Agenda and minutes

To approve as correct the minutes of the meeting held on 25 March, 2014 and authorise the Chairman to sign them.

The minutes of the meeting of the Committee held on 25 March, 2014 were agreed as a correct record and signed by the Chairman.

To consider the attached report.

Officers advised the Committee that the net return on the Fund’s investments for the quarter to 31 March, 2014 was 1.2%. This represented an out performance of 0.1% against the combined tactical benchmark and an under performance of -2.8% against the strategic benchmark.

The overall net return for the year to 31 March, 2014 was 7.0%. This represented an out performance of 1.5% against the annual tactical combined benchmark and an out performance of 7.0% against the annual strategic benchmark.

1.    Hymans Robertson (HR)

Market Summary

·         The domestic recovery continued afoot with the UK economy growing by 0.8% over the opening quarter of 2014. Continued improvements in the domestic outlook led the IMF to revise upwards its forecast for the UK economy, predicting that UK economic growth over 2014 would reach 2.9%. The IMF also uprated growth predictions, predicting the global economy would grow by 3.6% over 2014.

·         Over the quarter, Sterling had appreciated against the US Dollar and Euro but depreciated against the Yen. In Sterling terms, Europe ex-UK was the best performing region for equities (3.0%), followed by North America (1.2%) and Pacific ex-Japan (1.0%) The UK, Emerging Market and Japanese markets lagged behind at -0.6%, -0.8% and -6.0% respectively.

·         Conventional and index-linked gilts had moved back into positive territory over the quarter as interest rates fell, returning 2.2% and 3.6% respectively. Credit spreads were broadly unchanged over the quarter with corporate bonds returning 2.4% for the period.

Fund Performance

·       Assets were valued at £504.1m as at 31 March 2014, an increase of £21.5m over the quarter. The total return on the Fund’s assets over the quarter was calculated to have been 1.2%.

·       Performance from the Fund’s Multi-asset mandates was weak over the course of Q1 2014 as Barings DAAF and Baillie Gifford DGF underperformed their targets, whilst the Ruffer Absolute return mandate only matched its target. Performance from bond and equity mandates were however strong.

Investment Management changes

·        UBS had published the recommendations arising from its governance review of the UBS Triton Property Fund. This proposed the introduction of an independent supervisory board and changes to the redemption provisions.

Asset Allocation

·         As at the quarter end, the Fund’s direct allocation to equity assets was slightly overweight target at 26.5%. On a look-through basis, the allocation to equity assets was 45%.

·         A contribution of £11.5m had been invested into the SSgA Liquidity Fund during the quarter, pending allocation to a local infrastructure project.

2.    Baillie Gifford (BG)

We welcomed James Mowat and Chris Murphy to discuss the Fund’s investments in Baillie Gifford’s Pooled Global Equity Fund and Diversified Growth Fund (Multi-asset). Over the quarter ending 31 March 2014 the Global Alpha Fund had out-performed the benchmark by 1.7%, This continued the good level of performance since the mandate was awarded.  They did advise that they could not guarantee this level of performance all the time, but over a rolling 5 year period expected to meet or better their target.

BG advised that the Diversified growth Fund was  ...  view the full minutes text for item 2.

Report to follow.

As a result of the changes in the Local Government Pension Scheme Regulations (LGPS) 2013 and the Local Government Pension Scheme (Transitional Provisions and Savings) Regulations 2014, Scheme employers participating in the LGPS in England and Wales would have to formulate, publish and keep under review a Statement of Policy on certain discretions which they have the power to exercise in relation to members of the Career Average Revalued Earnings (CARE) Scheme.

Having considered the report we have:

1.    Noted the changes to the Pensions Regulations with effect from 1 April, 2014;

2.    Agreed to delegate to the Group Director, Resources, the Director of Human Resources and Organisational Development, and the Council’s Monitoring Officer, acting jointly, the responsibility to set the discretion decisions and produce the Policy Statement;

3.    Noted that the final discretion decisions and Policy Statement will be brought back for our information;

4.    Agreed to delegate to the Pension Panel the power to review and make the necessary discretion changes between valuations in response to regulatory change as they arise;

5.    Noted that any major discretionary decisions made on our behalf would be reported to us for information on a regular basis; and

6.    Noted that the discretions will be brought to us for review following the next triennial review.