Quarterly Investment Performance Report to 30/6/19 / Adroddiad Perfformiad Buddsoddi Chwarterol 30/6/19
5.1 The HoP highlighted the following
key headlines from the report:
- Markets had been generally rocky in Quarter 1; however some
recovery had been seen in Quarter 2.
trade wars and relations between the US and China had an effect on
the markets, as did issues around Brexit.
the end of June 2019 the value of the Fund had increased by
£130 million to £3,058 million. At the end of August
2019 the value of the Fund was £3,077 million, which was a
fair way ahead of the value of the Fund at the start of the
- Investment performance was marginally below the benchmark over 1
year; however performance was healthy and ahead of the benchmark
over 3 years, 5 years and 10 years respectively.
- Healthy investment performance over 3 years was helpful and
positive in terms of the 2019 Actuarial Valuation.
investment performance by fund managers could be seen in paragraph
9 of the report; however it was important to note that Aberdeen
Standard had come back strongly in recent months. The DIIA added
that a change in senior manager at Aberdeen Standard had resulted
in positive changes to their whole process, including their
short-term tactical decisions.
first full quarter of results from the Wales Pension Partnership
(WPP) was available, where Global Equities investments had
outperformed the benchmark, as well as providing more competitive
Fund was looking to invest in UK Equities within the WPP within the
5.2 The IIA provided the following headlines from Appendix 1 of the
- Markets had more than recovered their May 2019 losses; however
an up and down summer had taken place.
US Federal Reserve had cut interest rates for the first time in 10
years, which suggested growth concerns.
- Risk aversion could be seen by the strong demand for Government
Bonds and the fact that UK Gilts had delivered 3.8% in August
- Sterling was weak in July 2019 and flat in August 2019, largely
due to the uncertainty around Brexit.
- Growth in the Eurozone was quite slow, leading to the phrase
- Currencies, commodities and equities investments were all
becoming more volatile. As a result, the Fund needed to keep
abreast of what individual investment managers were doing and make
sure that diversification existed in terms of the Fund’s
5.3 Following questions from the Committee, the IIA made the
the long-term, it was not a good idea to make too many tactical
changes to the Fund’s Strategic Asset Allocation (SAA) and in
the short-term this could be expensive.
- More diversification of investments was needed along with global
exposure and changes around equities investments needed to be
staggered over time.
- Investments in property and infrastructure should improve once
issues around Brexit had become clearer.
was important to have investments within the Fund’s portfolio
that could perform well during a recession.
broad-based approach to currency exposure would be her
recommendation and it was impossible to know the trajectory that
Sterling would take in future.
- Dividends could be accessed in order to manage a shortfall in
cash flow; however it was likely that other areas would be accessed
first, especially cash and fixed interest investments.
The Pensions Committee agreed to:
Note the investment performance that had
taken place during the second quarter of 2019: and
investment activity and consider any further appropriate course of