Agenda item

This report is a summary of all manager issues that need to be brought to the attention of the Pension Fund Board, as well as manager investment performance.

Declarations of Interest:

None.

 

Key points raised during the discussion:

1.    The Strategic Finance Manager – Pensions & Treasury introduced the report.

2.    The Board was informed that the 2016 dates for the Board had been agreed and would be circulated separately (Action Review ref.: A26/14).

 

Judith Glover arrived at 9.44am.

 

3.    The Strategic Finance Manager – Pensions & Treasury explained the necessity to reassess the data on which prices were agreed with Legal & General before reporting back to committee in February 2015.  The Board supported the process.

 

John Orrick arrived and Phil Walker left the meeting at 9.48am.

 

4.    Members asked for information on the profit achieved by Mirabaud on the investments made with them during the period of the contract.  Officers agreed to calculate the sum and provide the Board with the information (Action Review ref.: A27/14).  

5.    Members queried whether the recent ruling by the Employment Appeal Tribunal would have any impact on the Pension Fund.  The Director of Finance informed the Board that she had been looking at the issue from a Surrey County Council perspective but did not believe that there would be any significant impact on the Pension Fund.  The Employers Representative stated that the Police and Crime Commissioner’s Office had concerns that the ruling would have a significant impact on the Police Service with a knock-on impact on the Pension Fund.

6.    The Surrey Pension Fund Advisor introduced the notes of the meetings with Fund Managers on 7 November 2014. 

 

Tim Evans arrived and Phil Walker rejoined the meeting at 9.56am.

 

7.    The Board went on to discuss whether the accounting scandal and potential litigation at Tesco would have any impact on stocks.

 

Tony Elias arrived as 10.05am.

 

8.    The Board discussed the differing views of investment managers on the potential for emerging markets.

9.    The Strategic Finance Manager – Pensions & Treasury highlighted the private equity cash flow analysis as requested previously by Members. 

 

EXCLUSION OF THE PUBLIC

 

RESOLVED:  That under Section 100A of the Local Government Act 1972, the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information under paragraph 3 of Part 1 of Schedule 12A of the Act.

 

PART TWO

IN PRIVATE

 

THE FOLLOWING ITEMS OF BUSINESS WERE CONSIDERED IN PRIVATE BY THE COMMITTEE.  HOWEVER, THE INFORMATION SET OUT BELOW IS NOT CONFIDENTIAL.

 

10.  The Mercer representative presented an analysis of the Fund’s private equity portfolios and fund managers.  Members asked a number of questions and these were answered by officers and the Fund’s advisors.  It was suggested and agreed that the Board should meet with two private equity managers – one which takes a Fund of Funds approach and one which makes direct investments.  This would help the Board to understand and compare the different investment approaches.  It was agreed that Standard Life (incumbent manager) should be asked to present to discuss further the merits of a Fund of Funds approach.  Further consideration would be given which single manager should be invited (Action Review ref.: A28/14).

 

PUBLICITY FOR PART TWO ITEMS

 

RESOLVED: That the items considered under Part Two of the agenda should remain confidential and not be made available to the press and public.

 

PART ONE

IN PUBLIC

 

11.  The Mercer representative provided an update on progress in setting up a framework for a liability driven investment (LDI) strategy.  A paper was circulated and is attached to the Minutes as Annex 1.  The Board discussed the proposed trigger level.  It was suggested that a trigger be set now and reviewed at each Board meeting. 

12.  The Mercer representative assured the Board that if the LGPS has to move to a passive investment strategy, there should not be any impact on the setting up of this framework, given that the LDI assets are to be managed on a passive basis.

13.  The Mercer representative presented a report on the range of options for the future management of the ex-Mirabaud portfolio.  He recommended that the assets are reallocated to Majedie for the reasons set out in the confidential annex 4.

14.  After discussion, the Board accepted this recommendation.  However, it was recognised that this could be subject to further review given the anticipated announcement from government on passive investment within the LGPS and its impact on reallocating assets to an active investment manager.

15.  The Mercer representative provided a report on the proposed alternative manager options regarding the Global Equities portfolio currently managed by Newton, as set out in the confidential annex 5. 

 

EXCLUSION OF THE PUBLIC

 

RESOLVED:  That under Section 100A of the Local Government Act 1972, the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information under paragraph 3 of Part 1 of Schedule 12A of the Act.

 

PART TWO

IN PRIVATE

 

THE FOLLOWING ITEMS OF BUSINESS WERE CONSIDERED IN PRIVATE BY THE COMMITTEE.  HOWEVER, THE INFORMATION SET OUT BELOW IS NOT CONFIDENTIAL.

 

16.  Members discussed the options regarding the Global Equities portfolio currently managed by Newton.

17.  Members discussed the uncertainties in the global equities market given the anticipated announcement from government on passive investment within the LGPS and its impact on reallocating assets to an active investment manager.

 

PUBLICITY FOR PART TWO ITEMS

 

RESOLVED: That the items considered under Part Two of the agenda should remain confidential and not be made available to the press and public.

 

PART ONE

IN PUBLIC

 

18.  The Strategic Finance Manager – Pensions & Treasury introduced the Financial and Performance Report. 

 

The Director of Finance left the meeting at 11.45am.

 

19.  The Chairman informed the Board that the Pension Fund had been shortlisted for the Fund of the Year (above £2bn) award, the Strategic Finance Manager – Pensions & Treasury had been shortlisted for Finance Officer of the Year, and the Senior Accountant had been shortlisted for Emerging Pensions Manager of the Year at the Local Government Chronicle Investment Awards 2014.

 

Actions/Further information to be provided:

a.    The 2016 dates for the Surrey Pension Fund Board to be circulated in due course.

b.    Officers to provide the Board with information on the profit achieved by Mirabaud on the investments made with them during the period of the contract.

c.    The Board to meet with two private equity managers – one which takes a Fund of Funds approach and one which makes direct investments.

 

Resolved:

      i.        To note the report.

     ii.        To reallocate the assets previously managed by Mirabaud to Majedie, subject to the decision by Government with regard to passive investment becoming mandatory for the LGPS.

    iii.        To review Newton further and receive presentations from the selected managers highlighted in the confidential annex 5.

   iv.        That the yield trigger for the LDI strategy be set at 0%.

 

Next steps:

None.

 

The Board adjourned at 11.55am to meet a Fund Manager.  The Board reconvened at 12.45pm, without Ian Perkin.