Following a member concern with regards to the impact of financial support from charities on beneficiaries’ Universal Credit payments, The Almshouse Association has received a written response from the Minister for Welfare Delivery, Will Quince.

The letter confirmed that financial support provided by charities to beneficiaries of all ages will not be considered as a rise in income. As a result of this, there will be no impact on the Universal Credit payments made to any beneficiary receiving financial support.

In the letter Mr Quince also expressed his thanks towards the almshouse movement for support it provides to those in need across the United Kingdom.

The letter can be found in full here

Related articles:
MPs respond to Association – 30 April 20
Association represents almshouses to Government – 30 Mar 20

Posted 06 May 20

Message from M&G Investment to members:

Dear investor,

Given high levels of recent market volatility and the meaningful loss of value in The M&G Charity Multi Asset Fund – coming shortly after some significant changes to the structure and management of the fund – we thought investors would appreciate an update on our views.

Primarily, we would like to emphasise that while there have been changes to fund structure and personnel, the key characteristics have not changed. The fund continues to operate with an equity range between 65% and 90%, has the bulk of exposures in Sterling denominated assets, and seeks to maintain distributions that steadily rise in cash terms over time (a yield of at least 3%).  This strong bias towards equities reflects the longer-term outlook of our investors and our investment philosophy. We recognise that ‘multi asset’ portfolios come in many different forms and, by and large, those with larger allocations to equities will have suffered more severe falls in March than those with a more balanced/cautious profile; however, it is important to remember that, on the flip side, portfolios that maintain a heavier bias towards equities will maintain more robust income flows during the downturn, and will invariably post stronger recoveries in capital value as we emerge from periods of extreme market stress.

What has changed is the flexibility on offer to the fund to make use of different funds across M&G’s suite of products to diversify exposures and capture a greater range of opportunities, and to make use of fund reserves to smooth the pattern of distributions in the face of volatility.

Nature and drivers of drawdown

As we entered March, the portfolio was positioned toward the middle of its equity range, light on bonds (with some emerging market exposure), and had a relatively high cash position, reflecting the fund manager’s view of the relative attractiveness of equity markets and concerns about very low yields on UK government bonds in particular.

In March itself, it was UK-focused equity positions which were the main detractors from return, given their focus on higher dividend payers. In a month in which diversification was hard to come by, UK and other developed government bonds provided some diversification but were not enough to prevent sharp losses.

Fund Responses

The volatility in March presented the opportunity to add to and diversify the fund’s equity exposures. New positions were opened in the M&G Global Select Fund and M&G Positive Impact fund. These are global equity funds run by the same manager and have a bias toward companies with strong balance sheets; the latter fund holds positions in companies which aim to solve social and environment problems, including health care companies.

Distributions

Dividend payments have been hit hard by the virus lockdown (since the 12^th March, 200 UK companies have announced the omission or deferral of dividends), while low bond yields are not in a position to make up the shortfall.  It is for just such situations that the fund’s income reserve facility was introduced under the previous ‘NAACIF’ fund structure, and this has been carried over in to the new fund. At present the environment remains very fluid and so we would be wary of looking ahead to make bold forecasts of distributions over the coming year. However, recent years of good performance and strong income growth have allowed for a reserve to be built up, leaving the fund in a position to put some of this to work to distribute to clients.  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 (3.50p per income unit).  Since conversion in November 2019, this fund now has a broader remit to access a wider range of income streams from different global assets.

Conclusion

It is our firm belief that the fund is well positioned to take advantage of a strong recovery when it comes.  At present valuations (end of April), the distribution yield now stands at 4.60%; this is attractive both for those seeking a strong income cashflow, and as a significant contribution to future total return.

As more clarity emerges we will endeavour to communicate as much as possible.  Part of this will be in the form of our new monthly fund reports, the first of which are attached.

If you have any further questions regarding performance or portfolio positioning on the M&G Charity Multi Asset Fund, please contact me directly on 020 3977 3623, or via email at charities@mandg.co.uk.  I am also available for ‘virtual’ meetings if your Investment Committee or Trustee Board would appreciate a more comprehensive update, along with my colleagues Tristan Hanson (Fund Manager) and Stuart Canning (Deputy Fund Manager). 

Should you have any administrative queries, or require copies of valuation statements and distribution vouchers, please contact our Charities Helpline on 0800 917 4472 or email info@mandg.co.uk.

Richard Macey
Director of Charities, UK Distribution      
M&G Investments

Posted 06 May 2020

During this coronavirus pandemic, The Almshouse Association has been proactive in ensuring that the concerns, needs and wishes of almshouse charities are heard and understood by policy makers in Westminster and beyond.

We have corresponded with ministers and MPs with targeted approaches to those in positions of influence on the frontbenches in Westminster and in the devolved powers.

This approach has produced a positive initial response, with a number of politicians responding to our communications either directly, to their local almshouse or raising the issues with other ministers. Those responding include The Minister of Health, Edward Argar, The Welsh Health Minister, Vaughan Gething and the Shadow Chancellor, Annalise Dodds, who has pledged to apply pressure onto government on our behalf.

Our message on your behalf is getting through and is being heard. We need to keep up the pressure to make sure actions follows.

We will keep you updated.

Posted 30 April 2020

The Almshouse Association is pleased to announce that we have added three new online training courses to our website course library.

With many of us are working from home, you may find you now have the time to take one or more of the courses on offer. Most are no more than 30-40 minutes long, are CPD accredited and you can download a certificate on completion.

All member charities have been issued with 6 credits per charity ( please do let us know if your need more). Each course uses one credit.

By clicking into the links below, you will be taken directly through to the course pages where you just need to follow the instructions.

Legionella Awareness – NEW

Health and Safety Basics and Essentials – NEW

Fire Awareness – NEW

GDPR Essentials

Safeguarding Vulnerable Adults

Mental Health Awareness

If you have any problems accessing, please do give us a call on 01344 452922 or email us at almshousesupport@almshouses.org

Posted 29 April 2020

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