Agenda item

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

1)    The stewardship report will be submitted for the October deadline.

2)    There was a positive absolute return over the quarter in Fund performance but underperformance against the multiple benchmarks for the period.

3)    Quarter one resulted in a strong set of returns for pension schemes which is reflected in the report data; yield values have risen over the quarter and bond prices have gone down. Expectations of rate cuts have changed and a slower pace of reduction is expected. The US economy performed well and the markets saw enthusiasm for tech and AI stocks.

4)    The UK performed well in equity markets whilst bond markets were mixed.

5)    The yield on UK corporate bonds are an important change this quarter to consider from a strategic perspective and the transition to multi asset credit will be considered in more detail in future meetings.

6)    A benchmark figure of 3.9% was achieved overall by Fund’s managers. Osmosis and Storebrand performed as expected however Wheb and Wellington under performed. The Committee now have 3 years of performance data for these impact investment managers which provides an opportunity to review. Habourvest’s performance moderated slightly, the long-term numbers are very strong but performance will be kept under review to monitor how Private Equity valuations move against the public market.

7)    Newton is positioned against technology which is reflected in their underperformance.

8)    The multi asset credit allocation has been made to Bluebay.

9)    M&G Alpha Opps fund held a very small Thames water allocation but the high profile default on the debt resulted in a negative impact on the Fund. There are concerns over continuity with Schroders with the general move of LGPS assets to pool options.

10)ACCESS JC met on 10 June 2024 where the  outturn report was presented which saw a slight overspend. It was also noted the ACCESS pool received good assurance on their Internal Audit which is the auditors highest rating.

11) Ruffer:  Committee noted the underperformance by Ruffer and that there have been organisational changes over the years the Fund has been invested. Officers advised that Ruffer have a different strategy and strong conviction and that it is advantageous to the Fund to have diversity and that this can be difficult to achieve. ISIO have met with the manager in response to the muted performance and are satisfied that team changes have not had a negative impact. It was agreed that ISIO would address concerns with Ruffer as the data now provides a good review opportunity. The Committee noted that the benchmarks are challenging and that the actual return figures are positive. Officers advised the committee that Ruffer’s portfolio does not include the big 7 tech funds.

12) Future reports will reflect Construction as a sector invested  in the Performance report appendix 1 for Market Background on Global equity and the Committee noted it is for managers to make investment decisions as to sector allocation.

12.2     The Committee RESOLVED to note the investment report.