Agenda item

Report of the Director of Finance and Presentation from Karen Thrumble, Pensions and Investment Research Consultants (PIRC) Limited.

The Committee received a report of the Director of Finance, which set out the performance measurement services being provided byPension and Investment Consultants Limited (PIRC).

The Chair welcomed David Cullinan,Pension and Investment Consultants Limited (PIRC), to the Committee.  The Committee noted that the contract was to provide:

-               participation in the Local Authority Universe – fund and portfolio data reviewed, standardised and incorporated in the aggregate;

-               provision of quarterly and annual Universe results and analysis;

-               provision of annual league tables and analysis;

-               provision of Universe research.

The Committee had also requested that PIRC be contracted to provide  additional important bespoke services for the Harrow Fund and  agreed that the Committee would review the format of the performance reports produced. 

In his presentation to the Committee, David Cullinan, PIRC, tabled the appendix ‘ Harrow Performance Fund – Performance Review to June 2017’ to the report of the Director of Finance which was not available at the time the agenda was circulated.  The Committee considered the appendix to allow a decision to be taken on the format of the reports required.  David Cullinan reported on the various slides set out in the tabled appendix and pointed out the following:

-               in 2016/17, the Fund outperformed its benchmark by 1.5% and this was partially due to the overweighting of equities and partially due to the performance of Oldfields;

-               reports would be provided quarterly and would detail the contributions from asset allocation and Fund Manager selection.  Longer term performance, over a period of three years, would be considered, including how global equities had performed;

-               PIRC would want to quantify the impact of currency hedging and how asset allocation performance was achieved together with volatility and risks taken.

David Cullinan, PIRC, responded to questions on the definition of risk and outlined the information that would be required from the Council in order to produce timely reports.  An officer undertook to report back on any resulting pressures of this requirement.  David Cullinan undertook to provide reports which would include the following:  variance, volatility around the benchmark, executive summary.  He agreed to liaise with the Director of Finance and her office in this regard.

Colin Robertson, Independent Adviser, suggested that the report ought to provide detail of the contribution to asset allocation performance by asset class and explore global equities performance.  Richard Romain, Independent Adviser, suggested that the Committee ought to consider annual reports from the PIRC whilst quarterly reports could be circulated separately.

Colin Cartwright, Aon Hewitt, stressed the need to include issues such as  net/gross of fees and disclaimers in any reports that would be published.

RESOLVED:  That

(1)          the report from the Pension and Investment Consultants Limited (PIRC) be noted;

(2)          the format and presentation of future reports include details set out in the preamble above;

(3)          the reports from the PIRC be considered on an annual basis and that quarterly reports be circulated separately to members of the Committee and the Pension Board and discussed when appropriate.