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Agenda item

Pooling Investments in Wales (including presentations from Link Fund Solutions and Russell Investments)

To provide Committee Members with an update on implementation of Pooling Investments in Wales and receive presentations from Link Fund Solutions and Russell Investments

Decision:

RESOLVED:

 

(a)  The Committee noted the report.

(b)  The Committee received a presentation from the WPP Operator.

(c)  The Committee discussed and agreed any comments or questions for WPP.

 

Minutes:

Mr Latham stated that the current oversight adviser is Hymans Robertson who were appointed for the initial establishment and transitional period.  However, the Pool will be appointing an adviser for on-going monitoring and further development of the WPP. The results of the procurement is to be agreed at the next JGC meeting on 9th December 2019. It was also mentioned that both Mr Latham and Mrs Fielder can’t attend the next JGC meeting due to the timing of the meeting.

 

            Mr Gough gave a brief overview of his role which is the relationship manager at Link Fund Solutions and is responsible for the safety and oversight of the Fund. Mr Gough expressed the following key points regarding the WPP;

-       Tranche 1 Funds involves two equity funds which started at the end of 2017.

-       The FCA approved the Funds in July 2018.

-       The first WPP manager day was in September 2018.

-       The first launch of the Fund occurred in January 2019.

-       BlackRock were appointed to transition the fixed income funds.

-       Karl Midl has worked for Link Fund Solutions for over 20 years and was appointed mid 2019 as Managing Director for Link Fund Solutions.

-       The global growth equity fund is more familiar to the WPP and has 3 underlying managers (2 of these where existing managers).

-       The global opportunity equity fund is Russell Investments Best Ideas Fund with 7 underlying managers.

 

            Mr Hibbert asked whether the WPP has agreed to share costs and how they are shared. Mr Gough said that from a transition stand point approach, each authority will be responsible for reshaping their portfolio. Therefore, the cost is proportionate to the size of each Fund. Mrs Fielder said that she has details of all of these costs and can identify the total transition cost. She mentioned that the only cost that is split equally across the eight Funds is the governance cost.

 

            Mr Mandich re-stated the three objectives of pooling which the WPP was implementing;

  1. To create scale.
  2. To enable co-investments.
  3. To put in place a better governance structure.

 

            He emphasised that the Fund are a smaller fund in a bigger pool but in the long run this has helped the Fund save money, by getting a lower cost through a bigger scale.

 

            The performance review on slide 8 of their presentation shown that the excess net return to date is 0.92%, which represents from mid-February 2019 to the end of October, is an excellent start.

 

            Mr Gough confirmed that Tranche 1 and 2 have been completed. Tranche 3 is a fixed income fund with Hymans Robertson appointed as the transition advisor and they are looking to launch this in January 2020.

 

            On slide 16, Mr Mandich raised that that they are hiring 5 to 6 managers for the Emerging Market Sub-Fund to achieve a smooth pattern of returns.

           

            Mrs McWilliam asked Mr Gough to explain the risks of the recent event involving Woodford Investment Management to the Committee. Mr Gough commented that there are limitations to what he can say but this is still ongoing. Neil Woodford is an investment manager who is involved with a number of Funds, one being an equity fund which was frozen and is now being wound down by Link Fund Solutions. There is lots of media attention on this, but the impact on the WPP and therefore the Fund is that Karl Midl who was recently appointed may not be as available as he used to be. Mrs McWilliam suggested that the Officer Working Group probe into this matter.

 

RESOLVED:

 

(a)  The Committee noted the report.

(b)  The Committee received a presentation from the WPP Operator.

(c)  The Committee discussed and agreed any comments or questions for WPP.

 

Supporting documents:

 

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