Consider the report of the Investment Manager
Submitted - a report prepared by the Investment Manager, with support from Hymans, that had already been agreed by the Pensions Committee and distributed to the employers and union representatives for consultation. The Pension Board was invited to scrutinise the document and details of the process, and decide whether or not it wished to make observations on the consultation.
The strategy was discussed and the Head of Finance Department drew attention to the most important issues.
In response to a target allocation of 10% in Property assets, it was asked whether or not the Fund intended to invest in social / residential housing considering that 10% was a target that was likely to attract good forecasts. The Head of Finance Department highlighted that some Funds were interested in investing in such property, but that Gwynedd's Fund did not intend to consider residential property and that such local opportunities were rare. As an individual Fund, it was noted that there were arrangements in place with the four property managers dealing with commercial and student accommodation property, but that the portfolio had not included residential property. It was suggested that the Government was likely to push funds towards infrastructure before residential housing.
It was noted that the Pensions Committee reviewed the nature of the Fund's investments on a regular basis, and monitored Investment Managers often to ensure that they adhered to the portfolio. Reference was made to the risks that needed to be taken to achieve the funding objectives and also to the methods of dealing with those risks. It was acknowledged that an element of risk had to be considered in order to secure returns and that the Investment Managers had to be trusted.
In discussing the assets already invested with the Wales Pooling Fund, the intention of using the Pool in the future was acknowledged. 22.5% of liquid assets had been transferred to the Pool, and as the Gwynedd Fund already had a Blackrock Manager, there had been no transfer fees; however Gwynedd continued to receive savings. In the context of Passive Equity, it was noted that there was a cost associated with a substantial number of transactions, but that this was a part of the risk management element.
In response to a question regarding the alleged discontent of the WLGA and the national Scheme's consultative Board, that the Wales Pool was under the influence of the Councils, it was highlighted that the joint committee would make the decisions on behalf of their funds. These would be public meetings and the idea was to keep to eight members (minimum). It was highlighted that representatives on the Board would report back comprehensively and effectively to the Pensions Committee and Pension Board. It was also noted that the constitution of the joint committee was about to be approved - subsequently, it would be possible to consider who else would need to be a part of the process, e.g. co-opted members on behalf of the scheme's membership.
It was accepted that the report had been drawn up jointly with input from Hymans and although it was a complex document, it was suggested that the strategy's contents were correct.