Issue - meetings

30.1     The Committee considered a report introduced by Russell Wood and Andrew Singh who drew the Committees attention to the following points:

1)    Since the last reported position, the valuation of the Fund has increased from £4.886bn as at 31 March 2024 to £4.893bn as at 30 June 2024). This performance reflects a positive absolute return of 0.3% in the quarter to June. The Fund however underperformed its benchmark in the period by -1.6%.

2)    The standout negative performance came from the Fund’s Sustainable equity investment with WHEB where a negative absolute performance of -3.5% and negative relative performance of -6.1% came through during the quarter which was driven by narrow market leadership in tech stocks which are not held by these managers.

3)    The various credit mandates posted positive results in absolute terms apart from Investment grade bonds, which experienced negative performance as interest rate cuts stalled in the US and UK and nominal and index-linked gilt yields rose over the quarter.

4)    The markets have moved on since the end of June, economic growth has slowed but central banks are cutting rates more aggressively which is driving the rate cuts vs controlling inflation. Overall markets have held up well but there is some volatility, and the markets are reactive to news flow.

5)    The UK Budget will be announced on 30 October, an announcement on interest rates will take place on 2 November and the US elections will be held on 5 November which will all impact on markets.

30.2     The Committee noted Ruffer’s muted performance and ISIO confirmed that they are monitoring this closely, and post 30 June performance has been a bit more positive. Ruffer have made profits from volitivity and have also weakened their defensive position. They are aware of this performance concern and ISIO will continue to keep the Fund updated.

30.3     The Committee requested further information about WHEB’s performance; ISIO confirmed that private equity valuations have been marked down as markets have moderated slightly. WHEB has a thematic approach and some of those have struggled such as healthcare and renewable energy. US and EU rhetoric have contributed to lower valuations. WHEB have a restricted remit as it has an ESG focused approach and things that are doing well such as the magnificent 7 technology stocks are not within their remit, but acknowledges their performance stands out.

30.4     Infrastructure has been subject to volatility and different assets have specific issues and Atlas’s performance has been impacted. Privately valued assets tend to be valued at a higher rate than interest rates but as the environment has shifted, some downward pressure would be expected, and for this to take some time to play out. It was noted that interest rates are considered in the longer term.

30.5     The Committee noted the difference in benchmark and targets were unclear and requested there is an amendment in  the report which goes to the November Committee meeting.

30.6     Appendix 3 of the report sets out the strategic allocation for  ...  view the full minutes text for item 30