Agenda item

A report of the Director of Finance was presented to inform Members 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. The Fund had no investments in Bonds at this time.

At the June 2018 Committee it was agreed that, a maximum level of 20% of the Fund would be held in cash. The cash level at the end of June 2024 was 3.44%.

Investment in direct property continued where the property had a good covenant, yield and lease terms. There were no purchases or sales in the quarter. Investment in Alternatives, such as infrastructure and private equity, offered the Fund diversification from equities and bonds. An amount of £67m was invested in the quarter.

It is a requirement that all transactions undertaken are reported to the Committee. Appendix A detailed transactions for the period 1 April 2024 – 30 June 2024.  There were net purchases of £66m in the period.

The Fund Valuation detailed all the investments of the Fund as at 30 June 2024, and was prepared by the Fund's custodian, Northern Trust. The total value of all investments, including cash, was £5,524 million. The detailed valuation was attached as Appendix C was also available on the Fund’s website www.teespen.org.uk. This compared with the last reported valuation, as at 31 March 2024 of £5,468 million.

A summary analysis of the valuation showed the Fund’s percentage weightings in the various asset classes as at 30 June 2024 compared with the Fund’s customised benchmark.

As at the 30 June 2024 the Fund’s equity weighting was 60.26% compared to 60.92% at the end of March 2024. Redemptions of £75m in total, were made from the Border to Coast Overseas Developed Market and UK Listed Equity Funds. It was agreed between the Investment Advisers and the Head of Pensions Governance & Investments that the Fund will disinvest from our State Street (SSGA) Passive Equity Funds.

The redemptions from SSGA had started with the proceeds coming back to the fund, (approximately £340m would be returned as cash), they would be completed over the coming quarter and reported to the Committee. The transfer of £330m to the Border to Coast Overseas Equity Fund was complete in September.

To date the Fund had agreed 4 Local Investments:

·        GB Bank – £20m initial investment called in full in September 2020. £6.5m was paid to the bank in December 2021. £13.5m paid August 2022 as the bank received regulatory approval to exit mobilisation. £4m was agreed at the September 2023 Committee and paid to GB Bank in October. £5m agreed at March 2024 Committee and paid May 2024.

·        Ethical Housing Company - £5m investment of which £765k had been called.

·        Waste Knot - £10m investment agreed at the June 2021 Committee, payment made in full December 2021.

·        FW Capital – At the September Committee agreement was given for an investment of £20m into the Teesside Flexible Investment Fund. The money would be called down as and when investments were made.

As at 30 August 2024 total commitments to private equity, infrastructure, other alternatives and other debt were £1,963m

ORDERED that the information provided was received and noted.