Quilter Cheviot

About Quilter Cheviot

At Quilter Cheviot we have a long history of working with charitable and not for profit organisations.

As one of the UK's leading charity managers, we provide investment services to over 650 organisations.

Many charities and trustees find accessing investments can be overly onerous. We pride ourselves on our flexible approach in dealing with the challenges and dilemmas that come with this responsibility.

In addition, we can offer charities a bespoke service by constructing portfolios specifically run-in line with their investment policy.

At Quilter Cheviot we understand that every charity’s situation is unique. Our Investment Managers have a wealth of experience working with charities with a wide range of mandates and understand the specific challenges and opportunities faced by the sector.

Charity funds offered

Available products and minimum investment by fund type.

Charity pooled fund

£100k

Minimum investment

Charity clients184
Total assets£180m

Advisory
Discretionary
Execution Only

Segregated mandate

£1m

Minimum investment

Charity clients654
Total assets£2bn

Advisory
Discretionary
Execution Only

Investment approach

Philosophy

Our philosophy: At a strategic level, long-term portfolios should focus on the long-term returns expected from asset classes. We aim to enhance these returns by exploiting market inefficiencies, and by making active, shorter-term, tactical asset allocation calls. Investment houses have become increasingly categorised as “value”, “growth” or “alternative”. Our belief is that the best results come from a mix of styles adapted to the market cycle; our objective is to identify future trends, and afford these the appropriate emphasis within portfolios, before they are arbitraged away.

We have a rigorous investment process, combining the skills of a dedicated research team of 25 career analysts working in partnership with our sustainable investment team of 7 people and specialist charity investment managers, to provide the optimum outcomes for our clients. We have embedded environmental, social and governance (ESG) factors into our investment process.

The Chief Investment Officer (CIO) has ownership of the overall investment process. The Chief Investment Officer’s primary responsibility is the oversight of the “top down” elements of the investment process. This includes asset allocation; governance of the process; risk control; strategies offering; and fixed income. The Head of Research's primary responsibility is the oversight of the “bottom up” elements of the investment process. This includes security selection; portfolio construction; research; oversight of collectives and equities. Specific committees are responsible for each element of the investment process. All the investment related committees report into the Investment Oversight Committee (IOC) which has oversight of the overall investment process. The role of each committee is summarised below.

Our investment managers are integral to the investment process and work in partnership with our research and responsible investment team on a collegiate basis. All investment committees are made up of a combination of practitioners i.e. investment managers and members of the research team. The role of these committees is to provide guidance to the firm both on model strategies and approved list of holdings.

There are three broad steps within our investment process:
• Understand the outlook in terms of global growth, monetary policy and geo-politics, using this to then formulate estimates for returns across asset classes
• Blend asset classes together, delivering the right balance of risk and reward for each client. We maintain a range of model strategies to cover the diversity of investment preferences.
• Populate asset classes with our active positions – i.e. through individual securities and funds.

Research is fundamental to what we do and we are fortunate in having one of the largest research teams within the discretionary fund management industry, with 25 award winning in-house analysts working in partnership with our sustainable investment team of 7 people. Our analysts specialise within global sectors and industries, giving us a unique perspective in terms of stock and fund selection. Third party research is used where we feel it is relevant and can add value for clients.

Given the extensive nature of the equity, fixed income and collective fund universes, analysts filter down the number of funds and securities to a monitored universe. This allows us to focus our resources on where best to add value for clients. We have outlined some of the criteria for our fund and security selection below.

Direct equities
We monitor an equity universe of around 350 companies. Analysts will publish recommendations on a select number of these stocks, having engaged with company management and analysed any potential investment themes presented by companies. Some of the metrics we look at for individual equities include:
• Quality – how good is the management team and how strong is a company’s position within its industry and sector
• Valuation – return on capital, cash flow and dividend yield, multiple valuation and asset quality
• Investment themes – will the company benefit from structural growth, such as in the robotics and automation sectors, or are there shorter-term trends relating to the economic cycle?

Fixed income
Our Head of Fixed Income works alongside the fixed income committee in determining the direct bonds and collective funds which we believe will work effectively for clients. For individual fixed income securities, we look at:
• Quality – what is the credit rating of the instrument, should we favour government or corporate bonds?
• Valuation – what is the duration or sensitivity of the security to interest rates, its currency exposure and its gross redemption yield?

