Agenda item

To consider the report

Submitted, for information, a report from the Investment Manager, updating Members on the Partnership's work, the performance of the Fund, and ongoing developments since its establishment in 2017. It was reported that the collaboration continued to go from strength to strength and by December 2021, 83% of Gwynedd's Fund had been pooled with the WPP (56% through the main funds and 27% through passive investments). As the WPP played a prominent role in the performance of the Gwynedd Fund, the importance of providing a regular update on the Partnership's work was considered.

In the context of Equity Funds, which had been established in 2019, it was noted that although the performance of the last quarter had been lower than the benchmark, the performance in general had been very good and had made a good contribution to the fund's performance. It was reiterated that the last quarter had been challenging, with concerns about the economic recovery expected following such a strong period.

In the context of Fixed Income Funds, which had been established 12 months ago, it was suggested that the general performance appeared to be good, yet again, the performance of the last quarter had been lower than the benchmark due to concerns about inflation and various other factors.

It was reported that the Fund's proportion of Emerging Markets had moved from Fidelity to the WPP Fund on 21 October 2021 and that the new Fund Managers were Artisan, Bin Yuan, Barrow Hanley, Axiom, Numeric and Oaktree. It was reiterated, in line with the advice from Russell Investments, that Bin Yuan had been selected due to their location in China and thus they were experts on the country's character and its markets.

It was expressed that the Partnership's latest work was to establish Private Markets with BFinance, a specialist search advisor, assisting the Partnership with the process of appointing Investment Managers for Infrastructure and Private Credit. It was reiterated that the intention was to launch these funds in 2022 with the Gwynedd Fund investing any new private markets money in them.

In the context of a member representative on the Joint Governance Committee, it was noted that Gwynedd Council had approved the modifications to the Inter-Authority Agreement on 7 October 2021. All WPP Authorities will be expected to approve the modifications before proceeding to the next step of nominating Member representatives. In accordance with the agreed procedure, in January 2022, a period of three weeks would be available for each Pension Board to nominate one Member Representative to undertake this role. In February, a short-list would be drawn up and a member representative would be formally appointed at the Joint Committee meeting on 23 March 2022.

The Head of Finance expressed that he would support the application of Osian Richards as a member representative on the Joint Governance Committee (as an observer for a period of two years). It was confirmed that one individual across the 8 Wales Pension Boards would be appointed.

Gratitude was expressed for the report.

Osian Richards was proposed and seconded as a member representative on the Joint Governance Committee.

In response to a question regarding the percentage invested in the Emerging Markets, it was noted that there were no separate percentages available for the sub-funds, but that 5% of the Fund was to be invested with Bin Yuan. It was noted that it was impossible to ignore the fact that the Chinese Market was seeing the biggest growth at present, and with Bin Yuan located in the country, current information could be guaranteed - WPP was eager not to miss the opportunity and take a risk.

In response to a question regarding the Partnership's costs (costs for 2020/21 - £706,000), and how the amount was divided between the Authorities, it was noted that the Partnership's day-to-day administrative arrangements were split equally between the eight authorities. It was reiterated that the investment costs were subject to each Authority's investments, with a pro-rata fee for shared funds and Hymans provided a separate bill for each Authority. Although it was accepted that substantial costs could mount, it was noted that the returns were good.

A comment was made that as 83% of the Fund had transferred to the WPP, this was proof of the good collaboration and that the Partnership should be congratulated on its success, as it was one of the best in Britain. This was something to be proud of.

The information was ACCEPTED.