Small US endowments and foundations are racing to outsource their investment management in the hopes of getting access to profitable but illiquid alternative markets amid growing funding challenges.

The funds collectively control trillions of dollars in assets but have struggled to generate consistent returns. The outsourcing boom has come as endowments and foundations increasingly rely on investment gains to meet funding needs, after other revenue sources became more volatile and operational costs jumped. It has coincided with a push into alternative asset classes such as private equity and venture capital in an effort to improve results.

While the embrace of an outsourced chief investment officer is aimed at improving performance, it has also reduced overhead costs in many instances — by eliminating the roles of in-house teams that used to do the job.

Multiple studies have found surging use of external managers by foundations and endowments. A study by the Commonfund and the Council on Foundations found 39 per cent of private foundations reported using an OCIO last year, up from 24 per cent in 2018. Another, by Captrust, an investment advisory firm in North Carolina, found the number which worked with an OCIO had doubled since 2020.

External investment managers, backed by leading Wall Street banks and consultancies, said they are in a better position to navigate private investments than many small funds that lack capacity and access.

But how much OCIOs benefit their clients remains unclear: they barely outperformed several popular investment benchmarks over the past decade.

“OCIO is not a panacea,” said Dennis Simmons, executive director of the Committee on Investment of Employee Benefit Assets, who had studied the practice. “It is not guaranteed to outperform an in-house team.”

By the end of June, Boston-based NEPC, an institutional investment consultancy, had managed $14bn for endowments and foundations as an OCIO. That was up 48 per cent from three years ago. “It is a part of the market that continues to grow materially,” said Scott Perry, head of portfolio strategy at NEPC.

US inflation-adjusted charitable donations fell 2.1 per cent last year following an 11 per cent slump in 2022, according to the Giving USA Foundation, thanks to surging inflation and pandemic-driven economic uncertainty that made Americans less generous.

A drop in college enrolment has imposed extra pressure on higher education as tuition income and government spending shrank. The problem is exacerbated by rising costs that caused “the power of each of your grant-making dollars to go down”, said Ned Rosenman, head of OCIO for endowments, foundations and family offices at BlackRock.

Mediocre investment performance has taken another toll on non-profit organisations. A study published this month by BlackRock shows US endowments with investable assets of between $251mn and $1bn have on average failed to generate the widely-accepted industry benchmark of 7.5 per cent annual return over the past 15 and 20 years.

Endowments and foundations “have really faced kind of a perfect storm in the past few years”, Rosenman said.

The solution, according to OCIOs, is to build up investment in alternative assets that boast a stronger return than public equities over time.

“There is a benefit of illiquidity premium that could be added to liquid investments,” said Bernard Reidy, national endowment and foundations executive at Bank of America, adding that returns on private markets could exceed public equities by 2 per cent to 3 per cent or more under leading managers.

The growing complexity of alternative investments, however, has created a high barrier to entry that small endowments and foundations struggle to overcome with their limited resources. That, said OCIO advocates, is where the model fits in.

Matt Bank, deputy chief investment officer of GEM, an OCIO in North Carolina that manages $12bn, said the company’s investment team of about 40 professionals focused on different segments of the public and private markets is a draw for clients.

“If you have a $500mn endowment, you simply cannot afford that level of team and staff,” Bank said. “It’s not cost effective.”

Many endowments and foundations are convinced. Patricia Langer, vice-president of administration and finance at Macalester College in Minnesota with a $902mn endowment, said it disbanded its internal investment team of four and started working with an OCIO last month in order to “gain access to higher earning (alternative asset) managers.” (The internal team was laid off).

“We reached a point where we needed to either invest in a bigger team, so that we could do more work to speak with more managers and knock on more doors, or consider the outsourcing option,” Langer said. “Our hope is that it’s easier to sustain a group of investment professionals in this OCIO model than it is to continue to expand and then continually refresh the existing staff.”

The use of OCIOs did pay off for some non-profit organisations. Stuart Comstock-Gay, president of the Delaware Community Foundation with $350mn investable assets, said he was “extremely happy” with what the OCIO his organisation hired seven years ago had achieved by investing in alternative assets ranging from commodities to real estate.

