MEMORANDUMDate27May 2008
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To:All Members of theInvestment Committee / From:COUNTY SECRETARY'S
DEPARTMENT
Ask for:Adrian Service
Ext:25564
Minicom:6611
My Ref:AS/
Your Ref:
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INVESTMENT COMMITTEE
27 MARCH 2008
MINUTES
ATTENDANCE
MEMBERS OF THE COMMITTEE
N K Brook (Chairman), R S Clements (Vice – Chairman), B N W Hammond,
J Mansfield, R Mays, A Mitchell, J Morton, R G Parker, N Payne,E Singam.
Also in Attendance
D E Lloyd (Executive Member for Performance and Resources), S Quilty.
Officers in Attendance
C Sweeney-Finance, Information & Commercial Services Director
A Service-Democratic Services Officer
N Webb- Finance Manager
Upon consideration of the Agenda for the Investment Committee meeting on
27 March 2008 as circulated, copy annexed, action was taken or decisions
were reached on individual items as recorded below :-
EXCLUSION OF PRESS AND PUBLIC
That under Section 100 (A) (4) of the Local Government Act 1972, the public be excluded from the meeting for items of business in 1. to 9. below on the grounds that they involve the likely disclosure of exempt information as defined in paragraph 3 of Part I of Schedule 12 to the said Act.
1.PENSION FUND - INVESTMENT MANAGER'S REPORT (BLACKROCKPORTFOLIO) - FOR THE QUARTER ENDING31 DECEMBER 2007
Andrew Belshaw and Theresa Holland from BlackRock attended the meeting and advised of the activities undertaken on behalf of the Pension Fund during the past quarter and informed of the Manager's expectations together with their anticipated policy for the future.
Theresa Holland advised that Andrew Belshaw had been appointed to become BlackRock’s +Senior Macro Manager in addition to being the Gilt Fund Manager.
RESOLVED
That the report of BlackRock be noted.
[BlackRock’s two managers exited from the meeting at this point and
Jupiter’s two managers then entered the room.]
2.PENSION FUND - INVESTMENT MANAGER’S REPORT (JUPITER ASSET MANAGEMENT PORTFOLIO) FOR THE QUARTER ENDING 31 DECEMBER 2007
Charles Crole and Paul Sheehan from Jupiter Asset Management attended the
meeting and advised of the activities undertaken on behalf of the Pension Fund
during the past quarter and informed of the Manager's expectations together
with their anticipated policy for the future.
RESOLVED
That the report of Jupiter Asset Management be noted.
[Jupiter’s two managers exited from the meeting at this point.]
3.PENSION FUND - INVESTMENT MANAGER’S REPORT (ALLIANCE BERNSTEIN) FOR THE QUARTER ENDING 31 DECEMBER 2007
RESOLVED
That the report of Alliance Bernstein Institutional Investment Managementbe noted.
4.PENSION FUND - INVESTMENT MANAGER’S REPORT (BAILLIE GIFFORD PORTFOLIO) FOR THE QUARTER ENDING 31 DECEMBER 2007
RESOLVED
That the report of Baillie Gifford be noted.
5.PENSION FUND - INVESTMENT MANAGER’S REPORT (CAPITAL INTERNATIONAL PORTFOLIO) FOR THE QUARTER ENDING 31 DECEMBER 2007
RESOLVED
That the report of Capital International be noted.
6.PENSION FUND - INVESTMENT MANAGER’S REPORT (SCHRODER INVESTMENT MANAGEMENTPORTFOLIO) - FOR THE QUARTER ENDING
31 DECEMBER 2007
RESOLVED
That the report of Schroder Investment Management be noted.
7.PENSION FUND - SUMMARY STATEMENT AS AT 31 DECEMBER 2007
The Finance, Information and Commercial Services Director advised that compared to the penultimate quarter, the last quarter had been a mixed period for performance with only Manager exceeding their benchmark [Baillie Gifford] and two Managers [BlackRock & Baillie Gifford] producingpositive returns. He stated that recent longer term bad performance had resulted in two Managers not being retained after 1 April 2008.
In response to a request, the Finance, Information and Commercial Services Director stated he would contact Alliance Bernstein to see if they had anything to add to their submitted report on the last quarter relating to their under performance.
The Committee after having a thorough discussion about the recent performance of its Investment Managers and with the above taken into account consider they have fulfilled its obligations.
RESOLVED
That the report of the Finance, Information and Commercial Services Director summarising the investments held at 31 December2007, which detailed the performance of the Investment Managers during the last financial quarter, year and three year period be noted.
8.GLOBALISATION AND EQUITY INVESTMENTS
The Finance, Information and Commercial Services Directorsubmitted a report outlining and explaining the decisions of the Sub – Committee which met on
15 February 2008 interviewing six short listed global equity managers and considered which Investment managers should be appointed and or retained from 1 April 2008.
