Issue - meetings

(a)  The Committee considered and noted the JGC agenda.

(b)  The Committee approved the attached draft WPP Business Plan, including the objectives of the pool on page 7 and the budget on page 13, relating to the period 2022/23 to 2024/25.

For the benefit of the new members, Mr Latham explained that previously the Fund set the investment strategy; decided how much was allocated to each asset class and selected a number of investment managers to deliver the strategy.  Apart from some legacy assets, the Fund does not now select their own fund managers as the Wales Pension Partnership (“WPP”) selects managers. 

Mr Latham confirmed the JGC appointed a new scheme member representative as outlined in paragraph 1.01.

He also highlighted in paragraph 1.01 that Dye & Durham were purchasing Link Group.  Link Fund Solutions provide WPP with back office infrastructure for the pooled investment vehicles WPP partner funds invest in. Mr Latham noted that it was unclear at the moment what would happen with Link Fund Solutions but the JGC and WPP were being updated on the matter.

Mr Hibbert said that private investors in Woodford (who were recommended by Link Group) were taking legal action against Link Group and asked if this was likely to affect the Fund’s services to WPP. Mr Latham said that the WPP confirmed this would not be the case, but Mr Latham recognised there were some risks, given that the Fund do not know the outcome or what actions the FCA would take. Mr Latham emphasised that WPP’s advisers, Hymans Robertson, had assured them that the FCA would become involved should anything happen to Link as a result of Woodford.

            The WPP officer-working group had set up several sub-groups for example, Mr Latham was involved on the risk management sub-group and Mrs Fielder was involved on the other two groups for private markets and responsible investment (“RI”). These were both complex areas and important for the Fund given that approximately 27% of the Fund’s assets were in private markets, and eventually any new commitments in this asset class would be made to the WPP private market sub-funds.

As identified from the report, there was a significant amount of work involved in these groups, especially regarding the private markets sub-group, given the appointments made in private credit and infrastructure. From next year, after the sub-funds were set up, private market investments will be  through WPP, for the various underlying allocators to determine how investments will be deployed.

            In addition, a significant amount of work was completed in relation to the responsible investment sub-group as outlined in paragraph 1.03 of the report. As reported at the last Committee, WPP were successful in becoming a member of the Stewardship Code. The Financial Reporting Council (“FRC”) highlighted suggested areas of improvement for WPP. As a result, an action plan was created ready for next year’s submission.

            The Fund had previously requested that WPP establish a Global Active Sustainable Equity sub-fund to help the Fund meet its investment objectives and Mr Latham updated the Committee on progress of this. Mercer provided views on progress reports provided by Russell Investments and the sub-fund structure would be recommended at the next JGC. After the recommendation at the JGC, approval would be required  ...  view the full minutes text for item 6