Agenda item

This paper provides the Pensions Board with a summary of the Pension Fund’s overall performance for the quarter ended 31 December 2024.

This item includes appendices that contain exempt information. Discussion of the appendices will require passing the proposed resolution at the end of the agenda to exclude members of the public and press.

Sian Cogley (Pension Fund Manager) introduced a report which highlighted the performance to the quarter ended 31st December 2024. Since the agenda had been published, more recent information had become available.

• Over the quarter to 31 March 2025, the market value of the assets decreased by £19m to £1,409m.
• The Fund has underperformed its benchmark net of fees by 0.05%, delivering an absolute return of -1.27% over the quarter.
• The total Fund delivered a positive return of 3.73% on a net of fees basis over the year to 31 March 2025.

On the 15th January 2025, officers submitted the Pension Fund’s response to the Fit to the Future consultation. This had previously been shared with both the Committee and Board as an appendix to the quarterly update. On 29 May 2025, the consultation outcome was released, alongside the final report on the Pensions Investment Review which covered both Defined Contribution (DC) and Defined Benefits (DB) Schemes. The Local Govt. Pension Scheme fell under a DB scheme.

William O’Connell questioned whether it was wise to be 5% over benchmark for equity in the current uncertain times. Sian Cogley explained that this would be discussed as part of the quarterly performance update at Pension Fund Committee on 25^th June. She added that as the fund was currently in the process of being revalued, it was likely that the investment strategy would be revised at the end of the year.

The Chair asked for clarification on the Liabilities in Appendix 1 and what they were. Sian Cogley explained that they were the present value of the pensions due to be paid to members.

The Chair raised concern regarding the LCIV Global Equity fund and specifically that there was a negative return both quarterly and annually. Patrick Rowe (Senior Finance Manager) explained that this was the performance of the fund against a benchmark and that the benchmark was a hard benchmark to hit, this was because the benchmark calculation included cash, that was currently performing well.

The Chair referred to page 44 of the agenda pack, and questioned why the LCIV Asset Manager, Ruffer, failed to take advantage of the upturn in the market following Donald Trump’s election victory in the USA. Patrick Rowe explained that the fund wasn’t positioned to benefit from the rise in equities because they weren’t sufficiently allocated in their assets under management to equities.

The Chair commented that the role of the asset manager was to respond to the changing markets and questioned why Ruffer was not live to the upturn in the market. Patrick Rowe confirmed that this was the case and especially for an active manager such as Ruffer but explained that Ruffer’s mandate was to offer an uncorrelated position in the portfolio so that they’re well placed to benefit when equities fell.

The Chair asked whether Aberdeen Long Lease was a commercial or residential investment. It was confirmed that it was a commercial investment.

The Chair commented that 26 years felt too short for a long lease. Sian Cogley told the Board that 26 years struck a balance between income durability and adapting to the market.

The Chair questioned whether there was a lock in period for the Aberdeen fund. Patrick Rowe confirmed that it was not a close ended fund and therefore a redemption request could be put in and this would be actioned usually within 6-12 months.

The Chair asked what percentage of the whole portfolio were in liquid funds and if that was mainly property based. Sian Cogley told the Board that 19% of the portfolio were in illiquid funds and this mainly came from infrastructure and fixed income mandates.

The Chair referred to the table in Appendix 3 and specifically the row regarding Net Expenses/Other transactions and questioned why the figure for December 2024 was circa £12m when all other months were closer to £400k. Sian Cogley explained that some money had been received in that period which had been transferred from the bank account to the custodian account.

RESOLVED: That the Pensions Board noted the report.