The foundation was “much more erratic in our returns” when it only held stocks and bonds, Comstock-Gay said. Now, its results are on par with peers, and sometimes even better, he added.

While some endowments and foundations have benefited from outsourcing their investment functions, others are waiting to see when and if the initiative bears fruit.

An OCIO performance index compiled by consultancy Alpha Capital Management shows the endowment and foundation sub index underperformed the S&P 500 index and a standard investment portfolio mix of 60 per cent US stocks and 40 per cent bonds in the decade through June this year.

“To say that OCIO is always more cost effective is just not right,” Simmons said.

HUNDREDS of households missing out on a winter fuel payment can apply for £200 to cover energy bills within weeks.

The help comes via the latest round of the Household Support Fund which is worth £421million.

The fund is designed to help hard-up households cover the cost of living, mostly through cash grants, supermarket and energy vouchers.

Each council across England has been allocated a share of the £421million pot and decides who to distribute money to.

North Devon Council has set aside £200,000 for pensioners receiving a council tax reduction but not pension credit.

The local authority said just under 1,000 pensioner households will receive £200 grants, the BBC reports.

Councillors in North Devon have expressed concern the roughly 1,000 who don’t qualify for pension credit could struggle to cover their energy bills this winter.

It comes after the Government changed the eligibility criteria for the winter fuel payment meaning only those on certain benefits, including pension credit, will receive the up to £300 payment.

We have asked North Devon Council how the £200 payments will be made, and when, and will update this story when we have heard back.

Eligible residents will be able to apply in the next few weeks via the council’s website.

What about if I don’t live in North Devon?

You should be able to get help via the Household Support Fund if you don’t live North Devon.

Each council across England has been allocated a share from the £421million pot.

But each local authority gets to decide its own eligibility criteria.

That means what you are entitled to will vary depending on where you live.

Not all councils have decided what they will do with their share of the £421million yet either.

The best thing to do is contact your local authority to see if any help is currently on offer.

You can find what council area you fall under by the using the Government’s council locator tool via gov.uk.

The Sun recently shared a guide and interactive map to help those unsure figure out what they may be able to claim.

Other help on offer

If you’re not eligible for the Household Support Fund, you might be able to get a grant from your energy firm to cover energy debt.

British Gas is handing out grants worth £1,700 to struggling households through its Individual and Families Fund.

The fund is available to British Gas and non-British Gas customers living in England, Scotland or Wales.

You won’t be eligible if you received a grant from the British Gas Energy Trust within the last two years.

And you must be seeking a grant to clear outstanding debt on a current or open gas, electricity or dual fuel energy account.

Crucially, you also need to have received help from a money advice agency within the last six months.

If you don’y qualify for help with British Gas, a number of other energy firms offer help to customers struggling with energy bill debt.

This includes OVO, Boost, E.On, E.On Next, EDF, Scottish Power, Octopus, Shell Energy, SSE and Utilita.

How has the Household Support Fund evolved?

Advertisement

The Household Support Fund was first launched in October 2021 to help Brits pay their way through winter amid the cost of living crisis.

Councils up and down the country got a slice of the £421million funding available to dish out to Brits in need.

It was then extended in the 2022 Spring Budget and for a second time in October 2022 to help those on the lowest incomes with the rising cost of living.

The DWP then confirmed a third extension of the scheme through to March 31, 2024.

Former chancellor Jeremy Hunt extended the HSF for the fourth time while delivering his Spring Budget on March 6, 2024.

Advertisement

In September 2024, the Government announced a fifth extension.

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

How do you feel about lace curtains? A charming finishing touch that brings back fond memories of granny’s cottage? Or an age-old prop of the curtain-twitcher that should never haunt windows again? 

The textile designer Tori Murphy, who has launched a collection of British-made, vintage-inspired lace curtains, is hoping customers are persuadable to the former. Made in Nottingham, the home of the original lace-making industry, the designs are drawn from the archive of one of the city’s oldest manufacturers, which began making lace in the 1760s. “The laces in this new collection are made exactly the same way, on the same machines, with the same materials that would have been used 50, 100 and 150 years ago,” she says. “Extraordinary manufacturing capabilities still exist in this country, and we’re dedicated to preserving them.”

