What are ARC Charity Indices?
ARC Charity Indices are a set of four Sterling denominated indices compiled by Asset Risk Consultants (ARC) to be used by charity trustees and their advisers in assessing the performance of a discretionary charity portfolio with a non-specialist mandate.
The ARC Charity Indices provide insight into the actual returns being generated by discretionary charity portfolios, net of fees, based on hundreds of Sterling denominated charity portfolios submitted by participating investment managers (see Data Contributors listed on pages 10–11 of this report).
There are no pre-set asset allocations; no asset class restrictions; no concentration limits; and no index performances used. Only actual charity portfolio performance numbers are included in the calculation of the ARC Charity Indices.
Why Use ARC Charity Indices?
In recent years, it has become the norm for investment managers to adopt a multi-asset class approach to charity discretionary portfolio construction. This trend has meant that the traditional approach to benchmarking has become less useful and many charities have moved towards absolute rather than relative return measures.
The shift towards cash-plus or inflation-plus benchmarking has, however, left charity trustees and their advisers in a quandary. Given the volatility of financial markets, how can the evolution of manager performance over time be assessed? The four ARC Charity Indices are designed to solve this performance measurement conundrum.
The ARC Charity Indices series allow charity portfolio performance to be compared versus a realistic and sizable peer group of charities whose portfolios have exhibited similar volatility characteristics. Reflecting the opportunity set afforded by today’s sophisticated and ever changing financial market, ARC Charity Indices are a barometer for the performance of the charity investment management industry.
Download the full report below: