Agenda item

Before discussing appendices 3, 4 and 5 of this item, Members are invited to consider the arguments set out in the Public Interest document and to pass the following resolution:

“that the Committee having been satisfied that the public interest would be better served by not disclosing relevant information, the public shall be excluded from the meeting for the duration of the discussion of exempt appendices, 3, 4 and 5 of this item, in accordance with the provisions of section 100(A)(4) of the Local Government Act 1972, 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 said that the Fund had increased by 2.3% over the quarter and had outperformed the strategic benchmark over the quarter and the year. Of the 5 managers rated as Amber in the RAG report (Exempt Appendix 3) 3 had continued to improve, while 2 had deteriorated. He drew attention to the update on the implementation of the investment strategy contained in section 4 of the report. Rebalancing had taken place in the quarter, and overweight equity had been reduced and the proceeds reinvested in corporate bonds.

A Member questioned the statement in paragraph 3.8 at the bottom of agenda page 14 that the issue of the Fund being practically the only investor in the SSgA European fund “was last addressed by the Panel in November 2011”, whereas in fact it had appeared regularly on agendas. The Investments Manager replied that it was not a new issue, though it had been monitored constantly. The Chair agreed with the Member that the issue had been constantly before the Committee.

Mr Finch and Mr Sheth commented on the JLT investment report. Mr Finch noted that MAN was struggling, vindicating the Committee’s decision to disinvest from them, even though JLT had advised at the time holding and watching them a little longer. He said that there were very few negatives over the quarter, apart from emerging markets. Overall managers were doing pretty much what the Fund wanted them to do. Mr Sheth commented on the performance of individual managers.

The Chair asked about the impact of the fall in the dollar. Mr Sheth said that it made some countries’ exports less competitive. Mr Finch, however, said that it had to be remembered that in Asian countries a high proportion of the population was under 25: growth in domestic demand could offset poorer export performance.

A Member noted that Blackrock appeared in the middle of the charts, which seemed natural enough since almost half the Fund was invested in them. Mr Finch said that was how Blackrock was intended to perform and they were performing their expected role. The Blackrock portfolio comprised long-term assets which were fairly static. The Member asked whether it was typical for a local authority pension fund to have this type of dominant portfolio. The investments manager replied that most, but not all, funds had a large passive fund, which helped manage overall investment costs.

The Independent Adviser suggested that the structure of reports should reflect the new investment structure of the Fund. Mr Finch agreed that this was a good idea.

Before discussing the exempt appendices, the Committee RESOLVED

“that having been satisfied that the public interest would be better served by not disclosing relevant information, the public shall be excluded from the meeting for the duration of the discussion of exempt appendices, 3, 4 and 5 of this item, in accordance with the provisions of section 100(A)(4) of the Local Government Act 1972, because of the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Act as amended.”

RESOLVED to note the information as set out in the report.