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ARC Charity Indices (ACI)

Created specifically for Charities, the ARC Charity Indices (ACI) are compiled to help charity trustees and their advisers understand their investment portfolio performance in a peer group context. The ACI can provide answers to how much return managers are generating for the level of risk taken.

ARC Charity Indices (ACI) are a set of four Sterling denominated indices compiled by Asset Risk Consultants (ARC) to help charity trustees and their advisers place charity portfolio performance into peer group context.

The ACI are published monthly, with a base value of 100 as at December 2003. 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 ACI.

The indices incorporate portfolio performance data from over 30 leading charity investment managers encompassing more than 1,500 discretionary portfolios. The indices are available free of charge to charity trustees and their advisers through a web-based subscription service which can be found at www.suggestus.com.

Why use ARC Charity Indices?

It is common for charity investment managers to adopt a multi-asset class approach to portfolio construction. This trend towards more dynamic asset allocation 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 (ACI) are designed to solve this performance measurement conundrum.

The ACI allows charity portfolio performance to be compared versus a realistic and sizable peer group of charities whose portfolios have exhibited similar behavioural characteristics.

Reflecting the opportunity set afforded by today’s sophisticated and ever changing financial market, the ACI are an accurate barometer for the performance of the charity investment management industry.

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