Agenda item

To receive the Brent Pension Fund Q4 2025-26 Investment Monitoring Update Report.

(Agenda republished to include the attached report on 11 February 2026)

The Chair invited James Glasgow (Hymans Robertson) to introduce a report, which outlined the performance of the Brent Pension Fund over the second half of 2025.  In presenting the report, members were advised that the asset allocations referenced in the report reflected the current portfolio as at the reporting date rather than the new long-term strategy agreed under the Investment Strategy Review, which would be updated in the subsequent report. The key points highlighted were as follows:

In noting the outline provided in relation to market background covering the monitoring period:

·            The US Federal Reserve and the Bank of England had both reduced interest rates, with the Federal Reserve cutting to a range of 3.5–3.75% and the Bank of England to 3.75% respectively, representing a positive direction of travel. A different picture had emerged in Europe and Japan, where rates had been cut and raised respectively.

·            UK inflation had remained more challenging than anticipated at 3.4% over the period, although it had been announced on the day of the meeting that it had fallen to 3.0%. Gilt yields had remained broadly stable, having reverted from the very low levels of a decade ago to a more moderate basis.

·            Gold had performed strongly over the period, largely attributed to investors moving away from growth assets towards protection assets amid unpredictability around US administration announcements and tariff policy.

·            From an asset class perspective, returns had been broadly positive across the board. Global equities led with returns of 12.2% over the period, with UK and Pacific markets outperforming US assets. The significant concentration of market capital indices in US equities, particularly the Magnificent Seven at approximately 60% of market cap weight, had prompted some reallocation of assets towards European and Pacific markets. Emerging markets had also performed strongly, driven in part by correlation with the US dollar.

In relation to total Fund performance members were advised that

·            The Fund had returned 9.4% over the last six months, representing a 0.5% outperformance relative to the index, placing the Fund in double-digit returns over the last twelve months. Over the last three years, the Fund had achieved an annualised return of 10.6%, which was noted as a strong result. Performance had been predominantly driven by global equity mandates, with UK equities and emerging market equities also performing well over the period. The Fund had posted a positive return over the second half of 2025, ending the period with a valuation of £1,491.7m, up from £1,360.6m at the end of Q2 2025.

Moving on to consider performance relating to Fund Managers, members were advised that:

·            The Fund’s passive global equity mandates were again the main contributors to the total return over the period, with UK equities also performing well. Emerging market equities provided very strong performance over the period. The multi-asset funds provided steady support, and the multi-asset credit and gilts funds delivered modest positive returns over the period. On a relative basis the Fund outperformed its benchmark by 0.5% over the period but remained slightly behind its composite benchmark over the past 3 years. Investing in the LGIM Future World Global Equity Index Fund was expected to lead to an immediate reduction in the Fund’s carbon emissions with further reductions anticipated in future, supporting the Fund’s net zero ambitions.

·            The cash held by the Fund had risen from £46.1m to £47.9m.

·            A new allocation to the LGIM Future World Global Equity Fund had been implemented during Q4 2025, representing a reallocation from the LGIM Global Equity Fund to a lower carbon, future world investment approach. Members sought clarification on the Fund's exposure to UK equities within the global equity mandate and were advised that the previous LGIM Global Equity Fund had been an ex-UK fund, with the UK equity allocation covered separately by the LGIM UK Equity Fund. The new LGIM Future World Fund included a UK allocation broadly in line with the UK's weight in the global equity sector (approximately 3.5%).

In terms of specific Funds, details were also provided on each mandate’s contribution to the Fund’s absolute performance over the 2^nd half of 2025, according to their allocation (including supporting details within the exempt appendix which had been provided for members of the Sub Committee).  Members noted that from an asset allocation perspective, the total growth portfolio was broadly in line with its benchmark at 58%, with no material over or underweight positions. The income portfolio was slightly overweight, primarily driven by the nature of asset return profiles, whilst total protection assets were slightly underweight by 2.6%. Neither position was considered material. Outstanding contributors to performance over the period included global equities and emerging markets, with the latter returning 22% over six months and achieving a long-term return of 10.1%. The two diversified growth funds had also performed well over the preceding twelve months, representing a marked improvement from the same period the prior year. Capital Dynamics Infrastructure continued to show material underperformance relative to benchmark over the longer term, though it was noted this mandate represented a small and diminishing allocation. Protection assets, having experienced significant losses during the 2022 period, were now in positive territory across all mandates and were producing good returns relative to benchmark.

Following presentation of the report, the Sub-Committee was invited to raise any questions. A query was raised regarding the composition of the LGIM Global Equity Fund's UK exposure, to which James Glasgow confirmed the position as described above, noting that he could follow up with precise figures if required.

With no further issues raised, the Chair thanked James Glasgow (Hymans Robertson LLP) for the update and the Sub Committee (having noted the Fund Manager Performance updated included within the exempt appendix of the report) RESOLVED to note the report.