Issue - meetings

Report of the Independent Financial Adviser (PF7).

The report sets out an overview of the current and future investment scene and market developments across various regions and sectors. The report itself does not contain exempt information and is available to the public. The Independent Financial Adviser will also report orally and any information reported orally will be exempt information.

The Committee is RECOMMENDED to receive the report.

Noted.

The Committee had before it a report which set out an overview of the current and future investment scene and market developments across various regions and sectors. The report itself did not contain exempt information and was available to the public. The Independent Financial Adviser will also report verbally, and any information reported orally will be exempt information.

Mr Peter Davies, Independent Financial Advisor in introducing his report, referred the Committee to the table at page 1 of the report, the economic consensus forecasts had been downgraded quite a bit since writing the report, and the UK consensus now stood at -8.7 for this year and the USA slightly lower at -3.8And eurozone -8%, but those were very sensitive to as when lockdown was relaxed and Government support received etc. 

Markets had recovered quite a lot since the end of March and in round numbers if the overall fund fell by £370m in the first quarter (13.5%), then at the moment it had recovered a half of that (£185m) to the first order so the position was not looking anywhere as near as bad as at the end of March, but was nevertheless a fall since the start of the year of 7% which was very substantial in historical terms.

The big test would come when Government support such as Furlough pay was tapered off and Government funding to companies had been fully invested and which companies would still be going concerns come the Autumn.  It would take some time to see what the total effects were and that was true of the listed market and the bond market and also through the private equity market.  Looking at the companies they were invested in, there was not a big exposure to the leisure industries, not through Adam Street and very little through the listed portfolio, but there will still be a case where companies are in difficulties and it would be a while before the Committee saw the extent of that.  The rebound outlook, therefore, particularly in the equities markets may not be so good in the next few months as the actual effects become more apparent.

Councillor Nick Field-Johnson questioned what the Committee’s outgoing were going to be and what the liability of the fund would be over the next 5 years and over the next 10 years to ensure we had ample coverage.  He asked whether the Committee could have a brief report on this matter.

Mr Collins reported that the Committee had received a report on that as part of the Assest Allocation report back in March.  M J Hudson had carried out a piece of work to look at the matter.  At the time, they were basing it on what their projections of what the Asset Allocations decisions would be.  That now needed to be updated.  The figures from the Actuary suggest in the main that the contributions received were more than sufficient to pay for the pensions going out for the next five years.  The  ...  view the full minutes text for item 105