Agenda item

To receive the Brent Pension Fund  Q1 2025-26 Investment Monitoring Update Report.

Sawan Shah (Head of Finance, Brent Council) introduced the Brent Pension Fund Investment Q1 2025 Investment Monitoring Update.  In terms of key highlights the Board was advised in relation to total Fund performance that the Fund had posted a negative return over the quarter, ending the period with a valuation of £1,310.1m, down from £1,335.8m at the end of Q4 2024.  The Fund’s passive global equity mandates were identified as the main contributors to negative absolute returns over the quarter. UK government bonds had also detracted, as rising gilt yields led to a fall in their value. In contrast, UK equities had delivered positive returns during the period.  On a relative basis the Fund had underperformed its benchmark by 0.1%. The Fund was also behind its composite benchmark over the past 12 months and over 3 years with members noting the current target and asset allocations exposure on an interim and long-term basis across growth, income/diversification and protection plus cash and reflecting the Funds Investment and diversification Strategy.  Cash held by the Fund had had decreased slightly over the period to £63.6m.  Whilst US tariffs on imports had led to material falls in equity valuations during April it was noted markets had since largely recovered.

The Monitoring Update also included details on the Fund’s Asset Allocation, which it was noted remained broadly in line with the overall Investment Strategy with the funding level estimated to be 131% in advance of the current 2025 valuation being completed.

Performance relating to Fund Managers was also outlined, with members advised that the portfolio had delivered a return of -1.6% over the first quarter of 2025 to 31 March, underperforming its benchmark by 0.2%. While performance over the past 12 months and 3-year periods remains strong on an absolute basis, returns had continued to lag the benchmark over both timeframes.  After a period of strong gains, global equities had posted negative returns in Q1 2025 with UK equities the only growth asset class to have delivered a positive return during the quarter. In contrast, emerging market funds had declined and underperformed their respective benchmark.  It was noted that the decline in global equities had been driven by renewed tariff-related uncertainty, which had weighed on investor sentiment. As a result, market participants had rotated out of high-valuation US technology stocks in favour of lower-valued names, leading value stocks to outperform growth with US equities having experienced their weakest quarterly performance since 2022, contributing significantly to the broader market decline.  Members were advised the property and infrastructure markets had also delivered mixed performance over the period. Property allocations had performed well on an absolute basis, while infrastructure performance had been more varied.

The Board was advised that update provided for the Sub Committee had also included an update on events following the 31^st of March 2025 and imposition of US Tariffs in relation to the impact on global equity markets. Whilst the immediate impact had been swift, with equity markets falling by 10-15% the market had subsequently recovered with the Sub Committee being advised of the position relating to the impact on Fund Manager valuations and provided with a summary of the outlook in relation to growth and inflation.

Having thanked Sawan Shah for the update and noting that the report had been subject to detailed review at the Brent Pension Fund Sub Committee on 24 June 2025, the Board RESOLVED to note the Q1 2025 Investment Monitoring Update without further comment.