Issue - meetings

16.1     The Committee considered a report by the Chief Finance Officer introduced by Russell Wood, Pensions Manager: Investments and Accounting and Iain Campbell, Head of Local Government Pension Scheme Investment (Hymans Robertson) together with exempt information set out in a later agenda item.

16.2     The following points were highlighted to the Committee:

1)    The arrangement between the Fund and its custodian (Northern Trust) have changed, requiring the Fund to directly enter into ‘Beneficial Owner’ Power of Attorney arrangements with the sub-custodian (Broadridge), appointed by Northen Trust, for proxy-voting services which will allow the Fund to be able to continue voting in various jurisdictions.

2)    During the quarter, markets were challenging returning -2.1% meaning the Fund value has reduced to below £5 billion and the Fund income portfolio is under-weight relative to the strategic asset allocation largely due to an under-weight position in private debt.

3)    The spike in inflation seen in 2022/23 has decreased and has remained between 2% and 3% in 2024/25 in line with the target that central banks set. There is concern that inflation may start to rise again with particular potential drivers such as new American tariffs.

4)    Gilt yields have fluctuated considerably within the reported quarter highlighting the uncertainty in markets in terms of tariffs and how they could affect the global economy.

5)    In terms of credit spreads which give a good measure of the market’s perception of the risks in the market. An increase at March 2025 highlights that the market perceives a higher market risk.

6)    Global equity market fell in quarter 1 with the largest fall in regional equity returns in North America and largest fall in sector equity returns in technology which were largely driven by American tariffs.

7)    There has been more volatility in the market since the end of quarter 1 due to a further announcement regarding American import tariffs however implementation of some tariffs has been delayed and trade deals have been agreed in order to calm the market.

8)    Some strong returns were seen in Europe due to defence company share prices following European Governments announcing that they would be spending more on defence whereas challenges for Bonds were seen as returns for Bonds are more affected by higher inflation and higher interest rates.

9)    The Fund’s ‘growth-orientated’ equity mandates, Baillie Gifford Global Alpha and WHEB Active Impact Equity, underperformed their respective benchmarks by 2.7% and 3.5% respectively. This reflects the broader challenges faced by ‘growth’ stocks over the quarter, which are inherently more susceptible to the volatility seen in the quarter.

16.3     The Committee discussed the underperformance of index bonds Storebrand and Osmosis and whether the underperformance compared to the benchmark is due to tracking errors or due to the general market and requested that the Storebrand tracking error is reported to the Committee in future investment reports.

16.4     The Committee RESOLVED to:

(1) note the report;

(2) Agree in principle for the Fund to enter into ‘Beneficial Owner’ Power of Attorney arrangements, managed by  ...  view the full minutes text for item 16