Agenda item

The Board will be provided with a verbal update on this item at the meeting.

The Group Manager for Funding, Investment & Risk addressed the Board. She informed them that there had been a significant level of activity following the announcement of the mini budget by the Government and that the markets were already sensitive prior to the announcement.

She explained that the Bank of England have now taken measures to attempt to stabilise the markets and will at this point offer temporary support until 14^th October.

She stated that to limit the impact of further collateral calls on the Fund’s LDI portfolio following the spike in yields the decision had been made by FRMG on the Monday (26^th Sept) to suspend further trading.

She said that Bond Yields started to rise around three to four weeks ago and at that time a decision was taken lock some in. She added that since the announcement of the mini budget more have been locked in.

She stated that the markets were now beginning to rally with sterling starting to strengthen.

She said that the portfolio overall remains in a good position and it has shown how important it is for the portfolio to be diverse. She added that there has been no change to the Strategic Asset Allocation.

The Chair asked if she could outline the responsibilities of the Committee and Brunel regarding the Strategic Asset Allocation.

The Group Manager for Funding, Investment & Risk replied that the Strategic Asset Allocation is set by the Committee every three years. She said that Brunel are then informed that, for example, the Fund wants to have 40% in equities to be split across a range of portfolios for investment.

She added that the LDI portfolio is manged by BlackRock through a bespoke strategy for the Fund and that this is supported through the FRMG (Funding & Risk Management Group) which comprises of officers and advisers from Mercer. She said that the FRMG meet at least once a month and had met on 26^th Sept to take appropriate actions.

She explained that the Committee had recently approved the Taskforce on Climate-related Financial Disclosures (TCFD) report and that the Fund is due to respond on this matter to the DLUHC in due course.

Steve Harman asked how our Fund’s approach differs from others within Brunel.

The Group Manager for Funding, Investment & Risk replied that on the whole they were probably quite similar, but said that Avon has the least exposure to equity and was the most diversified. She added that she felt in time that it was likely that asset allocations will converge as they seek similar opportunities to invest in. She said that Avon has a high level of risk management in place.

She stated that Brunel are working on improvements to the Fund’s reporting processes and also that the Climate Stocktake was ongoing, with a new Climate Change Policy expected in January 2023.

Tony Whitlock asked if recent events have had an impact on the employer funding position.

The Group Manager for Funding, Investment & Risk replied that it had not had any at this stage, but that it continues to be monitored.

The Chair thanked her for the update on behalf of the Board.