Agenda and minutes

Apologies for absence were received from Councillors David Jefferys and Andrew Lee and Councillors Dr Sunil Gupta and Adam Jude Grant attended as their respective substitutes.  Apologies for absence were also received from Councillor Jonathan Laidlaw.

Councillor Keith Onslow declared that a close family member was employed by Fidelity International but that they had no connection to the Local Authority’s account.

Councillor Kira Gabbert declared that she had funds invested with Fidelity International.

Councillor Ruth McGregor declared that she had a pension fund invested with Fidelity International.

Councillor Christopher Marlow declared that his employer’s pension fund was invested with Fidelity International.

In accordance with the Council’s Constitution, members of the public may submit one question each on matters relating to the work of the Committee. Questions must have been received in writing 10 working days before the date of the meeting - by 5.00pm on Wednesday 10 May 2023. 

Questions seeking clarification of the details of a report on the agenda may be accepted within two working days of the normal publication date of the agenda – by 5.00pm on Thursday 18 May 2023. 

No questions had been received.

RESOLVED: That the minutes of the meeting held on 13 March 2023 be approved.

There were no matters outstanding.

The Committee received a presentation from Fidelity International representatives, Ian Fishwick, Portfolio Manager – Fixed Income and David Barber, Relationship Director – UK Institutional providing an investment update on the London Borough of Bromley Pension Fund.

As at the end of March 2023, the London Borough of Bromley Pension Fund had approximately £142M invested in two of Fidelity International’s fixed income funds comprising the Sustainable UK Advocate Bond Fund and the Sterling Corporate Bond Fund.  The Pension Fund also had £124.3M and £65M invested in Fidelity’s multi-asset Diversified Income Fund and the UK Real Estate Fund respectively.  Performance in the two Fixed Income funds had been reasonably successful over the past year compared with the benchmark and performance of the Diversified Income Fund had improved during Quarters 3 and 4 and was now achieving a return of around 5% growth per annum.  The challenging economic climate had impacted performance of the UK Real Estate Fund during the 2022/23 financial year; however, the fund was now recovering and had outgrown its benchmark by 1% in the 12 months to the end of March 2023.

The Chairman asked the representatives of Fidelity International for their views on a potential UK recession.  The Portfolio Manager – Fixed Income stated that in his view it was likely the United States of America would experience a period of recession in the short- to medium-term, in which case the UK would be affected and may also go into recession.  The current economic focus of the UK was on reducing inflation and the associated cost of living via increased interest rates and this made a recession more likely.  The Chairman also asked about confidence in property values in relation to the Pension Fund’s investment in the UK Real Estate Fund and the Relationship Director – UK Institutional advised that whilst property values had undergone a revaluation over the past year, there was now increasing activity in this area. 

A Member highlighted the difficulties in finding an appropriate benchmark for multi-asset funds which aimed to balance investments across different asset classes and queried whether a greater focus should be placed on fixed income funds now that returns were increasing.  The Director of Finance further underlined the need for the case to be made for diversified investment over fixed income, particularly as these products tended to carry a higher risk, and the Relationship Director – UK Institutional confirmed that the yield from the Diversified Income Fund was increasing.  On a related note, a Member was concerned at a potential increase in loan defaults due to rising interest rates and the Portfolio Manager – Fixed Income noted that an increase in defaults was anticipated for which banks were well-prepared, but there was concern that quantitative tightening would create some volatility in the market.  In summing up, the Chairman suggested that whilst there were challenges inherent to investing in equity and bonds, this option also offered flexibility and therefore represented a valuable asset to the Pension Fund.

A Member queried the  ...  view the full minutes text for item 6.

Report FSD23032

The report provided a summary of the investment performance of Bromley’s Pension fund in Quarter 4 of the 2022/23 financial year and included information on general financial and membership trends of the Pension Fund as well as details of key developments in the Local Government Pension Fund (LGPS) expected during the next five years.

In considering the report, the Chairman was pleased to note that the London Borough of Bromley Pension Fund remained approximately 115% funded which represented a healthy position and advised that the Government guidance on potential new requirements within the LGPS regulations on mandatory pooling was expected to be published shortly.  A Member noted that the SDA had also recently published a report on asset management market performance which was likely to impact future investment opportunities and the Director of Finance would follow this up with fund managers after the meeting.  The Local Authority’s existing investment with Baillie Gifford had recently been transferred to the London Collective Investment Vehicle following the decision by the Pensions Committee on 13 March 2023.  In light of this transfer, the Committee agreed that that the published schedule of Fund Manager attendance for the 2023/24 financial year be amended to schedule presentations from Baillie Gifford and Morgan Stanley for the next meeting of the Pensions Committee on 11 September 2023, with the planned presentation from MFS to be rescheduled to 12 February 2024.  It was further agreed that fund managers be requested to provide their presentations to the Committee at least one week prior to the meeting to allow more time for Members to review this information. 

The Committee received an update from the Senior Advisor: Apex Group Ltd (formerly MJ Hudson) who confirmed that MJ Hudson had been bought by global financial services provider, Apex Group Ltd and that this was not anticipated to impact existing service provision.  In presenting his quarterly report, the Senior Advisor: Apex Group explained that there had been a rebound across nearly all asset classes since October 2022 and that fund performance had slightly outperformed the benchmark over the same period.  It was considered likely that there would be a period of recession impacting the United States of America and the UK in the short- to medium-term and it was likely that the next few years would be challenging from an investment perspective. The Bromley Pension Fund’s tactical asset allocation continued to deviate from the Strategic Asset Allocation Benchmark in being overweight in equities although this disparity had reduced following a recent rebalancing exercise.  Moving forward, Environmental, Social and Governance would be a key area of focus and the Senior Advisor would be meeting with the London Collective Investment Vehicle in Summer 2023 to explore this further, including carbon weighting on pensions investments.  In response to a query from a Member, the Senior Advisor: Apex Group Ltd advised that whilst currency hedging offered an investment option, outcomes were often unpredictable and required the right entry point. 

In considering the update, a Member was concerned  ...  view the full minutes text for item 7.

RESOLVED that the Press and public be excluded during consideration of the items of business referred to below as it is likely in view of the nature of the business to be transacted or the nature of the proceedings that if members of the Press and public were present there would be disclosure to them of exempt information.

The following summaries

refer to matters

involving exempt information

The Part 2 (Exempt) minutes of the meeting held 13 March 2023 were approved.

The Committee considered a Part 2 (Exempt) report on Meadowship Homes.