Agenda item

This report provides the Pensions Committee and Board (PCB) with the following updates on the Pension Fund’s performance for the quarter ended 30 June 2024:

a.       Overview of fund performance including funding position update

b.       Independent advisor’s market commentary

c.       Investment manager performance

d.       Asset allocation

Tim Mpofu introduced the report for this item. This report provided the Pensions Committee and Board (PCB) with updates on the Pension Fund’s investment performance for the quarter ended 30 June 2024.

The following was noted in response to questions from the Committee and Board:

• Cllr Bevan queried Mercer’s position on the 9 separate investment managers and 9 separate categories of investment. Steve Turner, explained that Haringey had a well-diversified portfolio and was in a good position for returns. The 9 separate investment managers and categories for investment could appear a lot to monitor, but the governance of the Committee and Board and officers meant the team were well capable to monitor assets effectively. Tim Mpofu elaborated that there were several appointment investment managers, but in terms of the actual asset allocation, the Fund was appropriately diversified. It was further noted that the team was exploring how to expand performance reporting to include specific composites based on asset class and investment objective in future reports. For example, the Fund’s listed equities allocation, included the MSCI World Low Carbon Tracker Fund, the RAFI Multi-Factor Climate Transition Fund and a bespoke passive Emerging Markets Fund. All these Funds would be included in the Listed Equities Composite for future performance review.
• Steve Turner explained that there was scope to increase the allocation to protective assets. The key reason for this was because of the strong funding level and the surplus that had been reported. That would give a number of options to consider, one might be to make changes to the allocation which provided greater stability in the funding level. The main reason why the funding level was so strong was because the value of the liabilities had come down. The more exposure invested in asset classes group bond yields, there would be some risk reduction. He strongly encouraged members to consider doing some de-risking.
• Steve Turner explained that the fund were overweight equities by 6%. Equities were the riskiest asset held from a long-term perspective, but this was liquid. There was a strong case to doing some rebalancing, that would mean reducing the overweight allocation to equities and there were opportunities to reallocate those assets. The fund was underweight multi asset credit and slightly underweight with index and gilts. There were some interesting opportunities in property and with reducing interest rates, the outlook for property was probably better than it had been.With what advisors thought the government was intending to do, there was scope to invest more in areas such as affordable housing; this was an asset class that had been discussed before with the committee that would also be well aligned with investing in a more impactful asset.
• Steve Turner noted that there was a lot of concern in the sector about the extent to which government guidance on investing has had an impact on fiduciary duty. With members fiduciary duty, they needed to make decisions which generated the required investment return. The sector was looking for the government to provide greater clarity on the consistency of fiduciary duty.

RESOLVED

This report was noted.