Responsible Investing
Foundation Scotland’s Investment Approach
Foundation Scotland’s investment committee regularly reviews our investment arrangements to ensure they deliver strong long-term returns, good value for money and high-quality service.
Following a competitive tender process, Rathbones was selected in December 2025, for their strong track record with charitable funds, robust responsible investment approach and the quality of their reporting and support services.
Rathbones is one of the UK’s largest and most established investment managers, founded in 1742 and managing over £100bn for clients. They manage £9.3bn specifically for over 3,000 charities and have dedicated charity teams in Scotland. Their experience, financial stability and commitment to responsible investing make them well suited to support our work.
Rathbones Charity Growth & Income Fund is a diversified multi-asset fund designed for charities. It includes global equities, bonds, property, infrastructure and other assets, balancing growth with reduced volatility.
We see it as our responsibility to invest for everyone’s tomorrow – doing the right thing for our communities and for wider society. Rathbones aims to deliver long-term value for investors while contributing to positive change. They integrate environmental, social and governance (ESG) analysis into all investment decisions, ensuring that sustainability factors are assessed alongside financial analysis. Their framework of eight sustainable development themes is linked to the ambitions of the UN Sustainable Development Goals (SDGs) but focus on areas where companies and investors have the greatest potential to create change. The Charity Growth & Income Fund applies exclusionary criteria to prevent investment in areas that we understand to be of widespread concern to charity investors.
Rathbones is recognised for leadership in stewardship, including active engagement with companies on climate, human rights and governance issues.
Our investment arrangements with Rathbones will be fully operational by the of January 2026.
Our portfolio
At present, the portfolio owns a single multi-asset fund which has exposure to a mixture of equities, bonds, commodities and private assets. The fund will invest predominantly in equities, with approximately 70 companies held at present. Given the variety of assets and the range of companies held, the portfolio is comfortably diversified, limiting the specific risk.
Given the historic performance of equities versus alternative asset classes, we have opted for a majority equity fund as this will be more likely to beat inflation over a longer period. There are no geographic constraints within the selected fund, allowing the manager to have a truly unconstrained hand when selecting best-in-class quality equities.
Some examples of companies this fund is invested in:
- Halma develops technology solutions for safety, health, and environmental markets. Its products include fire and gas detection systems, water analysis instruments, and medical devices for eye health. One illustration is its sensors and monitoring systems that help industrial sites prevent hazardous incidents and ensure clean water standards.
- Schneider Electric provides solutions that make energy use safer and more efficient for homes, businesses, and industries. It offers smart systems that help organizations cut energy waste and improve reliability. A good example is its building automation tools that allow companies to monitor and control energy consumption across facilities.
- Thermo Fisher Scientific offers laboratory instruments, reagents, and diagnostic tools for research and healthcare. Its portfolio spans life sciences, specialty diagnostics, and biopharma services. An example of its impact is sequencing systems that enable scientists to analyse genetic material quickly, accelerating drug discovery and personalized medicine.
- Taiwan Semiconductor Manufacturing (TSMC) is the world’s largest dedicated semiconductor foundry, producing advanced chips for computing, AI, and consumer electronics. It partners with leading technology firms to deliver cutting-edge processors.
Measuring performance
We focus on CPI + 4% as our primary benchmark, with an emphasis on achieving this target over a medium to long-term horizon of five to ten years rather than short-term performance.
CPI + 4% reflects our objective to deliver real returns above inflation, ensuring the fund’s purchasing power grows sustainably while supporting distributions. This aligns with goals rather than market comparisons, making it easier to measure success against long-term objectives rather than short-term volatility.
For context, we also monitor performance against a comparator index that uses the FTSE All-World Index to represent the equity allocation within our portfolio, providing a useful reference point for each component of the portfolio.
Foundation Scotland’s Investment Committee meets quarterly to review performance and portfolio composition. A formal meeting with Rathbones is held annually, supplemented by ongoing informal engagement.
All cash transactions to and from the fund require triple authorization, and cash can only be returned to the main Foundation Scotland bank account. Additionally, all funds are audited as part of our annual audit process. The Foundation is UKCF accredited.
Associated risks
The fund has a majority exposure to equity markets. The rationale for investing in equities is to combat inflation risk and the erosion of spending power over time. When held over the long-term equities have historically provided a hedge against inflation.
Equities however can be volatile in the short-term. This is partially mitigated by the funds exposure to cash, fixed income and alternatives.
The risk of not meeting our expected return targets in the short and long term need to be considered. If the fund does not meet the return expectations it may impact our investors ability to fund their charitable work. We are conscious of this risk. The selected fund manages risk through asset allocation, diversification, active management and in-depth research. The fund generates a consistent 3% distribution target regardless of the underlying market environment.