London, UK - Two weeks after the Archbishop of Canterbury attacked the “unreal” financial culture and lack of repentance in the City of London, the Church of England has launched a robust defence of hedge funds.
The Church Commissioners, who manage the £4.4 billion assets — down from £5.7 billion in 2007 — of the established Church, have criticised European proposals to regulate hedge funds.
A new European Union directive designed to limit the way hedge funds are managed restricts the Church’s ability to make money, the Church’s investment managers warn.
The criticism came in a letter, dated September this year, to the House of Lords’ EU select committee signed by Andrew Brown, secretary to the Church Commissioners, along with James Brooke Turner of the Nuffield Foundation, Sir Mark Walport of the Wellcome Trust and representatives of three other charitable foundations.
The letter warned that the new restrictions “will significantly restrict our ability to generate funds to pursue our charitable missions and thus reduce our impact for public good”.
They said there would be “unintended consequences” of the Alternative Investment Directive, which seeks to limit leverage, and to compel investors based in the EU to use only EU-based funds and deposit banks.
The signatories, who have investment porfolios worth a total of about £19.5 billion and spend nearly £1 billion a year on areas that are of “public benefit”, argue that more than nine out of ten global hedge funds are either not domiciled in the EU or have non-EU managers.
“To maximise the returns on our investments, we must have freedom to select the best investment managers, and funds, and to select the investment ideas that best meet our individual needs,” they say.
Last year the Archbishop of York, Dr John Sentamu, in an interview with The Times, compared short selling of shares to “bank robbery”.
Last month the Archbishop of Canterbury, Dr Rowan Williams, said in an interview with Jeremy Paxman that financiers had failed to repent for the excesses which led to the global financial crisis.
The Church of England has a strictly governed ethical investments policy. However, as a charity the commissioners have a duty to maximise returns on investments.