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Introducing a new Investment S trategy Mark Whitby FPMI, CPFA Head of Pensions 17 th May 2019

Mark Whitby introduces a new investment approach to boost returns and diversify risks, aiming to improve overall fund performance and secure inflation-linked cash flows. Learn about strategic asset allocation changes, savings achieved through pooling, and future considerations for fund enhancement.

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Introducing a new Investment S trategy Mark Whitby FPMI, CPFA Head of Pensions 17 th May 2019

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  1. Introducing a new Investment Strategy Mark Whitby FPMI, CPFA Head of Pensions 17th May 2019

  2. Why change our investment strategy? Former strategic asset allocation • Return was sufficient to meet need • Heavy reliance on equity to generate return • Equity and liability risks dominated • Broadly maintain expected return • Reduce/spread investment risks • Increase assets that generate inflation-linked cash flows Aim To

  3. What has been the Fund return? Performance of Fund versus Target (since March 2016) (Provisional figures to 31 March 2019)

  4. What is the funding level?

  5. What is the new strategic asset allocation?

  6. What is are the return and risks metrics?

  7. How are we building up our Alternatives?

  8. What else is the Fund considering? £100m Local Economic Development Fund £450m of equity protection

  9. How does the asset pool work?

  10. How is pooling progressing?

  11. How is pooling working for the Fund?

  12. What fee savings are we experiencing? • Only “best in class” managers made available through the pool • Net of fee performance should therefore be improved • Pool Operator (Link) costs offset by reduced investment manager fees for active funds • Example savings: • UBS Global Passive – Like for like fee reduced by 83% to £450k p.a. • JO Hambro – Over £400k p.a. indicative tax savings in pool

  13. What is next? • Revisit equity allocations now new strategic allocation set • Equity protection and Local Economic Development Fund • Fixed income – making credit work harder • Pool solution for existing multi-manager/indirect property mandates • Pool solution for new commitments to Alternatives e.g. infrastructure, private equity • Consideration of multiple Fund investment strategies • Responsible investment policy and signing up to the Stewardship Code

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