Issue - meetings

(a)  The Committee considered theeconomic and market update, the investment performance of the Fund for the quarter ended 30 June 2020 and the update on the funding position.

(b)  The Committee considered the investment strategy and manager summary for the quarter ended 30 June 2020.

Mr Harkin confirmed that the Fund has benefited from the risk management framework but also from the diversification of the asset portfolio. Since there was a lot of volatility between asset classes, there has been a strong rebound in particular in equities since March 2020 to now. Mr Harkin therefore emphasised the importance of diversification in a portfolio.

            Mr Harkin noted from that a US equity investor would be in a positive position and would have made money in the year 2020. He also outlined that the UK government bond yields had fallen; however, there had been a small rise recently. The risks ahead are much magnified short and long term; long-term in particular because of COVID-19. The COVID-19 pandemic had meant that global Governments were stimulating economies and protecting jobs where they can. There were political risks that could impact markets for example; the US election is less than a month away. Tensions also remained between the US and China and Brexit still needed to be considered a factor despite everything else going on. Mr Harkin stressed that the Fund has coped very well considering all that has occurred this year.

            Mr Buckland stated that the Fund has a current asset value at 31 August 2020 of c£2 billion whereas at 31 March 2020 this figure was c£1.8 billion. This was due to the fall in markets which drove a significant fall for the Fund in March but it was somewhat protected by the risk management framework. The total Fund valuation was now in a similar position to a year previous.

            Mr Middleman commented on the funding level monitoring slide, and explained that the black line identified where the funding level was expected to be on the basis of the contribution plan agreed at the 2019 valuation whereas the blue line showed the actual estimated funding level. He explained that, in simple terms if the Fund is above the expected level, then Fund's performance is ahead of the plan with its strategies, and vice versa.

Mr Middleman highlighted that the Fund was trending in line with the plan at the end of August despite the drop to a funding level of 85% in March 2020 from the market impact of COVID-19. To the end of August, the funding level was 92%. Whilst current figures were not fully available, Mr Middleman estimated that the Fund was still on track. Mr Middleman outlined that material uncertainty remained and this could impact on the financial position going forward. However, via the flightpath framework, the Fund has protections in place to limit any downside as much as possible to put the Fund in the best possible position to weather this uncertainty.

            Mrs McWilliam observed the slide outlining monthly asset values showed that we are now in a similar position to December 2019, which showed that the Fund's investment growth had not been in achieved the agreed targets. However, from the funding level monitoring slide, the current funding level position (at 31 August 2020)  ...  view the full minutes text for item 112