In response to a question, the Finance, Information and Commercial Services Director advised on the possible arrangements for hedging some of the pension funds
and what currencies tended to be hedged. He suggested that a further report on currency hedging should be submitted taking into account the comments / suggestions made at the meeting i.e the optimum level, the associated costs and how calculated, should a specific hedging manager be engaged or should some of the existing managers be requested to hedge a specific level of funds allocated to them.
RESOLVED
That 1) the decisions made at the Sub - Committee meeting held on 15 February 2008be endorsed and brought into effect from 1 April 2008; to
a)appoint Deutsche Asset Management, RCM Ltd and JP Morgan Asset Management as the Council’s Global Equity Managers with equal shares of assets and no performance fees;
b)not retain Capital International;
c)review the further engagement of Alliance Bernstein in 12 months time
d)retain two UK Equity Managers and that they be Jupiter Asset Management [based on recent performance] and Baillie Gifford [based on future performance advice given by the Council’s Consultant] ;
e)review the further engagement of Baillie Gifford in 12 months time;
f)not retain Schroders.
2) Mercers be requested to submit a report on currency hedging to a subsequent meeting.
9.MINUTES
The Minutes of the meeting of the Investment Committee held on
6 December 2007 were confirmed as an accurate record.
10.PENSION FUND – GOVERNANCE POLICY AND COMPLIANCE STATEMENT
The Finance, Information and Commercial Services Directorsubmitted a report giving details of the Governance Policy and Compliance Statement that the Council, as an administering Pension Scheme authority, was required to prepare and publish by 1 June 2008. He stated that the Communities and Local Government Department had issued new guidance to be taken into account by the Council in reviewing its Statement. He drew attention to the following aspects where the Council were not fully compliant with the guidance concerning : -
- direct representation of all 179 employers engaged in the Fund on the Investment Committee
- possible appointment of an independent professional observer
- votingrights for all Investment Committee Members or failing which, clear justification why voting is restricted.
The Committee considered the above three aspects and felt that the current representation and voting arrangements were satisfactory and this could be demonstrated by :
-issues concerning the Pension Fund were aired annually at the Employers meeting which all 176 employers were invited to attend giving them an opportunity to express concerns. Concerns raised at the annual meeting currently tended to be able to be explained and dealt with at the meeting.
-the majority of issues considered by the Investment Committee tended to be consensus decisions with only a few requiring a formal vote being taken.
-no requests have been received from the 176 employers to be represented on the Investment Committee.
It was felt that all Employers engaged in the Hertfordshire Pension Fund should be written to and reminded of the role and work of the Investment Committee and advised of their ability to attend meetings of the Committee if they so wished, particularly if they had concerns about the Pension Fund.
The Committee did not feel there would be any benefit of engaging an independent professional observer alongside Unison’s regional observer who attended most meetings plus additional cost would result from engaging a professional observer.
RESOLVED
That the draft Governance Policy and ComplianceStatement as submitted be approved.
11.LOCAL GOVERNMENT PENSION SCHEME – ACTUARIAL VALUATION AND FUNDING STRATEGY STATEMENT
The Finance, Information and Commercial Services Directoradvised the Committee of the triennial valuation of the Pension Fund as at 31 March 2007.
He also advised on a proposed draft Funding Strategy Statement to be adopted for the next 3 years.
It was noted that contributions to the Hertfordshire Pension Fund as invested were capable of funding 85% of pensions in 2007 compared to 76% in 2004.
He stated that the level of employers contributions had risen slightly since 2004 from 20.1 % to 21% in 2007.
He stated that he had discussed the future likely level of contributions with District / Borough Council officer colleagues and assumed that the information would be fed to their Councillors and to date no responses / comments had been received.
He advised that the difference [deficit] between the value of accrued liabilities and assets had reduced from £437.7m in 2004 to £387.9m in 2007 with the proposed level of contributions being geared to clear the Fund deficit in 20 years.
RESOLVED
That (a) the employers pension contribution rates for the period upto 31 March 2011 as set out in Appendix A to the submitted report be implemented.
(b) the Funding Strategy Statement as set out in Appendix B to the submitted report be approved.
12.DATES OF FUTURESUMMER MEETINGS
The Committee noted the dates of future summer meetings when the Annual Pension Fund Accounts and Report needed to be considered by the Committee prior to being agreed by the Audit Committee at their June meeting. To achieve this, the investment Committee summer meetings had been brought forward and would now be held on : -
a)Thursday 19 June 2008 at 10.00 am {previously set for 26 June 2008}
b)Wednesday 17 June 2009 at 10.00 am {previously set for 22 July 2009}
EMPLOYERS ANNUAL MEETING ON 9 APRIL 2008
The Committee Chairman drew attention to the Annual Meeting with Employers being held on Wednesday 9 April 2008 at 10 am at the Fielder Centre, Hatfield
and welcomed as many Committee members as possible to attend the meeting.
HEARING SYSTEM
The Committee expressed its dissatisfaction of the operation of the microphone
and hearing system during the meeting which had caused difficulties / deprived
Councillors with hearing difficulties to hear all the debate that had taken place.
Andrew Laycock,
CountySecretary
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