Approved by trustees on 5th June 2025. 

1. Introduction

1.1 The Inland Waterways Association (“IWA”) is a campaigning and grant making charity, whose purpose is to protect and restore the country’s 6,500 miles of canals and rivers.

1.2 IWA has annual income from fund raising, membership subscriptions, donations, and legacies with the objective of being at least equal to the annual expenditure on campaigning and, to a lesser extent, grant making activities. The Charity’s reserve policy is to hold a minimum level of reserves of £350,000.

1.3 The Association has approximately £1.4m of reserves for investment which will be managed in a split portfolio.

1.4 The trustees of the Association have delegated decision making on investment matters to Finance Committee. Investment Management is delegated to an authorised professional investment management company, regulated by the Financial Conduct Authority.

2. Investment Objectives

2.1 The Association seeks to produce the best financial return within an acceptable level of risk.

2.2 The investment objective for the short-term reserves i.e. restricted funds, is to preserve the capital value with a negligible level of risk. Assets should be readily available to meet cash flow requirements.

2.3 The investment objective for the long-term reserves is to generate a return above inflation over the long term whilst generating an income to support the on‐going activities of the charity.

3. Risk

3.1 Attitude to risk

IWA is reliant on fund raising, membership subscriptions, donations, and legacies for funding its activities. Investment assets are held as specific reserves or, where necessary, cash to supplement the cost of day-to-day activities.

The key investment risk to the long-term reserves is inflation, and the assets should be invested to mitigate this risk over the long term. The trustees understand that this is likely to mean that investment will be concentrated in real assets and that the capital value will fluctuate.

The short-term reserves are held for specific purposes to protect the Association’s restricted and designated funds and to this end the sum of £1M will be held in cash or near cash equivalent investments to minimise any risk of capital loss on this part of the portfolio. This is the Fixed Interest portfolio. It is envisaged that bonds of not less than class AAA or Gilts would be suitable for this purpose, relatively short term dated, and professional advice will be taken to achieve the best possible balance to this end.

The remaining part of the portfolio, the Equities portfolio, may be regarded as long-term assets and will be invested in an equity-based fund to maximise Total Return on the capital so held; to this end the provisions in clause 3.2 – 3.5 will apply unless a broad-based Equity Fund is selected.

3.2 Assets – Equities portfolio

The Charity’s assets can be invested widely and should be diversified by asset class, and by security. Asset classes could include cash, bonds, equities, property, structured products, and any other asset that is deemed suitable for the Charity. There shall be no investment in futures, forwards, options, swaps, hedge funds, cryptocurrencies, and other derivatives.

Finance Committee is charged with agreeing a suitable asset allocation strategy with the investment management company, within the broad asset allocation guidelines established by the trustees as follows:

Bonds                                     In a range between 15% & 25%

Alternatives*                        In a range between 10% & 20%

Equities                                 In a range between 50% & 70%

Cash                                      Up to 5%

*includes income focussed low, medium risk asset backed investment funds in particular infrastructure and property funds

3.3 Currency

The base currency of the investment portfolio is Sterling.

3.4 Credit

The Charity’s cash balances should be deposited with institutions with a minimum rating of A‐ or invested in a diversified money market fund.

Deposits (except for Barclays Bank) should be spread by counterparty, subject to a maximum exposure of twice the amount covered by the Financial Services Compensation Scheme, i.e. £170k.

Bond exposure should be focused on investment grade issuers.

3.5 Concentration

No investment other than cash shall be made that takes the total value of any one holding to more than 10% of the value of the portfolio. Where because of investment performance any holding exceeds 10% there will be no immediate requirement to sell the excess.

4. Liquidity Requirements

4.1 Income from the portfolio may be used to fund the Charity’s activities. A target income will be agreed with the investment manager on an annual basis, to enable effective budgeting.

4.2 Trustees wish to have at least 75% of the investments realisable within one month.

5. Time Horizon

5.1 The Charity has divided its reserves into those expected to be held for a long-term time horizon and those that may be needed in the short term.

6. Ethical Investment Policy

6.1 The Association’s reserves should be invested in line with its aims. The trustees do not wish to adopt an exclusionary policy, but individual investments may be excluded if they are perceived to conflict with the Association’s purpose.

6.2 In general IWA investment decisions should be taken with reference to good “Environmental, Social and Governance” (ESG) factors. ESG refers to the three central factors in measuring the sustainability and societal impact of an investment and help to better determine the future financial performance of an investment while paying due regard to environmental policies together with policies to enhance the sustainability of the enterprise.

7. Management, Reporting and Monitoring

7.1 The Association has appointed a professional investment management firm to manage the assets on a discretionary basis in line with this policy. Investment managers provide custody of assets. Managers are required to produce a valuation and performance report quarterly.

7.2 Finance Committee has responsibility for agreeing strategy and monitoring the investment assets. The committee meets regularly to review the portfolio, including an analysis of return, risk, and asset allocation. Performance will be monitored against agreed market benchmarks.

The overall investment objective is a total return of the Consumer Price Index inflation + 3.5% net of fees.

The investment management company is required to present to appointed members of Finance Committee at least once a year and to provide quarterly investment reports.

7.3 Finance Committee reports on investments to the full trustee board on at least an annual basis. This report should include a review of asset allocation strategy, performance, risk profile and consistency with long term investment objective.

8. Approval and Review

This Investment Policy Statement was prepared by Finance Committee to provide a framework for the management of the Association’s investment assets. It will be reviewed on an annual basis to ensure continuing appropriateness.