Agenda item

12.20

This report covers an overview of the financial markets, the overall performance of the Funds investments against the Investment Strategy Statement and commentary on any issues related to the specific investment portfolios.  The report includes the standard quarterly investment performance monitoring reports.

The Independent Financial Advisor submitted a report which covered an overview of the financial markets, the overall performance of the Funds’ investments against the Investment Strategy Statement and commentary on any issues related to the specific investment portfolios.  The report also included the standard quarterly investment performance monitoring reports.

Reference was made to the summary of the report and Members were informed that a number of Brunel funds were having a difficult time. The value of the Fund in the quarter fell to £3.26bn, a decrease of £117m compared to the end December value of £3.38bn.

The Fund produced a return of -3.5% over the quarter, which was -2.3% behind the benchmark. Purely on a single quarter basis performance against benchmark had been disastrous for the active equity portfolios, which have dragged down the 12-month positions with it.

Reference was made to the impact of the Russian invasion of Ukraine, global inflation, rising energy prices had on performance of investments.  However, Private Equity had a really good quarter, but more importantly the one year and longer performance periods look excellent.

Higher inflation would feed through to higher pension payments for next year (possibly 10%) which would need to be taken into consideration for cash flow management. Rising energy prices exacerbated by the Russian-Ukraine conflict impacted on commodities.

The Committee was provided with details of the low points in performance and that scrutiny would be made of Brunel to this effect. It was agreed that Brunel meet with the Committee annually unless there were specific issues that Members wanted to discuss with Brunel.

Officers reported that Brunel’s Portfolios were monitored, however, there was an issue about the appropriate level of involvement. It was noted that Brunel were looking at improving reporting to the Committee and it hoped this would occur at the December meeting of the Committee.

RESOLVED - (1) That the Independent Financial Adviser be thanked for the detailed report and the information contained therein be noted.

(2) That it be recommended that the Strategic Asset Allocation Group be asked whether commodities be included in their review.