Collectives
We use collective investment schemes to gain exposure where it is the only practical way to gain access to a specific asset class or sector on a cost-effective basis. This allows us to invest in specialist areas such as property (commercial and doctors surgeries), infrastructure (schools, hospitals and renewable energy), private markets and emerging markets. We have specialist fund research analysts who are responsible for monitoring over 300 ‘closed’and ‘open-ended’ funds. The collectives list includes specialist trusts providing access to particular geographies, smaller companies, or particular asset classes. Funds are selected in accordance with both quantitative and qualitative analysis, with significant importance placed on meeting the individual fund managers and their teams.

Sell discipline
All stocks on our recommend list will be classified as a buy, hold or a sell. A ‘Sell’ recommendations are issued when we believe there is a significant risk of material capital loss and where action should be taken without delay. Similarly, in the case of collective investment funds, ‘sell’ recommendations are mandatory and are issued for third party funds which we believe pose a significant risk of material underperformance and where action should be taken without delay.

Asset allocation

Our investment managers collaborate closely with our research team. Committees, comprising both managers and researchers, guide model strategies and approved holdings. Our process involves three key steps:

1) Assess global growth, monetary policy, and geopolitics to estimate asset class returns.
2) Blend asset classes to balance risk and reward for clients, fitting them into one of 12 model strategies.
3) Populate asset classes with active positions through individual securities and funds.

In considering the appropriate asset allocation, we start with our estimated nominal returns for different asset classes. These forecasts will change in line with GDP, inflation and other metrics and take no account of short-term market movements or the benefits (or not) of active management.

We consider how the combination of assets can work together to deliver the best return while lowering the overall volatility (risk) of the portfolio. Taking our estimated nominal returns, we have set out in the table below our long term strategic and current tactical asset allocation.

Allocation decisions

Direct Equities: We track 350 companies, with analysts recommending select stocks after engaging with management and analysing investment themes. Key metrics include:
Quality: Management strength and industry position.
Valuation: Return on capital, cash flow, dividend yield, and asset quality.
Investment Themes: Structural growth (e.g., robotics) or economic cycle trends.

Fixed Income: Our Head of Fixed Income and committee select bonds and funds based on:
Quality: Credit rating, preference for government or corporate bonds.
Valuation: Duration, interest rate sensitivity, currency exposure, and gross redemption yield.

Collectives: Our fund research team monitors over 300 funds, including specialist trusts. Selection is based on quantitative and qualitative analysis, with emphasis on meeting fund managers and their teams.

Risk management

Risk comes in many different forms; for us there are three key themes:

1) Meeting client objectives:
• The Statement of Investment Policy sets the parameters and defines how you want us to manage the Charity’s portfolio
• We monitor individual portfolios constantly and discuss investment conditions, strategy and tactics with trustees on an ongoing basis
• We report to you formally on a quarterly basis, regularly communicating to ensure that the portfolio continues to adhere to your guidelines and objectives, as well as explaining our rationale for sales and purchases each time that we deal (unless you otherwise wish)
• We set appropriate benchmarks and return aspirations, enabling our clients to judge us clearly

2) Adherence to your mandate:
• It is critical that we understand the risk that we are taking within portfolios; to that end we have an independent investment risk function embedded in our investment management process
• All client portfolios are monitored to ensure that they are in line with the selected strategy whilst our dealing system flags breaches to any investment guidelines (including ethical restrictions)
• Whilst we employ model strategies, we give latitude to investment managers to deviate from the model at the asset allocation, sector and stock level, subject to internal guidelines
• Our Chief Investment Officer and the Investment Oversight Committee review investment mandates and individual portfolio performance on a regular basis. These contribute to our ‘first line of defence’

3) Return expectations:
• We use a software system called Alternative Soft to estimate the forecast annualised return, the potential peak to trough movement, the volatility, and the maximum historical drawdown of our long-term strategic asset allocations
• We pay particular attention to the sensitivity of our portfolios to a range of factors including changes in interest rates and inflation expectations, alongside testing reactions to unexpected or major events
• We use the maximum exposure to equities as a way of defining risk, as we believe this is more helpful than assigning a risk number to a strategy. This helps us quantify the risks that we are taking and explain risk to our clients in practical terms

In order to ensure that we are able to manage these risks the firm operates a “three lines of defence” framework in regards oversight of the investment process.

The first line of defence entails the processes, policies, and procedures in place within the front office to make sure that the business is abiding by all of its regulatory obligations, as well as controlling and minimising risks. As regards the management oversight of the investment process, we have four major mechanisms:
• The CIO function and exceptions reporting
• The investment risk function
• Peer group reviews
• The Investment Oversight Committee

The second line of defence entails the compliance function, and the framework that it has in place to ensure that everything is operating as it should within the first line of defence. The compliance monitoring programme is a good example of this.