Murphy’s BB lace was deemed the best for protecting households from flying glass during the Blitz, able to catch fragments in its intricately designed weave

Murphy, who grew up between England and Ireland and is now based in Nottingham, is well aware that she has some prejudice to contend with. “Nets” have suffered a bad press over the years. While the original Nottingham lace was seen as a luxury, a status symbol made using state-of-the art British textile manufacturing, its desirability diminished as lace curtains grew in popularity and technology developed, with manufacturers turning to cheaper materials, including acrylic and nylon. Over-familiar and poor quality, lace curtains became associated with small-minded parochialism.

The term curtain-twitcher came into parlance in 1940, when lacy windows were widely visible across the British Isles. The Oxford English Dictionary attributes its first usage to Flann O’Brien, writing under the moniker Myles na gCopaleen, in a column for the Irish Times. But it was another Irish writer (under another pseudonym), Brinsley MacNamara, in 1918, who created the indelible image of nosy neighbours peering through curtains to cast judgment upon their townspeople, in his thinly-disguised village tell-all, The Valley of the Squinting Windows. 

Still in publication more than a century later, the cover of the 2018 edition of the book features a window with a lace half-curtain and a human silhouette, just visible — proof that those negative curtain-twitching associations still stand today, but also that its subject matter continues to make rivetingly good drama. Following what the neighbours are up to and judging them for it is, after all, the driving narrative of every soap opera ever made. Only last year, the trailer for Wicked Little Letters, starring Olivia Coleman and Jessie Buckley as neighbours-at-war, saw lace curtains used as a visual shorthand for the tale of prying and tittle-tattle that lies ahead.

But if there is a time for sheer curtains to shake off that frumpy image, it is surely now. After years dedicated to minimalism, we’re in softer and more decorative interior times and curtains have found themselves in favour again. Café curtains, usually made from sheer or demi-sheer linen, covering the lower half of windows, have been leading the way. Mary Walsh and Laragh Bohn, founders of bespoke curtain and blind-making service The London Curtain Girls, report a notable uptick in the style over the last couple of years, particularly for central London areas, such as Notting Hill, where houses directly front busy streets. 

“They’re an easy solution for privacy,” says Walsh. “Other options are shutters or full blinds, which block out a lot of light.” Lace, they believe, is the next step, particularly for the romantically inclined. “They’re definitely making a comeback and I think that’s because it’s all about memory and nostalgia,” says Bohn, “Using the kind of fabric you remember being used in your family. Lace always has a story — what it’s made of, where it’s made, who made it.”

A dramatic case in point is Murphy’s BB lace; the style was deemed the best for protecting households from flying glass and shrapnel during the Blitz, able to catch fragments in its intricately designed weave. Such heroic levels of practicality are surely a good reason to let go of lace’s negative associations.

But let’s not pretend the attributes that made lace curtains a popular option in the first place are not still attractive today. What is our preoccupation with social media if not 21st century curtain-twitching? A lace curtain allows you a certain amount of control over your privacy, while still being able to invade your neighbour’s. “You can tweak them so that people can see or not see what you want them to,” says Murphy. “You’re screened from the outside but you can still follow everything that’s happening beyond.” Sound familiar? Sound tempting? Maybe time, then, to give lace curtains another look.

Find out about our latest stories first — follow @ft_houseandhome on Instagram

When Britain’s oldest private equity firm 3i purchased an obscure Dutch discount retailer early last decade, even those involved in the deal had little inkling it would become one of the most successful leveraged buyouts in history.

One former executive who worked on the 2011 takeover of Action, which sells cheap products from towels to toilet cleaner out of retail parks, remembers looking around its warehouses and seeing piles of “very dusty old stock”.

But the takeover of an unassuming chain of bargain stores has proved 3i’s redemption trade, rescuing a storied buyout firm from growing irrelevance after a painful restructuring and making eye-watering returns for its shareholders in the process.

The firm, which in recent years has added to the majority stake it bought in 2011 for £114mn, now values its investment in the retailer at almost £15bn.

