Agenda item

Report FSD19084

Details were provided of the Fund’s investment performance for the first quarter 2019/20. Additional detail was provided in an appended report from the Fund’s external advisers, MJ Hudson Allenbridge. In advance of the meeting Members also received Fund Manager Reports on first quarter performance along with a quarterly Sustainable Investment Report from Schroders.  

The market value of the Fund ended the June quarter at £1,094m (£1,039.2m at 31^st March) and had further increased to £1,132m at 31^st July 2019.The quarter total fund return of +5.60% against a +4.32% benchmark compared to a +3.8% average across the 64 LGPS funds in PIRC’s universe. Detail on performance by individual fund managers was appended to Report FSD19084.

The Fund’s medium and long-term returns remained very strong overall -  the Fund ranking eleventh in the PIRC LGPS universe for the year to 31^st March 2019, first over three years, second over five years and first over ten, 20 and 30 years. In addition to winning the LGPS Investment Performance of the Year in 2017, the LGPS Fund of the Year (assets under £2.5bn) in 2018, L B Bromley also recently won the Pensions, Treasury and Asset Management Award at CIPFA’s Public Finance Awards 2019, recognising the consistent high performance of the Fund.

General financial Information was also appended to Report FSD19084, including final outturn details for the 2018/19 Pension Fund Revenue Account and the first quarter position for 2019/20. Details on Fund membership numbers were further provided along with summarised information on early retirements.

Following the Sub-Committee’s previous consideration of Fidelity’s Multi- Asset Credit Fund product, the appended report from MJ Hudson Allenbridge provided further comment on the fund.  

Concerning admission agreements for outsourced services, the cessation debt and deficit repayment plan for Mytime Active was being finalised for agreement by the Director of Finance, in consultation with the Chairman and the Chairman of General Purposes & Licensing Committee under delegated authority from the General Purposes & Licensing Committee. For GS Plus, the final transfer payment was being considered by the Actuaries and four admission agreements were being arranged in relation to Academies having outsourced services. Discussions were also ongoing for a possible admission agreement following transfer of the Council’s adoption service to Coram.

The report also outlined future Fund Manager attendance as:

3rd December 2019 – Baillie Gifford (global equities and fixed income)

3rd January 2020 – MFS (global equities)

13th February 2020 – Fidelity (fixed income, multi-asset income and property).

Mr Arthur indicated that the quarter had been positive for the Fund. Although there are signs of a slowing global economy this had been abated by the promise of further central bank easing. The Fund was performing very well long term. Six of the Fund’s seven portfolios outperformed their benchmark in the quarter with only Fidelity’s UK property marginally underperforming (the portfolio was funded just over a year ago and given the heavy cost of purchasing property assets, it is too early for performance figures to indicate the managers’ true ability). In their performance assessment, MJ Hudson Allenbridge highlighted all portfolio performance green except for Baillie Gifford’s Fixed Interest, marked amber. Mr Arthur also highlighted the sale of the Fund’s final holding of approx. £11.5m in Blackrock’s Global Equity Fund during the quarter (reinvested into Fidelity’s Multi Asset Income Fund).

On the Baillie Gifford Fixed Interest allocation, Mr Arthur highlighted that the Manager’s return (3.9% in the first quarter, outperforming benchmark by 1.8%) was less than the performance stated by the Fund’s custodian BNY Mellon (suggesting some pricing discrepancy which Mr Arthur would look into).

On future outlook, the level of surprise in actions from central banks is low but political events are not so predictable. In terms of global economic slowdown, Mr Arthur felt this would probably not be in the next year or two; however, in maintaining the current extended recovery, there might be repercussions down the line.

In summary, Mr Arthur indicated that all Fund Managers are performing well and that Managers appointed in the past 18 months are achieving in line with what they have been asked to do.

The Director confirmed that the Fund is receiving the level of income needed to meet its liabilities. If the Fund has too much cash it is reinvested.  

RESOLVED that the contents of the report be noted, including

comments from MJ Hudson Allenbridge in their report appended to Report FSD19084 regarding Fidelity’s Multi Asset Credit Fund.