Agenda item

That the minutes of the meeting held on 21 November 2017 be taken as read and signed as a correct record.

RESOLVED:  That the minutes of the meeting held on 21 November 2017 be taken as read and signed as a correct record, subject to the following amendments:

Minute 246 – Pension Fund Committee – Update on Regular Items

Second paragraph be amended to read as follows with the corrections highlighted in bold text replacing original wording:

An officer introduced the report and updated the Committee as follows:

·                     further investments in Longview had been closed as it had reached the limits set;

·                     The London CIV [deleted – Moreover, Longview] had made changes in its personnel.  The Committee considered if meetings with the new personnel, albeit in their interim positions, was necessary;

·                     the future direction of the CIV (Collective Investment Vehicle) was uncertain.  It was suggested that a report from the CIV ought to be requested for presentation to the Committee by [deleted – its senior personnel or] a member of their Board;

·                     the issues raised by the Pension Board related to the ‘Annual Report and Financial Statements for the year ended 31 March 2017’ and would be discussed later.

The Chair stated that the London CIV, of which he was a member, was scheduled to meet in December 2017 and he would report back on the discussions held.  The officer referred to the officer working group on the CIV of which he was a member and agreed that it would be helpful for CIV to report back.

Minute 247 – Performance Measurement Services

The penultimate paragraph to be amended to read as follows with the corrections highlighted in bold text replacing original wording:

Colin Robertson, Independent Adviser,  was of the view that the report of the PIRC was disappointing [deleted - and that it was unstructured].  He requested that the benchmarks referred to in PIRC’s report be checked, that no information had been provided on Local Authority Universe, including the requirements identified at the last meeting of the Committee.  Colin Robertson added that the report ought to have provided detail of the contribution to asset allocation performance by asset class and explored global equities performance

Minute 248 – Quarterly Trigger Monitoring Q3 2017

The penultimate paragraph to be amended to read as follows with the corrections highlighted in bold text replacing original wording:

Richard Romain, Independent Adviser, referred to the sensitivity of Liability Driven Investments (LDIs), which may change and asked to be notified of the extent of the trigger that would require a decision on de-risking.  Colin Cartwright, Aon Hewitt, undertook to discuss this aspect with the Council’s Fund Manager, BlackRock Investment Management and report back.  He suggested that a briefing session on LDIs, identifying such matters as risks and advantages, would be helpful. Colin Robertson, Independent Adviser, related his experience [deleted - that heavy trading would be required before a trigger would become necessary] that considerable training was required before LDI was implemented.

Minute 252 – Currency Hedging Regulatory Implications of European Market Infrastructure Regulations (EMIR)

Second paragraph  and resolution (2) to be amended to read as follows with the corrections highlighted in bold text replacing original wording:

Colin Cartwright, Aon Hewitt, advised on the benefits of moving away from seven counterparties to two and that it would offer diversification benefits compared to [delete - that would help offset] moving to just one counterparty.  This course of action would increase the costs by £20,000 per annum compared to the current situation.  He also favoured the re?introduction of equitisation, which would enhance returns [delete -  through the exposure to equity markets]. However, as this would increase exposure to equities, consideration would need to be given to reducing the exposure to passive equities.

Richard Romain, Independent Adviser, suggested having more than two counterparties which would increase the operating costs but these could be offset.  The Committee noted that whilst operating costs would increase, the mechanism was designed to reduce risks.

Having moved and seconded, it was

RESOLVED:  That, having considered the reports from Record and Aon Hewitt,

(1)          a move from seven to three counterparties to limit the cost of complying with the new EMIR regulations be agreed;

(2)          the equitisation programme be re-introduced to enhance returns [delete - through the exposure to equity market] with consideration needing to be given to reducing the exposure to passive equities as otherwise the exposure to equities would increase.

Minute 253 – Information Report – Investment Manager Performance Monitoring for period ending 30 September 2017

Second paragraph, penultimate line, replace ‘period of six months’ with  ‘period of eight to twelve months’.

Third paragraph, insert ‘rated’ at the end of the sentence.