Action has driven a more than 1,000 per cent rise in 3i’s shares as the retailer’s value has ballooned to account for 66 per cent of the firm’s portfolio by value, and has returned at least £2.9bn in cash to its controlling shareholder.

“It’s the gem in their portfolio,” said a former 3i partner.

However, not everyone thinks the rally is deserved. ShadowFall, the hedge fund that shorted the now-defunct fraudulent German fintech Wirecard, has built a multimillion-pound position against the firm because it believes its valuation of Action is too high.

The debate around Action’s valuation has underlined how 3i’s future, and that of its chief executive Simon Borrows, are intimately linked to the retailer’s success and raised questions over what the buyout firm might become — with or without its star asset.

“Shareholders are now essentially buying 3i as a proxy for Action,” said Haley Tam, senior equity research analyst at UBS.

3i declined to comment.

By the time Borrows was promoted from chief financial officer in 2012, the FTSE 100 company, which was founded in 1945 at the request of the UK government to support war-stricken businesses, had 124 investments in small to medium-sized companies and offices across the world.

“When I first joined, 3i was completing a transaction every working day of the year,” said the former executive, who joined the firm in the 1990s. “It was just an extraordinary volume machine.”

But Borrows, a former investment banker who advised on 3i’s initial public offering in 1994, whittled the group down, closing offices from Barcelona to Hong Kong, cutting more than a third of staff and restricting new deals to northern Europe and Brazil.

Within three years the number of companies in 3i’s portfolio had almost halved to 65, with some sold at a loss, while the group’s credit business was sold in 2016.

In 2015 Borrows put an end to third-party fundraising because the firm’s aim of investing in up to seven new targets a year left it with “no compulsion” to seek money from outside investors.

Meanwhile 3i had been growing Action, which had operated 250 stores across the Netherlands, Belgium and Germany when the group bought it. Sales at the retailer, which now operates more than 2,300 stores in 12 European countries, rose from €1.2bn to more than €11bn in the decade to March 2023. 

Action’s returns to the investment firm have largely been funded by the retailer taking on additional debt. The Financial Times reported this summer that 3i was set to receive another payout of at least €1.1bn as Action worked to raise new leveraged loans worth more than €2bn.

The buyout group recently increased its stake in the retailer from 55 per cent to 58 per cent.

Executives at 3i last year received £735mn in carried interest solely relating to the group’s investment in Action.

On top of carried interest, Borrows received more than £7.5mn in bonus and long-term incentives as well as a £700,000 salary for the financial year.

3i now values its stake in Action at £14.8bn.

But Matthew Earl, managing partner of ShadowFall, told the FT he believed the implied Action valuation of 18.5 times operating earnings before interest, tax, depreciation and amortisation was too high. He added the price of 3i’s shares implicitly attached an even higher multiple to the retailer.

Earl said he believed the retailer had benefited disproportionately from high inflation because it buys half its inventory months in advance — an advantage that would fade as price rises subsided.

He also questioned how much the chain could further expand in France, a “saturated market”.

Many remain bullish, and are not convinced by the thesis of ShadowFall’s short position. Clive Black, head of consumer research at Shore Capital, said Action was a “formidable business and it hasn’t gained the valuation it has through market manipulation, it has done it through exceptionally strong sequential growth”.

The discount chain may have benefited from “a short-term tailwind in [profit] margins from inflation”, Black added, but “it’s not just Action, inflation has been everywhere, Action used it well”.

Citi, which increased its price target for 3i days before ShadowFall’s position became public, subsequently argued that the valuation was “cheap when factoring in faster-than-peer growth” and that most of Action’s store growth was expected to be outside of France.

But regardless of Action’s valuation, the more important question for some is what 3i’s purpose is, whether it keeps or exits the asset.

Michael Sanderson, director in equity research at Barclays, said shareholders in 3i were “buying a business that is heavily exposed to Action’s development”, whereas 10 years ago it was “building value by . . . buying companies and growing them and selling them on after a short time period”.

He was positive about 3i and Action overall, but added there were “undoubted questions about what the long-term plan is, given [Action] is such a large part of 3i right now” and that the retailer had “got to such a scale now, there are very few options” for exiting it.