The third line of defence entails the Board and the tools it has at its disposal to make sure that everything is operating as it should in both the first and the second lines of defence. The internal and external audit functions are examples of this.

Example performance

Below we provide the long-term performance track record that we have achieved for our charity clients who have an objective of generating a reasonable level of income whilst maintaining the real value of the portfolio over the long-term from a medium risk approach (c70% equities). These figures are on a total return basis, net of all fees. Our Charity Composite comprises of 156 charity portfolios with assets of over £551m.

Cumulative net of fees to 31 March 2025 for the Quilter Cheviot Charities Composite:
1 year: 2.1
3 years: 9.5
5 years: 49.6

Charity team


Designated charity team: Yes

Remote working: Yes. There are no limits on our systems.

20 charity specialists

We have been offering specialist advice to charities since 1990s. The ethos of our business is built on the premise that ‘the people you meet are people investing the money’. Our core values are based on: • Doing the right thing • Be always curious • Embrace challenge • Being stronger together To ensure we fully understand the issues facing our charity clients, we actively encourage members of the staff to volunteer with a wide range of charitable organisations. We are proud to have set up our own charitable Foundation (Quilter Foundation) which has a particular focus supporting young people and the local communities we are part of. A key role of Foundation is to help staff be active in giving back to society and help them with their journey in volunteering. Average industry experience within the Charities team is 20 years.

Ethics & ESG


Offers ethical investing: Yes

We are acutely aware of the requirement for charities to be responsible investors and in our capacity as your investment manager, we act as steward for your assets. We have integrated Environmental, Social and Governance (ESG) considerations into our investment process. This helps us to identify and understand potential risks and opportunities. As charity specialists, we are mindful of our role as a custodian of your assets and confirm that we will fully incorporate your ethical requirements into the management of your portfolio. To enhance our capability, we have engaged the services of Ethical Screening, an independent specialist firm to screen the securities researched by our analysts and advise which ones should be excluded given their exposure to sectors that you wish to avoid. These restrictions are then loaded onto our dealing system to ensure ongoing compliance. We are able to screen all direct holdings (fixed income and equities). With collective investment schemes, it is impossible to screen on the same basis. In addition, there is a firm wide restriction on investing directly in cluster munitions and anti-personnel landmines, we also monitor any potential indirect exposure to this on an ongoing basis. We are acutely aware of the requirement for charities to be responsible investors and in our capacity as your investment manager, we act as steward for your assets. We have integrated Environmental, Social and Governance (ESG) considerations into our investment process. This helps us to identify and understand potential risks and opportunities. Where we invest directly in equities, our research analysts, alongside the responsible investment team, are responsible for assessing a company on all the relevant metrics including ESG metrics.. The qualitative process aims to identify the material challenges and opportunities that a company faces from an ESG perspective. These will vary according to the industry group, the geography, and the company itself. We believe this should be considered holistically as there is no perfect company – all will have challenges from an ESG perspective to different degrees. The responsible investment team has worked with the equity analysts to develop our own internal ESG dashboards for evaluating and monitoring equity holdings. We then complete a qualitative assessment which involves working closely with the equity analysts to review the holdings and establish how they are categorised. We use the Sustainability Accounting Standards Board (SASB) framework to identify material factors to track on the dashboards. Material ESG factors are sourced through various third-party data providers, annual reports, and publicly available sources such as CDP (formerly known as the Carbon Disclosure Project). As a responsible investor, we are committed to our role as a steward of clients’ assets to protect and enhance long-term returns. This encompasses our engagement with companies, through proxy voting and face-to-face dialogue, as well as considering environmental, social and governance (ESG) factors which could impact shareholder returns. We believe incorporating ESG considerations into our investment analysis and stewardships is important for the following reasons: A more holistic approach: Integrating ESG information into the investment process can help to mitigate risks and identify opportunities. Our primary focus is on risk mitigation as part of our responsibility to our clients. The double bottom line: In addition to potentially enhancing long-term returns, we believe taking these factors into account will benefit other stakeholders, creating environmental and societal value, not just economic gains. Policy drivers: There are multiple regulatory developments progressing the case for implementing responsible investment and requiring immediate action. These including the EU’s Action Plan on Sustainable Financing, the Taskforce for Climate-related Financial Disclosures (TCFD) and the UK Stewardship Code. Supporting client demand: Public awareness of ESG issues and client demand for responsible investment solutions are growing. We implement a firm-level responsible investment process that covers our centrally monitored holdings but can take a more targeted approach for clients who want their portfolios to reflect their specific interests or preferences. As part of our ongoing engagement with companies we seek to link executive remuneration with responsible business metrics. This is a nascent area and is not always easy for companies to successfully integrate into remuneration; however, we believe that this will become the norm, and we view this as a catalyst for change within the corporate world. The focus on behaviours and corporate culture should be linked to pay to pave the way for better outcomes. For the funds we own, our Fund Research team considers the approach taken by fund managers to ESG integration and engagement as part of its research and analysis process for evaluating funds. The analysts draw on various ESG inputs including holdings-based analysis via Style Analytics (a factor and ESG analytics provider) and the responses fund managers give to the responsible investment focused Request for Information (RFI) which has firm-level and fund-level questions on areas including responsible investment resource, integration approach, portfolio risk analysis and voting. A key part of the process, however, is the analysts’ 1-2-1 meetings with fund managers. The analysts use this assessment to assign an ESG rating to the fund, which reflects the degree to which they believe ESG risks and opportunities are embedded in investment analysis and decision making within the manager’s investment process. As part of the Quilter plc, we are a signatory of the United Nations’ Principles for Responsible Investment, which is a global, investor-led initiative to promote and support the integration of ESG considerations into investment research and ownership practices. We are also a signatory to the UK Stewardship Code. We were among the first group of investors to become signatories to the revised Stewardship Code in 2021 and have retained signatory status since then. We are also members of the following collaborative engagement groups and organisations: • Investor Group of the 30% Club • Climate Action 100+ • Nature Action 100 • PRI Spring • Wealth Managers on Climate • IIGCC Net Zero Initiative • The Investing and Saving Alliance (TISA) • UK Sustainable Investment and Finance Association (UKSIF) • Personal Investment Management & Financial Advice Association (PIMFA) • CDP • The Institutional Investors Group on Climate Change (IIGCC) • The Investor Forum • United Nations Global Compact Signatory

