Agenda and minutes

To agree the Council’s procedure rules for remote meetings.

RESOLVED –

THAT the Council’s procedure rules for remote meetings be agreed.

a)              Apologies

b)              Election of Vice-Chair

To elect a Vice- Chair of the Pension Committee for the 2020/21 Municipal Year

(A)           APOLOGIES

Apologies for absence were received from Councillors Ranjit Singh and Stephen Stark.

Apologies for lateness were also received from Councillor Shiva Tiwari.

(B)     ELECTION OF VICE-CHAIR

The Chair gave a vote of thanks to Councillor Lorna Russell for her work as Vice-Chair of the pension Committee over the last Municipal Year, particularly her work in championing the responsible investment agenda. However, due to her work commitments she now found it difficult to attend day time meetings, which had increased in number, and so would not be standing again this year as Vice-Chair.

RESOLVED –

THAT Councillor Heather Johnson be elected as Vice-Chair of the Pension Committee for the 2020-21 Municipal Year.

The following Committee Members made declarations for the sake of transparency:

Councillor Heather Johnson declared that she was a member of the Pension Fund.

Councillor Shiva Tiwari declared that he was a Director of Mayfair Equity Partners which was a private equity fund.

Councillor Madlani declared that he was a Board member of UK Steno Investment Finance Association which had a number of members who were fund managers and pension funds.

Councillor Abdul Quadir declared with regard to item 9 “Long Lease Property”, that his daughter was an employee of Aviva and that he would contact the Executive Director Corporate Services to have this formally registered as an interest.

          TO NOTE: Executive Director Corporate Services

There were no deputations.

Broadcast of the meeting

The Chair to announce the following: “In addition to the rights by law that the public and press have to record this meeting, I would like to remind everyone that this meeting is being broadcast live by the Council to the Internet and can be viewed on our website for six months after the meeting. After that time, webcasts are archived and can be made available on DVD upon request.

If you have asked to address the meeting, you are deemed to be consenting to being filmed and to the use of those images and sound recordings for webcasting and/or training purposes. If you are addressing the Committee your contribution will be recorded and broadcast.”

Terms of Reference of the Pension Committee

The Terms of Reference of the Pension Committee were agreed by Council on 7^th September 2020 and have been circulated to Committee Members for information and noting.

Any other announcements

Broadcast of the meeting

The Chair announced the following: “In addition to the rights by law that the public and press have to record this meeting, I would like to remind everyone that this meeting is being broadcast live by the Council to the Internet and can be viewed on our website for six months after the meeting. After that time, webcasts are archived and can be made available on DVD upon request.

If you have asked to address the meeting, you are deemed to be consenting to having your contributions recorded and broadcast, including video when switched on, and to the use of those sound recordings and images for webcasting and/or training purposes.”

Terms of Reference of the Pension Committee

The Chair informed the meeting that the Terms of Reference of the Pension Committee had been agreed by the Council at its meeting on 7th September 2020. The Terms of Reference which had been circulated to Committee Members as attached at Appendix A, were noted.

Director of Finance

The Committee noted that Kathy Freeman, Director of Finance had recently left the Council to take up the role as Executive Director for Corporate Services at London Borough of Lewisham. The Committee thanked Kathy Freeman for the support she had given it during her time at Camden and wish her well in her new role. The Chair had written to her to convey his thanks.

The Committee congratulated Nigel Mascarenhas in being appointed to the role of Interim Director of Finance and welcomed that he would be staying closely aligned with the work of the Pension Committee.

There were no urgent items.

To approve as a correct record the minutes of the meeting of the Pension Committee held on 20^th July 2020.

RESOLVED –

THAT the minutes of the meeting held on 20^th July 2020 be approved as a correct record.

Report of the Executive Director Corporate Services

This report presents the performance of the Pension Fund investment portfolio and that of the individual investment managers for the quarter ended 30 June 2020.

Consideration was given to the report of the Executive Director Corporate Services.

The Committee noted the performance of the Camden Pension Fund investment portfolio and the individual investment managers for the quarter ended 30^th June 2020 (quarter 2 of 2020).