For the former 3i executive, the group’s non-Action portfolio “is now not of a scale that it probably survives on its own”. They added that 3i had “become a victim of Action’s success”.

The need to diversify appears not to be lost on 3i, whose executives have pointed to other portfolio companies that could be their next success story.

3i designated Royal Sanders, a European producer of personal care products, to its “longer-term” assets last year. It has also highlighted Netherlands-based bread and snack producer, the European Bakery Group, as a strong performer in recent years.

“A number of assets have the potential to become longer-term compounders like Action,” Borrows said in May.

“We’ve obviously learned the benefits of holding things for longer,” he said last month, adding that the group’s 2015 sale of global material-testing laboratory network Element had been too early because it had “continued to grow significantly” since.

The buyout group is also looking to make two or three investments a year in software and services companies, to add to an overall “non-Action portfolio” that it recently said had both strong and weak-performing assets.

Despite Action’s continued growth, the former 3i partner suggested the group would keep Action “as long as they can”, but questioned just “how much of the juice is left” in the retailer.

As for what the firm would be without Action, the person suggested 3i might regret selling the credit arm given the private debt market boom.

“Simon’s probably looking at Action as his swan song,” they said. “After that he goes off. There isn’t anything else.”

3i still manages third-party capital in its infrastructure strategy but the former executive said the decision to stop raising more third-party funds in private equity might also hinder its pursuit of the next Action.

“If you can’t raise third-party funds, it’s very difficult to be a private equity firm these days,” they said.

Borrows has, however, pointed to the lack of pressure to return cash to external investors as a strength that will allow 3i to hold portfolio companies for longer.

Some observers, though, do not hold much faith in it repeating its success with Action.

“Being the next Action is really, really hard,” said Sanderson at Barclays, adding that the prospect of another investment doing as well was “almost impossible”.

ANGRY neighbours say a derelict house on a town’s most “prestigious street” has been abandoned for 20 years – and left looking like a bombsite.

Residents have demanded a landlord sell the home in Swindon, Wiltshire, after it’s become a major eyesore.

6

6

Advertisement

6

They are also calling for urgent repairs on the property and for it to be taken over by the council after complaints of inaction against the landlord.

One neighbour Chris Evans, 67, says the shuttered, graffitied and burnt building is a damning indictment on the town.

He wants something urgently done about the house under the council’s empty homes scheme after it has sat unoccupied for at least 20 years.

Chris said: “This is one of the most prestigious roads in Swindon and for the council to allow that to happen is pretty disgraceful.”

A view from a neighbouring house shows a large crater in the garden and first-floor doors opening into thin air.

The nearby property puts off potential tenants and Chris believes it is damaging his business.

Another nearby resident Agne said: “It has become some sort of like freakish attraction for people to have a laugh and point at.”

The house is not only said to be unsightly but also dangerous.

Agne has lived next door for 10 years and has seen squatters living there.

She said: “You don’t know if you are going to be attacked walking home.

“If that house goes on fire straight away it will spread into our house.

“This house needs to be knocked down. The council needs to get involved.”

Latest pictures show an empty former garage, a large hole that fills with water and smashed windows and internal brickwork left exposed.

The garden and house were left in this state after an extension was demolished.

The work also reportedly caused “awful smelling” raw sewage and gas to leak from the house.

Squatters, fires lit, drug dens and vandalism have all been reported – which have left their visible marks on the house.

The chief executive of the council Samantha Mowbray has admitted that Swindon Borough Council does not have enough money to do the work itself.

The owner was contacted but refused to comment.

6

Advertisement

6

6

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories

No one knew what became of Grandpa’s two woollen jumpers. They were last seen in the 1970s: it was rumoured they were thrown away by my grandmother, or possibly eaten by moths.

Grandpa, for the most part, wanted to forget the war. He didn’t much want to talk about the Normandy landings, but he did keep these two souvenirs from his service elsewhere. They were heavy and oily garments, with intricate patterns that suggested days of needlework through sunless winters. Family folklore had it that they were knitted by Grandpa’s girlfriend, who he met while serving at an Arctic navy base that was forever buried under snow drifts. Thirty years after the jumpers vanished, Grandpa passed away. Where they had come from, who had knitted them — these things remained a mystery.

