Agenda item

This paper reports on the performance of the individual portfolios and seeks to update the Panel on routine aspects of the Fund’s investments. The report contains performance statistics for periods ending 30 June 2025.

The Senior Investments Officer introduced the report to the Panel and highlighted the following points.

·  The Fund’s assets stood at £6,031m on 30 June 2025, delivering a net return of 3.7% over the quarter. This was 0.3% ahead of the return for the strategic benchmark. There were positive returns generated from the Brunel listed equity portfolios and the LDI portfolio, as gilt yields fell. Multi Asset Credit (MAC) and Diversifying Returns also contributed positively, although with the exception of MAC, the Brunel portfolios underperformed their respective benchmarks. Returns for the private markets portfolios were also positive, although performance verses benchmarks were mixed.

·  The estimated funding level stood at 106% at 30 June 2025 (c. £367m surplus).

·  Over 1 year to the end of June the Fund returned 3.4% in absolute terms and -2.5% in relative terms. The Brunel listed portfolios all delivered positive returns, however these fell short of their respective benchmarks contributing to underperformance over one year.

·  The second quarter of 2025 was marked by heightened volatility, as markets contended with renewed trade tensions and escalating geopolitical risks. The announcement of aggressive new tariffs by the U.S. administration in early April triggered a sharp sell-off, but sentiment stabilised following a temporary suspension of most measures to allow for trade negotiations.

·  Technology stocks were the standout performers, rebounding sharply as the pause in tariff implementation created a strong risk-on environment which was strengthened by better-than-expected earnings announcements and renewed enthusiasm for AI technologies among investors. In contrast, the healthcare and energy sectors lagged, weighed down by weak earnings and geopolitical disruptions.

·  At an individual portfolio level, the Brunel Global High Alpha portfolio returned 4.4%, lagged its benchmark return by 0.8% as weak stock selection in aggregate more than offset the benefits from sector allocation. Positive allocation was driven by underweights in energy and consumer staples. Selection was strong within IT where the underweight in Apple and overweight in TSMC were the largest contributors, with the latter benefitting from renewed AI-related demand.

·  The FTSE Developed Paris Aligned Index (PAB) returned 4.9% over the quarter, closely replicating the performance of the benchmark index over the period. Although the index has a positive tilt towards growth and an overweight allocation to technology stocks, returns were held back by weak stock selection in the technology sector. The majority of this is attributable to underweight positions in Nvidia and Broadcom. The portfolio did benefit from an underweight towards the energy sector which was the weakest performing sector given the fall in oil prices over the quarter.

The Panel, having been satisfied that the public interest would be better served by not disclosing relevant information, RESOLVED, in accordance with the provisions of the Section 100(A)(4) of the Local Government Act 1972 that the public should 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 I of Schedule 12A of the Act as amended.

The Panel RESOLVED to note the information as set out in the reports.