UK Charities Pivot Toward Private Markets and Active Management

The survey of senior executives overseeing £5 billion in assets highlights a decisive shift in portfolio construction. Beyond private equity, 86 percent of respondents have expanded their exposure to hedge funds and real estate. This appetite for risk is set to persist, with nearly all surveyed charities planning further increases in private equity allocations over the next two years. The move is fueled by a desire to capture stronger returns, with 56 percent of participants citing capital growth as their primary motivation.

Active management is gaining significant traction alongside this asset reallocation. Seventy-one percent of charities intend to increase their use of active strategies over the next three years, citing improved transparency and the ability to leverage data-driven insights. James Ayre, head of investment for charities at Rathbones, noted that evolving technology and research tools are strengthening the case for active management as organizations attempt to balance long-term financial objectives with ethical mandates. While UK equities remain a fixture in most portfolios, the current climate reflects a clear trend toward higher risk tolerance, with 63 percent of respondents expecting their appetite for volatility-linked opportunities to grow in the coming years.