A single clue remained: my school project on Grandpa’s second world war experiences contained the name of a base: “Sibol.” This, research revealed, was really “Saebol” — a tiny village on the Hornstrandir peninsula, perched at the remote northwestern edge of Iceland (also the northwesternmost point of Europe). Here the Royal Navy had built a radar station on the precipice of a 500-metre high cliff, perched like an eyrie over the North Atlantic breakers. Two miles away was the village where they could buy fresh sea trout (and perhaps have the company of Icelanders).

After the war, the base fell into ruin: later the village and then the whole peninsula were abandoned, for their remoteness made them unviable. Hornstrandir is now a nature reserve without permanent human habitation — guidebooks call it “Europe’s last wilderness” or a land at “the end-of-the-world”.

Through the summer of 2024 I scanned the few existing images of the base and studied the pixels that attested to its presence on Google Earth. Then, one stormy week in August, I caught a flight to north-west Iceland, boarded a little ferry at Ísafjörður and finally saw Hornstrandir with my own eyes through a spray-soaked porthole: a grey silhouette rising from heavy seas. There are no harbours here so, after a 40-minute crossing, we transferred from the ferry to an inflatable launch and landed with a crunch on the black sand beach. The weather was worsening: tomorrow the ferry would not sail, the captain had warned. I was stuck on Hornstrandir, left to solve the mystery of the two woollen jumpers.

The Hornstrandir peninsula is part of the Westfjords — a mountainous part of Iceland that covers an area larger than Slovenia, but which has a population of just 7,000. The Westfjords’ first recorded visitor was the Norseman, Flóki Vilgerðarson, in the 9th century. He had sailed from the Faroes with three ravens. When released out at sea, the birds would fly high to scan the horizon — the boat would then follow the path of a raven who had spied dry land. Days later, Flóki looked out over a fjord full of icebergs and gave the country the name it still has today.

The Westfjords get a fraction of the tourists who tour Iceland’s Golden Circle and the south, in part because of the effort of getting here. The largest settlement, Ísafjörður, is 140 miles as the crow flies from Reykjavik, but a driver must cover double the distance, the roads tortuously looping up and down a succession of fjords, like a pencil tracing the fingers of an outstretched hand. The reward is seeing Iceland as it was before the tourist explosion of the 2010s: before its vast landscapes became stage scenery for Hollywood films and influencer selfies. There are quiet fishing villages, the great waterfalls at Dynjandi, fewer crowds.

The outlier is the Hornstrandir peninsula itself — where the northernmost finger of the Westfjords comes within three miles of touching the Arctic Circle. Hornstrandir is cut off from the rest of the Westfjords by a glacier on its neck, meaning there are no roads to drive, scant reception to make social media posts.

Here, instead, you get an impression of the country as it was centuries ago — when the only way to travel was on foot, horseback or under sail. In Hornstrandir’s most remote parts, you see Iceland as it might have appeared to the black eyes of Flóki’s ravens: a virgin landmass newer than the New World, for this land had never before known human footfalls.

Only a lighthouse guarded the shore as the boat left me, my cousin Toby Smith (also on the trail of his Grandpa) and our guide Doug Robinson on the beach at Slétta. Sea sickness eased as we climbed the brittle volcanic rock. Greylag geese flew overhead. It would be a nine-mile hike to Saebol, where we intended to camp for two days as we explored the peninsula. Beyond the lighthouse, the only marks of humanity were telegraph poles erected by the British during the war, standing like the Narnia lamppost out in the tundra.

From the deck of an approaching ferry, Hornstrandir can seem lifeless and lunar: grey cliffs, becoming rusty red on their vertical flanks. Close up, you see it is a place where life clings on tightly, in defiance of winds that rage up to 100mph. Puffball mushrooms sprout in the lee of boulders. Bonsai birch trees grow sideways, hugging the ground.

“There’s an old joke,” said Doug. “If ever you find yourself lost in an Icelandic forest: stand up.”

