Agenda and minutes

The Democratic Services Officer read out the procedure.

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

The Assistant Investments Manager presented the report. He said that the quarter had been positive, with positive returns on most asset classes. Managers were, in aggregate, underperforming the benchmark. Table 1 showed fund investment performance for the past three months, both inclusive and exclusive of currency hedging. Because currency hedging had been in place for less than twelve months, the “relative to benchmark” data excluded it. The impact of currency hedging was addressed in paragraph 4.9 of the report. During the quarter Sterling had strengthened against the Euro in December, but had weakened against the Dollar and the Yen. Overall, the hedging programme had reduced the return for the quarter by 0.1%. The decision to make a tactical bond allocation had been made during the quarter. The monthly spread between UK corporate bonds and UK gilts (now c. 1.49%) had now moved halfway toward the 1.2% trigger level at which the switch would be reversed.

The Chair asked why there had been a decline in bond yields. Mr Sheth replied that this resulted from continuing concerns over the Eurozone crisis, quantitative easing, and the fall in headline inflation. The Investments Manager said that when the tactical switch had been performed, the yield of the corporate bond index had been 4.85%, but was now 4.65%.

In conclusion, the Assistant Investments Manager asked Members to note that the funding level was now 68% (down from 69%in the last quarter), the reason being the fall in the gilt yields.

Mr Sheth commented on the JLT investment performance report (Appendix 2). He said that there had been a strong start to the year. The latest data suggested that there was a sustained, not merely seasonal, rise in employment in the US; the European Central Bank had made liquidity available to banks in the EU, which was the Eurozone equivalent of quantitative easing, and there had been a reduction in borrowing costs for the Spanish and Italian governments. However, it was questionable whether the Greek people would endure the ten years of austerity that had been demanded as the price of the recently-agreed rescue package. Macroeconomic factors were driving markets at the moment, but investment managers could outperform the markets by skill and the anticipation of opportunities. He drew attention to the data for currency instruments given in the table on page 8 and for Record Currency Management on page 9. Noting the performance of Schroders Global Equity Portfolio, he said that JLT believe it is too early to draw firm conclusions; their performance is within expectations given the long term unconstrained nature of the mandate. JLT believe that investments in emerging markets would be likely to do well in 2012. RLAM had done very well. There were no concerns about any of the investment managers.

A Member asked about the bullet point below the table on page 10 stating that the 0.9% underperformance against the benchmark last year was not reflected in the performance graph. She wondered how the Committee would be in a  ...  view the full minutes text for item 26.

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 1 and 2:

“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.”

It was proposed by Councillor Coombes and seconded by Councillor Batt and RESOLVED unanimously that

Having been satisfied that the public interest would be better served by not disclosing relevant information, that, in accordance with the provisions of the 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.

Peter Hunt and Martin Pluck of TT International made a presentation to the Panel and answered questions. The Chair thanked them for their presentation.

Following discussion, it was RESOLVED to make a recommendation to the Avon Pension Fund Committee at its next meeting to be held on 16 March 2012 as follows:

Officers will continue to closely monitor the performance of TT and report back to the Panel any issues resulting in significant underperformance

The workplans (circulated after the publication of the agenda) were noted.