Pension Fund Investment Advisory Panel 26 September 2019

We are poor right now that multi-strap sense obviously allison davis decorations of you in dress i have known okay minutes of the previous meeting i’ve recorded from the 18th of july i still wasn’t present i record them i agreed them to be accurate the gender point for the quarterly performance review the public aspect of it i’m just going to as usual pick out

A few bits and this is only to note the content of the report paragraph two point two on page four over three months the 30th of june 2019 total fund assets have turned 4.8% compared to the target of 10.3% this equates to a performance by 3.5% the funds for market value increased by 42 million over the quarter from seven hundred and twenty point seven million

To seven hundred sixty two point seven billion over the last 12 months the fund performance is seven point nine percent and the three-year annualized performances nine point seven percent the annual performance of target is five point five percent so i guess during the quarter the fund continued in preventing its new investment strategy and the report of the fund

Also move the assets on to the private market investments 4.4 million was invested in infrastructure and 109 million in private debt all of which is particularly good given the wider market background and i would look where global economic growth has continued to be salary for me the associate great technology conflicts something that we highlighted in the annual

Report and the presence of ongoing geopolitical risk suggests that the world economy is more likely to stabilize below trend in the second half of 2019 for the bible i believe this point is well strategic asset allocation the total allocation to global equities increased 52.8% over the quarter there by being 12.8% overweight relative to the strategic allocation and

I remind everyone that strategic allocation is earmarked percentage of the fund that we wanted a specific type of asset this is because the global equities are all performing well or the woman but are performing very well i’m performing the rate by which we are transitioning them to other forms of our sample that is everything that i want to raise with regards to

The open part the public part of the performance review before we go on to any other business while there any questions some people want to raise or points that people want to make for the public i would say it’s remarkably thank you teddy i’m a sub here today and i’ve not been to one of these being songs before and i so i’ve read the papers closely then sometimes

One does and and i also noted that a strong performance and thought that was extremely encouraging and interested in your comment there about the reason that we’re still at 52% plus when the strategy said two years ago it was to get known forty percent for equities and and i’m just kind of wondering and not exactly worrying but i think sometimes when you get into a

Performance and you sort of think all that’s alright and here’s the question where is the downside where is the risk could we see that disappearing as quickly as we furnace up here so to be absolutely clear there this is i’ll give you my take and then i’ll be corrected by the experts the structure separate e months ago and the my first meeting as chair of pensions

We noted a quarterly a very poor quarterly performance because of overexposure to equities this reinforces the fact that the strategy was set 18 months ago reduced our bondage reduce our exposure attract these 40% as you said since then our holdings in the equity market have constantly kept on performing at a rate greater than our transition right so we keep on

Removing the stocks from them but the remaining stocks keep on rising at a greater at a greater rate than we are removing we’re not slowing down in our transition and the our sort of objectives is clearly stated from my perspective his chair remain principally value for money for both members and members and scheme and residence the transfer to the new strategy the

Transfer to the siv where appropriate and obviously in the case of this quarterly monitoring without it additional subsidies secondly objectives which are to do with divestment decarbonization and increase sustainability but the absolute crystal ones remain vfm and transferred from new strategy so we’re not slowing that down because we see a good performance it’s

Just because the performance setting is so good that is outstripping the rate at which we transition which i suppose begs the next question which is then should we accelerate the transitioning to rebalance the portfolio and i come back to my first question is where is the risk because if if it is the case that the fund is over performing against our anticipated

Target because of that then perform in those markets who could my grandmother my view absolutely is that we that the risk is still held by over exposure to equities right i’m not what we’d have it is not going for a translating from should we be transitioning at a greater rate very good question lesson the two things here first is all the transitions that you are

Into private markets and private markets have their own frequency of allocating capitals to every strategies so even if you wish to we cannot that’s one the second question is whether we can manage this active risk we can and it is good practice to review the investment strategy at least once in three years was that your evaluation which have we this year and we’re

Already looking at so do you h sort of bonds equities more sophisticated more sophisticated involves mathematics it’ll be online i’m not too sure you know that is that is definitely one of the transitory one of the options in our in our 2019 strategy where we can propose we intend to propose something which is more holistic we call it management phase i’m not

Something we’re gonna be discuss in part two of this okay specifically the risk management framework which is going to combine equity risk management using equity hedging instruments as the first bullet second mitigated currency risks through a synthetic structure thirdly potential inflation hedging solution using index and pawns in 40 potential future return in

Enhancement using the long exposure through futures non-credit exposures in ces and the final approval interaction efficient cash management so this is something we’re going to be looking at on simultaneously we emphasize in that part also discussing those secondly targets as i turn them well we will be reviewing some of the specific funds on their performance arm

Also we’re going to be looking at some of this secondary targets to do with the vestment decarbonisation sustainability and how that fits in coral in our strategy in our risk management so at the moment at this part of the meeting it’s a capture of where we are how we performed when we move into the second part of meeting we look specifically at how different funds

For them because that’s the commercial incontinence bed and we will be looking at how we manage the risk okay okay is there anything else and get point out it takes time is there any other business for this section of the meeting we had an interview and susan interviews about how governances that this pension fund was done which raised a number of issues between

Accountability aligning authority responsibility and accountability in this committee to other committees and actually what we need to do is won’t be more clear be clearer so hopefully it would be potentially will be trained in structures in the future to make it clearer as to the accountability and how that works anyone else in which case i resolved that the

Public are excluded from the meeting and during consideration of the next reports on the grounds that they’re exempt from this quote of the reasons you you

Transcribed from video
Pension Fund Investment Advisory Panel 26 September 2019 By Merton.TV