SHETLAND Charitable Trust’s (SCT) reserves have swollen to nearly £458 million as its investments surged by almost £150 million as global money markets recovered from the initial shock of the Covid-19 pandemic.
Trustees heard at a meeting on Thursday that the boom followed an “extraordinary period for equity markets around the world” as fortunes slumped by as much as 35 per cent in early 2020 before recovering and surging to near all-time highs.
Huge growth in technology and digital industries have driven the strong recovery, particularly in the US and Japan – leading SCT investments to generate some £130 million more than anticipated during 2020/21
That equates to a return of around 50 per cent, compared to under five per cent in 2019/20.
The trust’s financial plan for 2020-2025 assumes a medium term return of 6.5 per cent a year, with the income generated enabling it to spend over £10 million a year supporting various organisations and activities in the islands.
SCT chairman Dr Andrew Cooper said the surge in funds was “outstanding by any yardstick”.
“We are always conscious that it’s the longer term return that matters and fortunes can dip just as quickly,” Dr Cooper said.
“But it’s reassuring for the community’s future that we have strong reserves in place to cope with the social challenges of uncertain times ahead.”
In 2019 the trust steered the value of its reserves above £300 million for the first time since the turn of the century – having dropped to £150 million due to overspending and a downturn following the 2007/8 global financial crash.
The bulk of the charitable trust’s spending in 2020/21 went on Shetland Recreational Trust (£2.97 million), Shetland Amenity Trust (£1.14 million) and Shetland Arts (£604,000), along with just shy of £2 million supporting the isles’ rural care model.
Last year it also contributed a £500,000 grant towards Shetland’s MRI scanner appeal.
In the current 2021/22 financial year the trust has increased its spending to £12 million, including an extra £1 million for its main grant scheme and the introduction of a new small grants scheme.
The majority of trust funds are invested by the active equity manager Baillie Gifford, which holds 59 per cent or £261 million.
Its 79 per cent return last year was nearly double the market benchmark of 39 per cent.
A report from trust chief executive Ann Black said Baillie Gifford continued to deliver “excellent” returns, averaging 36 per cent a year over the past three years.
BlackRock, meanwhile, invests a £94 million portfolio designed to track the market and last year delivered a return of 35 per cent, slightly above the 32.5 per cent benchmark.
Schroders invests £56 million in UK property, which trustees were told had held up “surprisingly well given what’s happening on the high street, in offices and also Brexit”, with a 2.8 per cent return slightly outperforming the 2.5 per cent benchmark.
The fourth and final fund manager, Insight, invests in a diversified fund mandate and recovered the losses it had incurred early in the pandemic.
It holds £31.5 million of investments for the trust having returned 14 per cent, against a benchmark of four per cent, last year.
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