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Charities “significantly” overpaying investment managers

outsourcingUK charities sector could save hundreds of millions of pounds in investment charges by switching to an outsourced model popular among global institutions, it was claimed.

According to SEI, an outsourcing provider to investment houses including charities, the UK charity sector could be overpaying “significantly” for investment management fees when compared to other institutional investors.

SEI claimed charities could save between £250 million and £288 million (€329 million) by switching to an outsourced chief investment officer (OCIO) model commonly used by global pension schemes and US endowments.

Fees for an equivalent strategic asset allocation in an OCIO model that combines advice and implementation are likely to be lower than the investment management fees charities currently pay, SEI said.

Charities could also benefit from the multi-sector experience boasted by the OCIO strategy, the company said.

Pradeep Kachhala, director UK charities in SEI’s institutional group, said: “It is concerning that the charity sector could be significantly overpaying for investment management services, and our analysis demonstrates that a renewed focus is needed.”

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