Fees

Our standard charging schedule for charity clients is as follows:
• 0.6% on the first £2,000,000;
• 0.5% on the next £3,000,000;
• 0.4% on the next £10,000,000;
• 0.3% thereafter

The annual management fee includes general investment advice, management of the portfolio, quarterly reporting and meetings as well as administration and custody (our nominee service). On the segregated portfolio, the annual
management fee is calculated on the capital value of the portfolio, quarterly in arrears.

The fee includes general ongoing investment advice, day to day management of your portfolio, quarterly reporting and meetings as well as administration and custody (our nominee service). To be clear, we do not charge:
I. Commission on transactions or bargain charges
II. No entry or exit charges
III. No performance related fees
IV. No additional charges for meetings or travel expenses or reporting including annual tax reports

Operations & service


Administration: Central. All administration is handled internally including custody. To ensure we are able to deliver seamless support to our clients; we have experienced and dedicated charity administrators alongside your investment managers.

Onboarding: A week on receipt of the completed paperwork. We are only too aware that setting up a new account can be daunting. Therefore, we assist with all relevant new account opening documentation to ensure the process is as straightforward as possible. For most clients, we facilitate the transfer of existing portfolios in specie (where possible) to mitigate the risk of being out of the market. At the outset, we would help you conduct a thorough review of your current investment strategy (should be required) using our knowledge and expertise from an investment perspective and our experience as charity trustees

Ongoing advice: Yes. The ethos of our business is built on the premise that ‘the people you meet are the people managing your money’. This is a safeguard against any disconnect between the discussion we have with you as a client and the implementation of your charity’s investment strategy. To ensure we have the expertise, we have a dedicated charities team with an average of over 20 years of experience looking after a diverse range of charities, both in terms of value of investments as well as charitable purposes. The service we provide includes general investment advice at no additional cost as well as the investment management of the portfolio, reporting and meetings, administration and custody (our nominee service). Each client has two investment managers who take full responsibility for all aspects of your portfolio.

Custody

We provide a full custody service via our nominee company and Cofunds at no additional cost which takes care of: • Safeguarding of assets • Timely collection and payment of dividends • Report for annual accounts . We hold clients’ assets in the name of our nominee companies or in designated “client” accounts with one of our appointed sub-custodians. For example OEICS are held in Cofunds and US equities with Bank of New York.