Professor Robert MacCulloch: Shouldn't Charities Hold Diversified Investments....

Shouldn't Charities Hold Diversified Investments, so they don't risk being decimated, like the Tindall Foundation?

In 2022, the Tindall Foundation, which owns around 21% of the Warehouse, a publicly listed company, had nearly all its capital invested in that one company, amounting to a total value of around $344 million (see the Foundation's accounts below). Its total assets were listed at around $401 million. In other words, 86% of the entire portfolio was held in a single stock.

The following year, in 2023, the Foundation valued its Warehouse shares at about $236 million (a lost in value of $108 million in one year). Over the past year Warehouse shares have fallen again, from around $1.80 to $1.00 today, a drop of 40%. That amounts to another fall in the value of the Foundation's shares, this time to around $142 million (a drop of $104 million). Taken together, they sum up to a fall of $212 million in just two years. It must be even worse than that, since back in 2000, Yahoo Finance records Warehouse shares as selling for between $8 and $9.

What I don't understand is that since Charities are run for the benefit of the "beneficiaries", investing primarily in one stock opens those beneficiaries up to a huge amount of risk. In the case of the Tindall Foundation, the risk is now materializing. How come the Foundation didn't diversify, via a fund manager like Jarden's or Milford Asset Management, which would likely have meant it now has over a billion dollars in funds invested for good causes, rather than a number fast approaching one-tenth of that number?

Sources:
https://register.charities.govt.nz/CharitiesRegister/ViewCharity?accountId=c38ee76e-fe04-dd11-99cd-0015c5f3da29&searchId=1ea4083a-b8eb-4883-ada2-3d37f1fc032d

Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.