through the Coronavirus Pandemic. Full information can be found here. Notable measures include:
  • Increasing the standard allowance for Universal Credit for 12 months by £1,000 and will increase working tax credit basic element by the same amount. For the self-employed, the Government will suspend the minimum income floor for anyone affected by Covid-19. Self-employed people will be able to access Universal Credit at a rate equivalent to Statutory Sick Pay for employees.
  • The Government has increased housing benefit and universal credit so that the local housing allowance covers at least 30% of market rents in an area.
  • The Government has announced that the self-employed will receive up to £2,500 per month in grants for at least 3 months. This will be calculated by 80% of their average monthly trading profit over the last three years.
  • Employers will be able to reclaim expenditure for any employee who has claimed SSP as a result of COVID-19.

• The Regulator of Social Housing is running a blog on the Coronavirus Pandemic. This is is maintained and updated with the latest information for registered providers of social housing. A letter was also sent to all registered providers detailing the expectations of registered providers at this time. Any registered providers who did not receive or need to replace the letter can find it here.

Housing – March 20 Summary

• Risk of non-compliance before new Rent Standard:  The Regulator of Social Housing (RSH) has published an addendum to its Sector Risk Profile 2019 that identifies the areas that are most likely to increase the risk of non-compliance with rent and data quality requirements.
• The Regulator of Social Housing has warned registered providers and local authorities about a range of circumstances which make non-compliance with rent requirements more likely to happen, in advance of the new Rent Standard coming into force on 1 April 2020.

Charities and Charity Law – March 20 Summary

• Charities (Protection and Social Investment) Act 2016 review: DCMS has published a review of the Charities (Protection and Social Investment) Act 2016, which aimed to:
  • Provide new and strengthened powers for the Charity Commission
  • Extend the criteria for automatic disqualification from charity trusteeship and apply disqualification to senior management positions
  • Strengthen the transparency and accountability of charity fundraising
  • Give charity trustees an explicit legal power to make social investments.

The review recommends that the legislation be renewed.

Previous Policy and Governance Updates:
Click here for Policy and Governance – Feb 2020 Summary
Click here for Policy and Governance –Jan 2020 Summary
Click here for Policy and Governance 2019 Summary

Posted 1 April 2020