Issue - meetings

[To provide an update on a range of investment issues]

Jill Davys, Assistant Director – Investments and Finance presented the report on a range of investment issues, primarily the economic and investment background and the quarterly performance of both the West Midlands Pension Fund and the West Midlands Integrated Transport Authority Pension Fund (WMITA PF). Supporting responsible investment activities was covered in a separate paper on the agenda for the meeting.

Malcolm Cantello (Unison) noted the variance between the investment strategies of the two employers in the WMITA PF.  He asked whether there would be a coming together of the approaches the two had towards risk in the light of the proposed merger of the WMITA PF with the West Midlands Pension Fund.  The Assistant Director – Investments and Finance confirmed that the two scheme employers were at different positions in terms of their, maturity, funding and resources and therefore had different strategies and approaches to risk. Rachel Brothwood, Director of Pensions added that the differential strategies were to be maintained for the closed transport fund.

In response to Malcolm Cantello about levels of cash held by the Main Fund, the Assistant Director confirmed that the Fund was holding cash for investment into income generating assets and to cover currency positions.

Councillor Angela Sandison noted performance in the global active equity portfolio and queried whether it had been affected by the Fund being underweight in the US.  She asked, with weather events likely to become more extreme through global warming, should the Fund reduce its risk in the insurance linked fund. The Assistant Director acknowledged that global active equities were underweight in US equities and went on to explain the action to take out some of the risk exposure pending transition to a sustainable equity portfolio. Regarding the insurance linked fund; whilst recent performance in the sector had been poor, the ten-year performance was still showing a positive return. The Director of Pensions added that she noted the concerns and performance of the insurance linked funds for the period and confirmed that the Fund was taking a wider review of this market.

Councillor Claire Simm noted the reduction in the value of the Fund during the nine month period to date and asked whether this was typical for that part of the year.  The Chair commented that there had been a global wide blip. The Fund took a long-term view of its investment value, noting the recovery already observed in the current quarter.  It was noted that overall the Fund had performed well relative to its benchmark and against other LGPS and non LGPS peers.

Resolved:

1.    That the global economic and market update paper prepared by the Fund’s adviser, Hymans Robertson be noted.

2.    That the quarterly performance reporting for the West Midlands Pension Fund be noted.

3.    That the quarterly performance reporting for the West Midlands Integrated Transport Authority be noted.

4.    That the updated benchmarking information received in relation to the Fund’s investment performance and costs be noted.