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Court Of Protection

Volume 403: debated on Tuesday 8 April 2003

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To ask the Parliamentary Secretary, Lord Chancellor's Department pursuant to her answer of 20 March 2003, Official Report, column 908W, on portfolio holdings held by the Court of Protection for minors, what measures are in place to ensure that depreciation in the value of funds held by the Public Guardianship Office is kept to a minimum. [105967]

Any equity investment in respect of Public Guardianship Office's (PGO) clients is undertaken by external fund managers either by a panel fund manager appointed by the PGO or by a manager chosen by the receiver on behalf of the child and approved by the Court of Protection. Equities are held in a diversified portfolio, comprising holdings in individual shares or in unitised funds, so as to spread the risk. The performance of the fund managers is regularly monitored and any underperformance investigated.In giving its directions for the investment of funds, the Court of Protection recommends investment strategies that are deemed suitable for the individual requirements of each case. These will provide for some, and sometimes all, of the award to be held as a cash deposit in the Special Account operated by the Court Funds Office, which currently pays a favourable rate of interest of 6 per cent. This is to ensure that commitments over the shorter term can be met without there being any obligation to sell securities at a time when they may have fallen in value, and also to modify risk in the overall portfolio.Equities have suffered badly over the past three years, but they are still recommended as the best means of achieving a return that matches or exceeds the rate of inflation over the longer term.There are no specific measures in place to ensure that there is no depreciation in the value of such funds. The only way to do that would be to hold all the funds in the form of cash, but that would run the risk of failing to match future rates of inflation and mean that clients' funds would perform less well relative to equity markets when they were rising.