To submit a report by the Investment Manager
In response to a request from members, the Investment Manager submitted a report containing information on the Pension Fund's Investments. It was noted that the Annual Report published in September 2015 had already noted relevant information, and it was restated that the report summarised the main messages, and referred specifically to Gwynedd's choices.
It was explained that there were a number of restrictions within the regulations that could be increased by the fund, and a list of Gwynedd's current restrictions were listed in the report. However, it was emphasised that the regulations allowed administering authorities to increase the restrictions if they required. It was noted that there was an ongoing national consultation to change these regulations by abolishing restrictions in order to facilitate pooling and collaborative investment, although the existing arrangements would remain in force until March 2016.
In the context of the Local Government Pension Scheme regulations, the Pension Fund had to take specialist advice on investment. Hymans Robertson (independent advisor) was the advisor for Gwynedd's Pension Fund.
An advisor from Hymans would join the Pensions Committee's investment panel to monitor the investment managers, and would be present at each of the quarterly meetings with the investment managers. The Pensions Committee would agree upon an investment strategy, aiming to maximise the returns to the fund at present and in future - by considering (very) long term investments. Reference was made to the strategic distribution of the assets, noting that the majority was in equity, bonds and property.
Matters arising from the discussion:
• In referring to targets for the investment managers - it was suggested that a discussion and more detailed information was required.
• A wider picture of the performance was needed in order for the Pension Board to be able to add value - but to avoid duplicating the work of the Pensions Committee.
• There was a need to analyse investment trends over the medium-term.
• Performance monitoring? Were there formal guidelines or processes to do this?
• Were the fees of the investment managers and Hymans commensurate with the work?
• Was there a need to consider a specific period for contracts with investment managers / consultants? It was proposed that guidance or a process should be establised to manage the situation.
• It was agreed that there was a need to ensure flexibility to allow the continuation of the investment managers and consultants' contracts, but that a specific review period should be set.
In response to the above observations, it was noted that a summary of performance for each quarter could be presented, followed by a briefing session for discussion. It was emphasised that an overview of 3 - 5 year performance could be provided, starting with an overall overview before deciding whether there was a need to scrutinise in more detail.
In relation to setting a specific period for the contracts of consultants and investment managers, it was noted that Hymans had provided good advice over the years. A suggestion had been made recently to review the relationship, but it was decided to continue until 2017 (in the context of the current national consultation on pooling funds).
In response to a question, in the context of pooling in future either with Welsh and/or English funds, it was noted that good collaboration and research had been undertaken with Welsh funds, and that details of this proposal would be submitted as a response to the consultation in February 2016.
A) SHARE THE QUARTERLY PERFORMANCE SUMMARY WITH PENSION BOARD MEMBERS.
B) PROVIDE AN OVERVIEW REPORT OF PERFORMANCE TO MONITOR TRENDS (3 – 5 YEAR PERIOD)
C) RECOMMEND THAT THE PENSIONS COMMITTEE AMENDS THE POLICY TO SET A SPECIFIC TIME PERIOD FOR REVIEWING THE PERFORMANCE OF INVESTMENT MANAGERS AND THE INDEPENDENT CONSULTANTS