Agenda item

1.     Mr Graham introduced the report that included recommendations arising from the equity review and the fixed income review, to enhance the composition of the Fund’s investment portfolio.

2.     Mr English, Mercer, presented the conclusions from the Equity Portfolio Review.  The following points were noted in response to comments and questions:

·        The figures included in the presentation were indicative because the precise value of the investments changed on a daily basis.  Subject to approval by the Committee, investment changes would be conducted as percentages of the Fund’s allocation.

·        The Fund was restricted to select a sub-fund on the ACCESS platform, however both the quality-oriented global equity sub-funds that were identified were expected to perform well.

·        One of the two sub-funds was felt to have had some style drift, this was less favourable because it was important to the Fund that sub-funds had consistent repeatable investment processes with strong philosophical principles.

·        The proposals involved some significant change that would incur a cost.  Consideration would be given to employing a transition management specialist to ensure the transition was manged in an organised way, they could help to minimise the cost and risk of the transition.

·        An update would be provided to the Committee at the next meeting.

3.     Mr Page, Mercer, presented a summary of the Fixed Income Review.  The following points were noted in response to comments and questions:

·       It was felt that four mangers were too many, and that two or three would be preferable.

·       It was important to choose mangers from different fields.

·       When the Committee meet in February 2025, there could be a session to look at how the Fund and ACCESS Pool had developed, and what they might look like in the future.

4.     Mr Page, Mercer, presented the Kent Pension Fund Risk Monitoring report up to 30 September 2024.  During consideration of the presentation the following points were noted:

·       The equity protection strategy was working well.

·       Index linked guilts showed a 3.6% return since inception of the strategy and was regarded as providing sufficient collateral.

·       Consideration should be given to what needed to happen if there was too much or too little collateral.  A framework would be brought to the Committee in March 2025.

5.          RESOLVED to note the report and agree:

a)    to invest 20% of the Fund’s global equity allocation (equivalent to £665m) in the WS ACCESS Quality Stars Equity Fund (managed by Robeco);

b)    to disinvest entirely from the Sarasin Global Equity mandate (equivalent to £435m), using the proceeds to facilitate recommendation a);

c)    to redeem a sufficient amount (equivalent to £230m) from the WS ACCESS Global Equity Core Fund (managed by Baillie Gifford) to fund the residual investment requirement arising from recommendation a) after taking account of recommendation b).

d)    to invest 50% of the Fund’s UK Equity exposure (equivalent to £460m) in the UBS Life UK Equity Tracker Fund

e)    to redeem a sufficient amount from the WS ACCESS UK Equity Fund to facilitate recommendation d)

f)      to delegate implementation arrangements arising from recommendations a) to e), including the appointment of a transition manager where appropriate, to the Head of Pensions and Treasury

g)    to terminate the Fund’s fixed income mandates with Goldman Sachs, CQS and Schroders.

h)    to increase the Fund’s existing investment in the M&G Alpha Opportunities strategy to 5% of the total Fund value;

i)      to invest 5% of the Fund (equivalent to £420m) in the WS ACCESS Total Return Credit Fund (managed by BlueBay)

j)      to invest 5% of the Fund (equivalent to £420m) in the WS ACCESS Asset Backed Securities Fund (managed by 24 Asset Management)

k)    to delegate implementation arrangements arising from recommendations g) to j) to the Head of Pensions and Treasury.