Hornstrandir turns out to be rich foraging territory — we pick sour blueberries from soft beds of moss. Elsewhere are small patches of rhubarb — vestiges of gardens from houses that no longer exist. The appeal of hiking here is roaming a uniquely raw wilderness — one largely without paths and without shelter from the elements. At one point we are forced to cross a river that has burst its banks, the icy water sloshing up to our kneecaps. Another time, a vengeful gust rips the waterproof cover from Doug’s rucksack, and carries it over a cliff edge: we watch helplessly as it spirals high over the sea.

Most tourists come to Hornstrandir to see Iceland’s only native land mammal — the Arctic fox — little grey creatures for which this is a precious stronghold. Later, one scampered along a beach in front of us, a fish tail hanging from its mouth. But more often our conversation centred on another animal.

Polar bears are not native to Iceland, but they do inhabit the coast of Greenland, 180 miles across the Denmark Strait. It sometimes happened that a bear was chased out of its territory on to unfamiliar pack ice. Come summer, the ice could splinter: an unlucky bear might find itself cast adrift, sailing on a frozen raft under the midnight sun. After days at sea, the currents brought many to Hornstrandir.

I found records of over 130 bears making landfall in the Westfjords — the first in 1321, the most recent in 2011, with three locals killed by the animals in between. The protocol is for a coastguard helicopter to be dispatched with a marksman — but mostly it is a case of false alarms. Nervous hikers have reported seals or boulders. Doug recalled panic two years ago over footprints made by a swan. Hornstrandir was a place of mirages — even so, it was worth being cautious. “By now,” he said, “we are overdue for a polar bear.”

Three weeks after we returned, a young polar bear was shot across the bay from Slétta.

Grandpa also arrived by sea, albeit via Reykjavik. His wartime posting in Hornstrandir was not one of glory or heroism. But it is the first record I have of anyone in my family or my ancestors leaving Great Britain. Here, he would have seen unfamiliar sights: the nightly dance of the aurora, the leaping humpbacks in the fjords, a poor population who still gathered seabird eggs from springtime cliffs, suspended on fraying rope.

This remote base offered sanctuary from the horrors of the battlefield — a serviceman could stand on a cliff at the westernmost edge of Europe with the polar wind in his face, and all the turmoil of a continent at war behind his back. No German bomber would reach him here. More significantly, Grandpa was also witnessing the last days of permanent habitation on Hornstrandir.

For some hours we followed the so-called “green cliffs” of Hornstrandir — great precipices that curved upward like cutlasses, and then fell into air and writhing seas. Eventually the clouds thinned to reveal buildings to the north: a red-roofed church and a handful of houses dotted along a bay. This was what remained of Saebol. Surprisingly, its houses were not ruined — drawing closer we saw one building that looked brand new. Its owner was a tall pensioner with rain-splattered spectacles, and a pipe hanging from the corner of his mouth. Einar Hreinsson had made it his mission to revive Saebol as a living village, albeit only for the summer months.

 “This is the most precious place on the planet,” he told me. “That is why our family had to return.”

Einar welcomed us into his home, built during the pandemic, where he and his wife Anna are resident from May to late August. Over a lunch of smoked trout and hot chocolate served in Moomin mugs, he told us the story of the village. For centuries, Saebol lived off the Atlantic. In a good week villagers could net a dozen tonnes of cod. In a bad year they could lose 12 men to the ocean. By the 1940s, people had battery-powered radios: they knew of the “madness” that had gripped Germany. They were afraid the day that warships appeared in the bay.

When it was, in fact, British servicemen who stepped ashore, Einar’s grandfather and great uncle presented themselves as the village’s only English speakers. They were glad to find employment with the Royal Navy: helping my Grandpa and two-dozen comrades heave strange equipment to that wind-blasted clifftop (a location they privately considered “crazy”). Rumours circulated about what the radar was looking for. Einar leaned in to me and — as if spies were listening — whispered the word: “Bismarck.”

The servicemen and the locals got on famously. Local children saw moving pictures for the first time as film reels whirred in the mess: they also tasted solid chocolate. Grown-ups became hooked on gifted cigarettes and were invited to the base, where they were waited on like “kings and queens”. This desolate Arctic posting turned out to be a blessed one: Einar’s grandmother remembered the servicemen “cried when they arrived, and cried when they left”.

