Issue - meetings

67.1     The Committee considered a report by the Chief Finance Officer introduced by Russell Wood, Head of Pension 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.

67.2     The following points were highlighted to the Committee:

1)    The investment work plan shows a key focus on Local Government Pension Scheme pooling in terms of joining a new pool and transition of assets.

2)    The quarter 3 performance report shows an increase in the valuation of total Fund assets of £200 million.

3)    The Fund is underweight to Income but overweight to Growth and Protection with the imbalance is primarily due to the unfulfilled private debt allocation.

4)    Diversified growth mandates provided resilience seeing positive returns for Newton, BlueBay and Ruffer.

5)    In terms of market conditions, inflation remains below 4% while both fixed and index linked gilt yields remain volatile. The impacts of the Artificial Intelligence (AI) sector have led to further market volatility.

6)    All investment managers underperformed their benchmark in quarter 3 with Longview lagging by 5.9% and both impact equity mandates (WHEB and Wellington) behind.

67.3     The Committee discussed the Fund being underweight in terms of AI and the magnificent 7 and the impact of being underweight in these sectors on performance stability and resilience to major market changes.

67.4     The Committee discussed private equity mandates which underperformed again in quarter 3 and have underperformed in the last 3 years. It was noted that although private equity mandates are experiencing a period of negativity, they have performed strongly over a longer period of time (decades).

67.5     The Committee highlighted the importance of considering actual returns together with performance in relation to benchmarks when analysing investment success and decision-making.

67.6     The Committee RESOLVED to note the report.