Agenda item

Report of the Chief Operating Officer to report the following in respect of the three months to 31^st March 2016:

·         Investment asset allocation

·         Investment performance

·         Responsible investment activity

·         Budget management

·         Late payment of contributions

·         Communications

·         Funding level update

The Committee received a quarterly update report on performance of the Haringey Pension Scheme covering the three month period up to 31 March 2016. Performance in the quarter was a return of 2.89% on the fund against a benchmark of 3.11%, producing a variance of -0.22%. The Committee noted that Pantheon Private Equity achieved a fund return of 19.73% over a 12month period, which represented an over performance of 16.07% against the benchmark of 3.66%.

The Committee considered the performance of individual fund managers, the Independent Advisor, John Raisin, gave a context the performance of CQS, advising that the multi sector credit funds across the board were unable to achieve the benchmarks originally set for them given market conditions and that seen that context; CQS had performed better than most. Steve Turner reiterated the assessment of the Independent Advisor and stated that their performance was one the best within their respective asset class.  The Committee considered whether the benchmarks that had been set were unrealistic on the whole, given market conditions. Steve Turner agreed to speak to officers outside of the meeting to discuss the benchmarks and comparable performance of the different fund managers and bring a paper back to the next Committee. (Action: Steve Turner/Oladapo Shonola). 

The Committee sought clarification on the likely impact of the Brexit vote to the Fund. In response the Committee was advised that stocks had rallied in the last week and that Equities were up around 20% since the low rate in February. Steve Turner, Mercer, advised that the fall in the value of sterling had massively increased the value of overseas equities, however the value of liabilities had also been pushed up in recent weeks. In response to a follow up question, Mr Turner advised that the risk of a recession had certainly increased along with the likelihood of inflation.

The Committee were advised that the property retail investment market had been impacted and that a number of funds had closed for redemptions, with some funds marking down the value of their assets by between 10-15%. Steve Turner suggested that the Committee would benefit from getting an update from its property manager CBR at the next meeting. (Action: Oladapo Shonola/Clerk). 

Keith Brown advised that his reading of the situation was that there would be ongoing uncertainty in the markets, particularly in relation to levels of employment and the likely fall in GDP which would result was estimated at 1-1.5%. In addition, the growing speculation that the Bank of England would raise interest rates had been quashed and there was increased likelihood of further rounds of Quantitative Easing which could well have an inflationary impact. The Global Index was significantly up in June which would increase the value of overseas equities but the indices which were orientated toward the UK economy, such as the FTSE 250 had taken a significant hit to their value.

Officers advised the Committee the investment of £50m in the Aviva Long Lease Property Fund was progressing and that the subscription agreement had now been signed. It was anticipated that the Fund would join the queue of investors by September and that investment would take around 12 months from that point. Officers also advised the Committee that in relation to the London CIV, the Government had issued further guidance on pooling, specifically in regards to passive mandate and life funds. This had impacted on the Fund’s transfer of assets into the CIV and would likely impact the level of savings available. Further guidance was being awaited. The Chair advised that she had spoken to the Head of Finance – Pensions and Treasury about arranging for someone from London CIV to come in and provide the Committee with some training. In relation, to the decision to shift approximately 20% of total fund assets to the Low Carbon Index, the Committee was advised that the first tranche of asset switching worth approximately £60m was completed on 3^rd May 2016. The second and third tranches were provisionally scheduled for 1^st August and 1^st November respectively.

RESOLVED

·         To note the information provided in respect of the activity in the three months to 31^st March