The stock market slump has wiped £500 million off the value of the Church of England's largest single investment fund, it emerged yesterday.
But a shopping centre in Gateshead, flats in north London and the church's refusal to sully its hands with alcohol or tobacco have seen it through the hard times, the annual report from the Church Commissioners has revealed.
The return on its assets plummeted by 9.3% last year, but was still rather better than the average of 13.9% for UK pension funds, thanks largely to a longstanding policy of "cautious" investment and the fact that property holdings make up 40% of the fund. Its diverse portfolio includes housing and industrial estates and farmland.
Total assets were valued at £3.5 billion at the end of 2002, £160 million higher than if it had enjoyed an average performance.
Church Commissioners believe that its ethical investment policy, which bars the fund from holding stocks in companies which mainly supply tobacco and alcoholic drinks, has also helped as those sectors performed relatively weakly in the last quarter.
It improved the return by as much as 0.7% in that period.
They also pointed out that the average total return over the last decade has been 10.7%, when comparable funds have seen a 7.3% return.
"Compared with almost all other funds, these are very good figures," said Andreas Whittam Smith, First Church Estates Commissioner.
"They contribute to a sustained record of good performance which reflects the success of the commissioners' long-term financial strategy in recent years."
The fund pays clergy pensions for those in service before 1998 and supports bishops, some cathedral clergy and some clergy in parishes.