But by the time the war was over, Saebol had had a glimpse of the modern world. Soon after, the local doctor departed, and towns on the “mainland” offered work on modern fishing boats. The migration happened rapidly: Hornstrandir was abandoned between 1948 and 1952: furniture piled into boats, horses and family dogs slaughtered, houses left to decay. The day she left, Einar’s grandmother hysterically threw her possessions on to a bonfire by the shore. On the “mainland” she never recovered from the pain of that departure from Hornstrandir. “I wish she could see that we are back here now,” said Einar.

Storms were forecast so Einar insisted we forgo our tents, and stay at his house instead. He also showed us around his village, unlocking the old schoolhouse where ancient desks were carved with initials. We visited the church whose chandeliers swayed in the shadows as the bell tower shook in the wind. We also met other families who had returned to their ancestral land to build new summer homes: who now had the financial means to revive a settlement that had existed since the time of the longships and the three ravens.

We knocked on the door of five houses: met about 20 people, some of whom were staying here for the summer, others holidaying for a weekend. But no one had heard of the girlfriend, nor knew who had knitted the two jumpers. September was coming: people would soon be leaving. Plywood was being affixed to windows before the snows came.

“We will keep investigations ongoing,” said Einar, the day we left. But he knew, as we did, that our questions had come two decades too late.

From Saebol, a path led up a steep incline and on to the mountain plateau. Sleet began to fall as we made our way to the radar base, becoming snow on the higher ground. The village houses were far away when a Nissen hut appeared from the fog. No scavengers had been to Admiralty Experimental Station Seven, nor had any plants overrun it. There was still coal in the bunkers, and on a diesel engine you could read “DURSLEY” — the Cotswold market town where it was made.

Rather it was the Arctic weather that had prized the base apart: storms that had smashed its glass, turned brickwork to rubble. Just a few paces from the huts was the cliff edge, dropping into mist. Breaking waves sounded from 500 metres below. One serviceman had described this hazard in his diary. You could sense vertigo in the wobbly way he had written the word — “sheer”.

Now, at a time when the world seemed to stand on another precipice — when another “madness” seemed to be taking hold — I wondered if these remote heights might ever again present themselves as a hideaway, a safe retreat. I thought too, of Grandpa, wearing his jumpers. Though we would never find out who knitted them, we would later find black and white images of him at the base: smiling among the snowdrifts, a pipe hanging out of his mouth.

I was glad I had followed in his footsteps, I thought, as I went to inspect the wreckage of the radar itself. From this lonely latitude, for months on end, the operators sent wave upon wave of invisible light out across the wide expanse of the ocean. Then they would wait for their instruments to register something — those returning echoes which indicated a presence, out of sight.

Details: how to visit Hornstrandir

Hornstrandir is the most remote part of the Icelandic coastline — conditions can be extreme and help distant, so hiking is only generally undertaken between June and August. Travel here can be akin to an expedition; it’s wise for all but the most experienced hikers to go with a guide.

Borea Adventures (boreaadventures.com) operates as a one-stop shop for Hornstrandir trips — as well as operating the ferry from Ísafjörður, they offer guided walks in the interior, with a three-day traverse of Hornstrandir from £938 per person.

Most visitors to Hornstrandir will need to camp at the free campsites. Borea is also able to organise stays at Kvíar Lodge — an off-grid farmhouse on the southern side of the peninsula that’s renowned for Arctic fox watching opportunities (and can be visited during winter too).

Ísafjörður, the staging post for Hornstrandir adventures, can be reached by either a six-hour drive from Keflavík International Airport, or a 45-minute flight from Reykjavik airport with Icelandair — get a window seat as the landing is a spectacular one (icelandair.com). Stay at the Hotel Ísafjörður overlooking the bay, with rooms from £120 (isafjordurhotels.is).

Oliver Smith was a guest of the tourist board, Visit Westfjords (westfjords.is).

Advertisement

For more on this chapter of history, see Jökull Gíslason’s book Iceland in World War II — A Blessed War (Sæmundur).

Find out about our latest stories first — follow FT Weekend on Instagram and X, and subscribe to our podcast Life & Art wherever you listen