The Committee noted in particular that

·       The portfolio had a market value of £1.557bn at 31 March 2020, compared with £1.769bn at 30 June 2020.

·       During the second quarter of the year, Covid-19 was again the dominant factor on economies around the world and in the UK.

·       Following record breaking falls in equity markets in Q1, Q2 saw equity markets shoot back up.

·       Inflation levels remained low, and fixed income assets had a positive performance.

·       In currency markets, the dollar lost value over the quarter and the pound also performed poorly.

·       Gold had a particularly strong Q2 with prices rising above $1800/ozt for the first time since 2011.

Committee Members noted Appendix A “Camden Client Ranking by Manager” which detailed Camden’s exposure as clients to the overall fund or strategy managed by Investment Managers. Where Camden represented more than 5% of each fund and there was a material increase, due to client outflows, this would be reported to Committee on an exceptions basis.

The Committee also noted Appendix B, which presented a more comprehensive overview of the financial markets by the Independent Investment Advisor and reported the performance of the individual Investment Managers in more detail. Karen Shackleton, Independent Investment Advisor highlighted the salient points as follows:

(a)        London CIV - Baillie Gifford – This sub-fund delivered a return of +27.9% in Q2, outperforming Harris by +4.3%, and by +20.9% for the 12 months to Q2 2020. They outperformed the performance target by +7.4% for the quarter and by +8.9% for the 12 months. They were the highest performing sub-fund on the London CIV in Q2. Baillie Gifford’s 12-month performance had produced strong relative returns, beating the index by +8.9%. Some of this strong performance was attributed by the manager to its investments in ‘rapid growth’ companies, as well as consumer discretionary, communication services, and healthcare. The London CIV monitored this manager and due to the recent strong performance of the fund, fund flows would need to be carefully watched, as well as liquidity in the portfolio. Although the situation was currently under control, the situation could change, and as such monitoring would continue over the coming months. In terms of assets under management, the London CIV sub-fund stood at £3,088.9 million as at end June, an increase of £674 million since the previous quarter end. Camden’s investment represents 11.44% of the fund.

(b)       Harris – Harris’ stock selection had a positive impact, adding +5.14% and sector selection detracting -0.44 % from the return relative to the index in Q2 2020. Most of the positive stock selection came from holdings in financials, which added +3.6%, meanwhile information technology holdings were the biggest detractor from the sector selection (-1.9%). For the past 12 months, Harris had trailed its performance target  ...  view the full minutes text for item 8.

Report of the Executive Director Corporate Services

This report presents the report by our Investment Consultant, Isio, on the proposed Long Lease Property (LLP) mandate which was proposed as part of the Investment Strategy Review in July 2020.

This report has an appendix which contains information exempt within the meaning of Schedule 12A to the Local Government Act 1972 and is not for publication. The appendix has therefore been circulated to Committee Members only.

If the Committee wishes to discuss the contents of a closed exempt appendix it may pass the proposed resolution identified at the end of the agenda to exclude members of the public and the press from the proceedings for that discussion.

Consideration was given to a report of the Executive Director Corporate Services.

The Committee noted the report by the Fund’s Investment Consultant, Isio, on the proposed Long Lease Property (LLP) mandate which was proposed as part of the Investment Strategy Review in July 2020.

Isio had been commissioned to review the London CIV’s Inflation Plus fund, which had been identified as a good fit for this asset allocation. Their work was also scoped to examine other best in class managers and their work formed Appendix A and B to the report. Isio were asked to consider Environmental, Social and Governance issues in their brief as well as the Independent investment advisor’s points.

It was noted that Appendix Aset out Isio’s report on long lease property and the fit of the London CIV’s Inflation plus sub-fund to Camden’s requirements. The Committee also noted that Appendix B set out further information on long lease property investment managers and their processes. This was a Part II appendix, as it contained information relating to the financial or business affairs of particular persons and was, therefore, not available to the public. Committee Members confirmed that they had read the appendix and would take it into account when making the decision.

