Helen Macpherson Smith Trust

Next open date for applications is 16.01.2018 View Grant Dates

Main Menu Search

A Remarkable Growth Story

“Compound interest is the eighth wonder of the world” – Albert Einstein

From an original bequest of £275,000 ($550,000), $144m income has been generated and a $100m corpus invested for the future.

 

On her death in 1951, the late Helen Macpherson Schutt (née Smith) left a bequest of £275,000 ($550,000) for the establishment of a charitable trust in perpetuity to benefit all Victorians.

Remarkably, the invested assets of HMSTrust’s corpus have grown from the initial benefaction of $550,000 in 1951 to $100m today. This exceptional investment performance did not happen by chance.

Corpus and grants final

Firstly, Helen wisely instructed her trustees to re-invest two thirds of the income generated over the first 21 years of the Trust. One of the features of compounding is the substantial benefit gained from strong growth early in the life of a fund. This income from the first 21 years of the Trust now accounts for $49m (or 49%) of the $100m corpus. In 2009 the Supreme Court of Victoria approved an Administrative Scheme which again gave the Trustees limited power to accumulate income to corpus. This power of accumulation activated by the Trustees from FY10 now accounts for $5m (or 5%) of the $100m corpus.

Secondly, the Trustees made a decision to invest primarily in growth assets (such as Australian equities) which have generated good capital gains (7.2% compound annual growth rate) over the last 65 years.  If the $550,000 had only matched inflation it would be worth as little as $10m instead of the $46m it is today.

Finally, but very importantly, HMSTrust has managed its investments internally from inception, and has invested astutely in better performing companies. If the $550,000 had simply matched the growth of the All Ordinaries Index over the 65 years the corpus would only be worth $30m today.

Corpus graph

At the same time the corpus has generated income of $144m (or $225m adjusted for inflation) over the 65 years which has been allocated as follows: $113m ($170m) in approved grants, operating expenses of $21m ($30m), transfers to corpus of $6m ($21m) with the remaining $4m available for future granting.

It is truly a commendable achievement that the original $550,000 bequest 65 years ago is now a $100m corpus which has generated $144m of income which has been used to benefit the state of Victoria.

$99,609,498 invested for the future

YEAR ENDED JUNE MARKET VALUE
$ 000’s
1952  550*
1965 1,629*
1975 3,181
1985 10,932
1995 29,796
2000 49,645
2005 78,263
2010 83,889
2011 89,516
2012  79,809
2013 89,966
2014 100,217
2015 104,535
2016 99,609
* Figure represents book value (market value unknown)