Agenda item

A report of the Interim Director of Finance was presented to inform Members of the how the Investment Advisors' recommendations were being implemented.

A detailed report on the transactions undertaken to demonstrate the implementation of the Investment Advice recommendations and the Fund's valuation was included, as well as a report on the treasury management of the Fund's cash balances and the latest Forward Investment Programme.

The Fund continued to favour growth assets over protection assets.  For the period under discussion, bonds were still not considered value for the Fund and the Fund had no investments in Bonds at this time.

The cash level at the end of June 2023 was 4.34%.

Investment in direct property where the property had a good covenant, yield and lease terms would continue.  The Fund had purchased one property in the quarter for £30.5m – St Albans Retail Park. 

Investment in Alternatives, such as infrastructure and private equity, offered the Fund diversification from equities and bonds. They came with additional risks of being illiquid, traditionally had costly management fees and investing capital could be a slow process.  An amount of £66m was invested in the quarter.

It was a requirement that all transactions undertaken were reported to the Committee.  Appendix A to the submitted report detailed transactions for the period 1 April 2023–30 June 2023.

There were net purchases of £174m in the period, compared to net purchases of £84m in the previous reporting period.

As at 30 June 2023, the Fund had £218 million invested with approved counterparties. This was a decrease of £117 million over the last quarter.  The graph at Appendix B to the submitted report showed the maturity profile of cash invested.  It also showed the average rate of interest obtained on the investments for each time period.

The Fund Valuation detailed all the investments of the Fund as at 30 June 2023, and was prepared by the Fund's custodian, Northern Trust.  The total value of all investments, including cash, was £5,051 million. A summary analysis of the valuation showed the Fund’s percentage weightings in the various asset classes as at 30 June 2023 compared with the Fund’s customised benchmark.  The detailed valuation was attached at Appendix C to the submitted report and was also available on the Fund’s website www.teespen.org.uk.  This compared with the last reported valuation, as at 31 March 2023 of £5,060 million.

As at the 30 June 2023 the Fund’s equity weighting was 62.27% compared to 61.23% at the end of March 2023.   As cash levels reduced the team were looking at cashflow projections to determine if and when equity redemptions might be required.  A summary of equity returns for the quarter 1 April 2023-30 June 2023 were shown at paragraph 8.4 of the submitted report.

With regard to the Fund’s Local Investments, a further payment of £13.5m was made in August to GB Bank as the Bank received regulatory approval to exit mobilisation.

As at 31 August 2023 total commitments to private equity, infrastructure, other alternatives and other debt were £1,927m and details were provided at paragraph 8.8 of the submitted report.

ORDERED that the information provided was received and noted.