Agenda item
PRESENTATION FROM PIRC - LOCAL AUTHORITY PENSION PERFORMANCE ANALYTICS ANNUAL REVIEW
- Meeting of Pension Board, Monday, 26th November, 2018 10.00 a.m. (Item 7.1)
- View the background to item 7.1
The Board will receive a presentation from PIRC– Local Authority Pension Performance Analytics Annual Review.
Minutes:
The Board received a presentation from Pensions & Investment Research Consultants (PIRC) on the Pension Performance Annual Review.
Board Members received the following in response to their questions:
- It was difficult to generalise why there has been a move from equity towards diversification.
- The LGPS was performing well as a higher risk fund.
- The Fund had equity protection which reduced the risk of holding equities.
- With regard to the Risk and Return Last Five Years slide, Tower Hamlets Council was placed on the top half along the risk line.
- With regard to the Fund Structures slide, the blue arrow showed the number of managers had increased from 5 to 13. The figures 5, 7 and 13 represented the number of fund managers. The percentage numbers represented the proportion which is actively managed.
- With regard to the Top and Bottom Performers – Ten Years slide, the yellow dots represented underperforming funds and the red dots represented outperforming funds.
- It was noted that Bromley was doing well on the league tables and advisors suggested this may be due to a larger allocation on equities.
- It was clarified that the performance value dots on the diagram represented the whole of the UK not just the London boroughs. They represented the 63 funds covered by PIRC. There are 89 local authorities joined to the Fund in England and Wales. There are 101 authorities joined to the Fund in the UK.
- Members requested a clarification on point two of the What Can Be Learnt slide. It was clarified that Tower Hamlets had more active managers because it had invested in alternatives. The advisor explained that a wider range of investments tended to result in the need for additional specialist managers. It was noted that Tower Hamlets had two absolute return funds and two DGF (Diversified Growth Fund) managers. The Chair understood this to mean that the Council should be mindful to not lose manager value by investing in a pool with too many managers as there may be a risk of in effect moving towards passive management.
- It was clarified that the data presented on the table in the Tower Hamlets Fund Structure included funds which are not in the pool, namely GSAM, Insight and Schroders. It was noted that L&G was separate but the Council was paying the London CIV fees for managing the relationship with L&G and this would count towards the pooling arrangement.
- It was reported that the Fund had done well and was performing well relative to the benchmark. Significantly over the past year the Fund outperformed the average by 1.5%, this ranked it in the 7th percentile out of the 63 local authorities covered by PIRC and about the 4th or 5th ranked fund. It was noted that Baillie Gifford’s success contributed to this result.
- It was concluded that the Fund had outperformed over 1, 3 and 5 years and performed broadly in line with benchmarks over the long term which was a positive outcome.
ACTION: for a PIRC update to be on the meeting agenda for Board and Committee meetings in summer 2019. Bola Tobun to action.
RESOLVED:
- To note the presentation.
- To receive a PIRC update in summer 2019.
Supporting documents: