Issue - meetings

The Committee noted the performance of the Fund over periods to the end of December 2020 along with the Economic and Market update.

Mr Harkin provided an economic and market update to 31 December 2020 to the Committee and summarised the following points:

·         The risk-on sentiment continued to drive positive asset returns.

·         Central Banks had stimulated the economy because of the fluctuating impact of the COVID-19 outbreak.

Mr Buckland confirmed that at 31 December 2020 the market value of the Fund had increased by c£120 million in the year to a total of £2.1 billion, which was an all-time high. This increase was due to the impact of asset price inflation that Mr Harkin had discussed. The Fund’s performance over 3 months, 12 months and 3 years was +6.2%, +6.4% and +5.4% p.a. respectively.

Mr Buckland highlighted the three different targets/benchmarks from paragraph 1.04 on page 147. The actuarial target was the target level of long-term return assumed by the Actuary. The strategic target was the potential return for the Fund’s investment strategy, and the total benchmark was the composite of the targets of each of the underlying fund managers. The Fund has outperformed the actuarial target and the strategic target over Q4 2020 and 1 year. There was a slight underperformance on the total benchmark.

            From an asset class perspective, the Fund were now broadly in line with all strategic targets. However, private market asset performance lagged listed markets and were below the benchmark.  Mr Buckland reassured the Committee that he had no concerns on this matter.

Cllr Bateman thanked the team for their work and the comprehensive report for this item of the agenda.

            Mrs McWilliam asked whether the target of +5.4% over the quarter was the benchmark or strategic target. Mr Buckland confirmed it was the benchmark.

            Feedback was welcomed and encouraged by Mr Buckland on the monitoring report as it was in a new reporting style.

            Mr Everett asked what the advice and sense of confidence was on the short-term forecast for Q1 2021 and Q2 2021. Mr Harkin confirmed that the assumptions for the upcoming year were relatively positive for risk assets. Equities were expected to return relatively strongly given the global COVID-19 vaccine roll out. Investors were continually trying to look ahead in terms of the COVID-19 position. However, he cautioned that the market remained extremely volatile and as seen in recent events nervousness can affect the markets.

            Cllr Bateman questioned how negative interest rates would affect the Fund. Mr Harkin replied that the UK is in a new economic position. He said that currently global bond yields are very low given the unemployment figures, inflation rate and the post Brexit impact.

RESOLVED:

The Committee noted the performance of the Fund over periods to the end of December 2020 along with the Economic and Market update.