Issue - meetings

Report FSD18042

Details were provided of the Fund’s investment performance for the fourth quarter 2017/18 with additional detail provided in an appended report from the Fund’s external advisers, AllenbridgeEpic. Information on general financial and membership trends of the Pension Fund was also outlined along with summarised information on early retirements.

The market value of the Fund ended the March quarter at £970.7m and had increased to £983.6m as at 30^th April 2018.The total fund return for the fourth quarter was -2.39% against a benchmark of -2.62%, compared to an average -3.6% across the 61 LGPS funds in PIRC’s universe. Overall, medium and long-term returns for the Fund remained particularly strong with returns of 6.7% for 2017/18 and 26.8% for 2016/17 against a benchmark of 3.1% and 24.6% respectively.

Concerning the revised asset allocation strategy and appointments of Schroders (60%) and Fidelity (40%) to manage the Multi Asset Income (MAI) allocations and Fidelity to manage the property fund, initial drawdown for the Fidelity MAI and property fund was completed in February 2018 and the Schroders MAI investment was due to complete on 25^th May 2018.

A Q4 summary of manager performance was also appended to Report FSD18042 with the Council using its main custodian, BNY Mellon, for performance measurement information. PIRC currently provided LA universe comparator data with 61 of the 89 LGPS funds signed up to the service, including L B Bromley. Details of the final outturn for the 2016/17 Pension Fund Revenue Account were also appended to the report along with the provisional outturn for 2017/18.

A timetable of Fund Manager attendance at future meetings was also outlined as follows:

24^th July 2018 – MFS (global equities)

13^th September 2018 - Schroders (multi-asset income)

7^th November 2018 – Baillie Gifford (global equities and fixed income)

5^th February 2019 – MFS (global equities).

In discussion, Allenbridge summarised the Fund’s performance highlighting its very good long term performance and its position as one of the best performing LGPS funds. Background was also provided to the recent asset allocation review and decisions to place funds in the MAI and Property mandates.

Although the Fund’s value fell to £970.7m, an outperformance of 0.23% was achieved for the quarter even though global equity markets had been undermined in mid-February. With weak bond markets, strong economic growth, and rising inflation, particularly in the US, an expected rise in interest rates led to the US equity market falling 10% from peak to trough in the following two weeks. All major equity and bond markets were down for the quarter as a whole. 

Since Q4, the fund’s value had increased and markets were seeing an increased level of stability. Even so, with the substantial Q4 turbulence, Allenbridge suggested (in their report) that 2018 might not be as smooth as 2017. Members were advised that some instability could also remain as central banks continue to remove stimulus to economies such as Quantitative Easing. Nevertheless, Allenbridge suspected  ...  view the full minutes text for item 38