Agenda and minutes

The Democratic Services Officer read out the procedure.

There were none.

Apologies were received from Bill Marshall, for whom Andy Riggs substituted.

There was none.

There were none.

There were none.

These were approved as a correct record and signed by the Chair.

Members are invited to consider the reasons for and against disclosure as set out in the public interest test document attached to the report, and then to pass the following resolution before discussing Appendices 3 and 5:

“Having been satisfied that the public interest would be better served by not disclosing relevant information, the Committee resolves that, in accordance with the provisions of Section 100(A)(4) of the Local Government Act 1972, the public be excluded from the meeting for these items because of the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Act as amended.”

The Assistant Investments Manager presented the report. He highlighted three points of note:

1.  Man had reduced the number of underlying managers in their portfolio, in line with the recommendations of the review of hedge funds in March 2011. This restructuring had been completed in October.

2.  A letter had been received from BlackRock in response to questions about their corporate governance raised at the meeting with them on 7^th September. This was attached as Appendix 4 to the report.

3.  The active currency hedging programme had been implemented in July and would be fully implemented within a 12-month timeframe. Currency movements favoured the fund during the quarter and therefore the active currency hedge reduced overall return by 0.1%.

Mr Finch commented on the JLT investment report (Appendix 2 to this agenda item.) He said that market volatility had been significant during the period since 30 June 2011. There were no fundamental concerns with any manager. Aggregate manager performance as shown on page 13 of the JLT report demonstrated that diversification across different assets had added value to the Fund during the last 3 months. The second graph on page 13 demonstrated the differences in returns generated by the equity managers over the last 12 months.

Members agreed that the performance of the Fund had been reasonably good in current market conditions.

A Member asked for an update on how cash held internally (paragraph 7.4 of the cover report) had been invested. The Investments Manager replied that the amount of cash held by the Treasury Management Team had been reduced.

Before consideration of Exempt Appendix 3 (TT Peer Group Analysis) and Exempt Appendix 5 (Summaries of Investment panel meetings with Investment Managers) to the report, the Panel RESOLVED as follows:

that having been satisfied that the public interest would be better served by not disclosing relevant information in accordance with the provisions of Section 100(A)(4) of the Local Government Act 1972, the public be excluded from the meeting for these items because of the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Act as amended.

The Committee returned to open session

Mr Finch tabled a paper setting out the issues of the euro crisis and some strategic options that the Fund might wish to consider.  He said that the past 18 months had been the most extraordinary from an investment perspective that he could recall. In 2010 there had been talk of the UK’s credit rating being reduced, but now the UK was seen as a safe haven. The change in yields over the period, shown in Chart 1, resulted almost entirely from the Eurozone crisis. Yields had been pushed to unprecedented levels. The last time that bonds were 2.5% was after the war when yields were restricted by legislation.  It was noted that the UK has benefitted from the long term structure of its debt when compared with some European countries.

Chart 2 of his paper  ...  view the full minutes text for item 16.

Members are invited to consider the reasons for and against disclosure as set out in the public interest test document, and then to pass the following resolution before discussing this item:

“Having been satisfied that the public interest would be better served by not disclosing relevant information, the Committee resolves that, in accordance with the provisions of Section 100(A)(4) of the Local Government Act 1972, the public be excluded from the meeting for this item of business because of the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Act as amended.”

The Investments Manager presented the report.

Members agreed that there was no need for immediate concern that the management of the pooled fund would suffer because of the reduction in the number of investors.

RESOLVED to recommend to the Avon Pension Fund Committee that no further action is required and that Officers will continue to monitor fund size as part of their on-going monitoring.

RESOLVED to note the workplan.