Declarations of interest:
None.
Key points raised during the discussion:
1. The Strategic Finance Manager (Pension Fund and Treasury) introduced the item and highlighted the advice that the Board delay a decision to invest via the Marathon Emerging Markets Fund. The Board supported this delay.
2. It was suggested that, in relation to the Marathon Emerging Markets Fund, the Board should have a discussion on whether to increase exposure to emerging markets. The Mercer representative explained that the Board had not been looking to increase its exposure with emerging markets but that Marathon had asked its clients to move from segregated investments into a pooled fund.
3. A Member queried the adoption of stock lending, suggesting that it adds volatility to the market. The Chairman pointed out that stock lending was adopted two years ago by the Board. It was also suggested on the plus side that stock lending creates liquidity.
4. The Surrey Pension Fund Advisor introduced the notes of meetings with Fund Managers, attached as Annex 2 to the report. There was some concern about Franklin Templeton’s exposure to the Ukraine. The Surrey Pension Fund Advisor assured the Board that, while Franklin Templeton was a large investor in the Ukraine on behalf of its clients, this exposure was not considered a risk to the company’s viability. The pooled fund owned by the Surrey Pension Fund does have a holding in Ukraine bonds, but these represent a small allocation of the overall fund.
5. It was confirmed that, while the Surrey Pension Fund Advisor and Strategic Finance Manager (Pension Fund and Treasury) hold the meetings with Fund Managers, Board members were always invited to attend.
6. It was requested that figures in the report be provided net of fees. The Strategic Finance Manager (Pension Fund and Treasury) confirmed that the custodian could provide this, although the Mercer representative explained that where performance-related fees were concerned there would be some manual work and therefore some additional cost. The Chairman suggested that this be considered as part of the deep dive into all costings and fees (Action Review ref A6/15).
7. The Board noted that asset allocations were all comfortably within variances.
Actions/Further information to be provided:
The deep dive review of the Pension Fund to include a review of the information provided to the Board, eg the potential for receiving figures net of fees.
Resolved:
i. That the report be NOTED.
ii. That the allocation of the £34.5m cash position would be deferred to the end of the meeting.
iii. That multi asset credit would be considered under item 17.
iv. That the Surrey Pension Fund Board training policy be APPROVED.
Next steps:
None.