Agenda item

The Investments Manager presented the report.

She drew attention to the draft minutes of the Brunel Oversight Board (BOB) meeting of 18 July 2018. The next meetings of BOB would be in September and November. The November meeting would discuss the business plan and budget for 2019/20 to be submitted to the shareholders for approval. The transition to the passive equity portfolio was completed in July in line with the timetable, so BlackRock are no longer managing the Low Carbon Fund; it is now managed by Legal & General using the same benchmark index. The selection process for two active equity portfolios, UK Equities and Low Volatility, is reaching the final stage. Mercer has confirmed that the new portfolio will meet Avon’s strategic objectives. As far as private market investments were concerned, Avon had made commitments to the Secured Income and Infrastructure portfolios in line with its strategic asset allocations of 7.5% and 2.5% respectively. Mercer had again confirmed that these portfolios will meet the Fund’s strategic objectives. Brunel was creating an Authorised Contractual Scheme (ACS) which would give Brunel greater power to impose its own voting policy. This is a positive for the Fund as currently we adopt the voting policies of our fund managers.

A Member referred to item 5 of the BOB minutes (agenda page 57) and asked whether this was a move by Brunel to manage private market investments in-house. He also wondered whether the request for additional funding for this function indicated that the original budget estimate bid had been insufficient. The Investments Manager replied that the private markets were a complex area to model in the original business case. Certain assumptions had been made in the business case, but having  set up the private market team and launch initial private market portfolios,  Brunel  realised they need middle office support for each portfolio. The extra resource will allow the savings to be delivered.  The Business case always assumed that private markets would eventually be managed in- house where there was expertise.  Indeed setting up the private market portfolios is ahead of the business case plan.

A Member asked whether the remuneration report, which was the subject of item 4 of the BOB minutes, could be shared with the Committee. The Head of Pensions replied that as it is a special reserved matter which requires unanimous approval of the shareholders. It might be possible to share it with Members at a later date, but this could not be done within the decision-making cycle.

The Committee, having been satisfied that the public interest would be better served by not disclosing relevant information, RESOLVED that the public should be excluded during the consideration of exempt appendices 2a, 2b, 4 and 5 and that the reporting of this part of the meeting be prevented 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 Schedule 12A of the Act as amended.

After it was RESOLVED to note:

1. the progress made on pooling;

2. the updated project plan for the transition of assets.