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| 4 May 2023 | |
| Charity Sector News |
The past year has ushered in a combination of interconnected challenges for investors, from geopolitical conflicts to high inflation, supply chain problems to financial market volatility. Inflation in some developed economies has exceeded 10%, At the same time, Russia’s invasion of Ukraine has shaken equity markets further. Economic sanctions as well as energy and food supply issues have exacerbated investor concerns about inflation, particularly in Europe. Combined with a risk-off approach, global indexes fell by as much as 25% during 2022.
According to Mercer’s survey of endowments and foundations (E&Fs), conducted early in 2022, half of respondents cited higher inflation as one of their two main investment challenges for the next three years. This was second only to concerns about low expected investment returns. In addition, 39% said they were not sure or did not believe that their portfolios were prepared for a market downturn.
If your portfolio has experienced investment losses, it is easy to be pessimistic and focus on the worst outcomes. While it is prudent to be prepared for such scenarios and ensure that these short-term headwinds do not affect your organization’s overall mission and spending plans, it is also important not to be caught off guard: make sure you are positioned to capitalize on compelling opportunities. To do this, you will need information — and plenty of it. The path ahead over the coming months and years is unpredictable, and it is best to explore different scenarios and how they may affect your portfolio, its liquidity, and the ability of your investment
You can read the full Mercer report here
