Agenda item

To receive the Brent Pension Fund Q1 2021 Investment Monitoring Report.

Kenneth Taylor (Hymans Robertson LLP Investment Consultant) introduced a report which outlined the performance of Brent Pension Fund during Q1 2021. 

In presenting the report, the following were highlighted as key strategic points:

·                The Fund had posted positive returns over the past 3 months, ending the quarter with a valuation of £1,032.1m up from £1,010.4m at the end of Q4 2020.

·                The Fund’s growth holdings were the main drivers of returns, along with the Ruffer fund that added notable performance.  Within equities, the UK equity fund was the standout performer on an absolute basis.

·                The Fund’s long dated gilts holdings detracted from returns following the sharp rise in yields over the quarter as inflation expectations had risen.

·                During Q1, £30m was sold from the UK equity fund, with the proceeds split equally between global equities and the Ruffer Multi-Asset fund.

·                The Fund was currently holding more cash than usual. The Fund’s upcoming investment in Low Carbon equities, and capital calls for the private market mandates, would be funded from cash.

The Committee then moved on to consider the summary provided in relation to asset allocation.  Key points noted were as follows:

·                The interim and long term target allocations in terms of growth, income/diversifiers and protection. The growth in portfolio contains the equity investments and the amounts in these funds were fairly well aligned and performing as expected. Protection assets were designed to provide more stability.

An overview was then provided in relation to manager performance of the various funds, focused over the last 12 months. It was noted:

·                That total Fund return was positive during the quarter on both an absolute and relative basis with longer term performance also comfortably ahead of targets.

·                UK equities had led global markets with strong performance.  Over the year emerging markets had led with the JPM fund having posted impressive performance relative to its benchmark, despite underperforming over the last quarter.

·                The Ruffer Multi asset fund had also posted strong performance over the last quarter and despite their different approaches both this and the Baillie Gifford funds had returned broadly similar performance over the last year.

·                The CQS mandate had shown strong performance in bouncing back from previous falls and whilst gilt yields had risen sharply the overall portfolio with its long duration had experienced a fall.  Members also noted the performance summary provided in relation to the LGIM Global & UK Equity Funds, LCIV JP Morgan (emerging market) fund, Capital Dynamics (private equity) fund, the Baillie Gifford and Ruffer Multi asset funds, Alinda Infrastructure fund, LCIV  and Capital Dynamics Infrastructure funds, CQS Multi Asset Credit fund and Black Rock UK Gilts fund.

·                Current performance in relation to the Capital Dynamics private equity fund was provided and the Alinda and the Capital Dynamics Infrastructure funds posted negative returns, although it was noted that the impact of this was mitigated as a result of the Funds holding fewer assets in these investments.

·                On an overall level, it was repeated that the fund was significantly ahead of the benchmark period. 

The Chair thanked Kenneth Taylor for his presentation and members were then invited to ask questions, with the responses summarised below:

·                Details were sought on the reasons for the increase in fund valuation with Kenneth Taylor advising that this was primarily due to the increase in value and performance in both Global and UK equity markets, as well as the Ruffer Multi-Asset fund.

·                Members also queried the impact of Brexit on the UK gilt investment market over the short to medium term, which they were advised that the economy would be expected to be impacted by supply and demand issues within the market as well as potential rises in interest rates. 

·                A question was then asked about the RI rating in relation to the BlackRock Fund. Clarification was provided that this related to responsible investments covering environmental, social and governance issues with confirmation also provided that the investment in this fund had been held for 2.5 years.

·                Further details were sought relating to climate risk analysis and whether a deeper analysis was available.  In response, members were advised of the basic approach adopted to identify the likely impact of high-level risks with the analysis also designed to test the resilience of different funds in relation to various climate scenarios.

·                As a final issue the Committee were assured that no concerns had been identified in relation to the change within the management structure of the Ruffer Multi asset fund.

Members welcomed the update provided and with no further issues raised thanked Hymans Robertson LLP for their presentation.  It was RESOLVED that the report noted.