Most clubs across Victoria hold surplus funds in cash or term deposits. For many committees, broader investment options haven’t been considered due to the assumption that they would involve too much risk.

However, a trend has emerged in recent years for clubs to introduce a diversified,professionally managed portfolio approach, capable of generating returns above cash or term deposits. This has been most noticeable in clubs across New South Wales where gaming revenue and balance sheets are larger, perhaps prompting greater consideration as to how an optimised investment strategy can add to the long-term financial security of a club.

A glance at publicly available statements shows most of the larger clubs in New South Waleshave engaged financial advisers to establish and manage portfolios with custodial investment platforms such as BT Panorama, Netwealth, Macquarie Wrap or Hub24. These services efficiently administer and transact in managed funds and listed securities. What has worked effectively for those larger organisations with $10m or more to invest can deliver the same results for smaller amounts. Earning an additional 3 – 4% p.a. above term deposit rates can make all the difference for the financial strength of a club. As long as appropriate investment strategy guardrails are in place, we believe the rewards comfortably outweigh the risks over the medium to long term.

Our team at Canaccord Genuity in Melbourne specialises in managing investment portfolios and providing governance and strategy advice to wealthy families and not-for-profit organisations around Australia. Canaccord is a global business with wealth management operations across North America and the UK as well as Australia.

When it comes to investing club funds, as is the case with most decisions made by club committees, it’s one of weighing up the risks and rewards. Strong governance is the best place to start and before managing investments, we assist clubs in drafting an investment policy that suits their structure and objectives. An effective policy will define key roles and duties with regard to investing club funds and place restrictions around the liquidity of investments in the portfolio as well as exposures to various asset classes. For instance, whilst a portfolio with 70% in shares might suit a young individual with a long investment time horizon, it is clearly inappropriate for a club needing to prioritise capital stability, income and liquidity.

Allocations to growth assets like shares, property and private equity most at risk of capital losses and volatility are generally completely excluded or strictly limited in these portfolios.Defensive asset classes such as fixed interest and credit tend to be more suitable with some of the upside potential of growth assets sacrificed to ensure greater capital stability and liquidity.Investing in a broad range of strategies is a further risk mitigation tool and critical for portfolios where reducing the potential for capital losses is of paramount importance. Any single investment can perform below expectations but including sufficient diversification means that no one exposure will substantially impair the returns of the broader portfolio.