The London CIV’s sub-fund was managed by Aviva and they were also in attendance at the meeting to present their strategy and answer Members’ questions on their product. Their presentation was contained at Appendix C.

David O’Hara and Andrew Singh, Isio, reminded the Committee that in July 2020, Isio presented the Camden Fund with the results of a review of investment strategy, including suggested changes that would enhance the overall strategy. A key recommendation was to reduce inflation risk within the Fund by increasing the allocation to inflation-linked assets, such as LLP, residential property & infrastructure. The Committee agreed, in principle, to make an allocation into LLP and the specific strategic allocation was expected to represent 5% of the Fund’s assets. The Committee had a preference to make use of the investment options available via the London CIV investment pool if these provided a good strategic fit. During the investment strategy review, Isio identified that the London CIV Inflation Plus Fund might offer a potential approach to implement the LLP allocation. The Committee agreed to explore this fund in further detail and to seek to assess it relative to other potential alternatives

David O’Hara and Andrew Singh then summarised the main points and recommendations of their report.

·       Following the July Committee meeting, the Camden Fund agreed, in principle, to make a 5% allocation to long lease property. Given the regulatory framework for LGPS funds, there was a preference to invest via the London CIV if a suitable investment option is available.

·       London CIV did not currently offer a proposition with 100% long lease property exposure, however their newly established Inflation Plus Fund would be comprised of LLP assets in the majority, alongside other real assets predominantly with long dated inflation linked  ...  view the full minutes text for item 9.

Report of the Executive Director Corporate Services

This report provides a quarterly update on developments at the London Collective Investment Vehicle (CIV) in creating sub-funds for the spectrum of asset classes, on-boarding of assets and development of the CIV’s staff resource. Progress with the London CIV contributes to the Government’s pooling agenda and drive to reduce costs in the Local Government Pension Scheme (LGPS).

This report has an appendix which contains information exempt within the meaning of Schedule 12A to the Local Government Act 1972 and is not for publication. The appendix has therefore been circulated to Committee Members only.

If the Committee wishes to discuss the contents of a closed exempt appendix it may pass the proposed resolution identified at the end of the agenda to exclude members of the public and the press from the proceedings for that discussion.

Consideration was given to a report of the Executive Director Corporate Services.

Committee Members noted a quarterly update on developments at the London Collective Investment Vehicle (London CIV) in creating sub-funds for the spectrum of asset classes, on-boarding of assets and development of the CIV’s staff resource. Progress with the London CIV contributed to the Government’s pooling agenda and drive to reduce costs in the Local Government Pension Scheme (LGPS).

The Committee noted that Appendix A set out the Fund Launch plan and progress to date. This was a Part II appendix, as it contained information relating to the financial or business affairs of particular persons and was, therefore, not available to the public. Committee Members confirmed that they had read the appendix and would take it into account when making the decision.

It was noted that Jason Fletcher, the new Chief Investment Officer (CIO), joined the London CIV in July taking over from Kevin Corrigan. He had 29 years experience working in both the public and private sectors, actively managing and passively managing and investing in alternative assets and building responsibility investments in the process which will be important for the future.

The new Head of Responsible Investment, Jacqueline Jackson joined the London CIV in July, but was unable to attend the Committee meeting. It was noted that the London CIV was already a signatory on The Task Force on Climate Related Disclosures (TCFD), an enabler for more informed decision-making, helping to tackle climate change. Jacqueline Jackson would be heading the Responsible Investment Reference Group to ensure that responsible investment, risk and cost transparency was fully integrated into the investment life cycle. This built upon the Environment, Social and Governance (ESG) stocktake review undertaken previously.

Both Jason Fletcher (CIO) and Rob Hall (Deputy CIO) were in attendance at the meeting. Rob Hall informed the meeting that they had worked hard on getting to the next stage of pooling and stated that staffing was a key issue. They were aware that 10 people on the investment team was not sufficient for the growth ambitions of the company so that number would need to be increased. With regard to general resources, a head count needed to happen and systems and processes needed to be put in place and bedded in. These were important, but it was stressed that these were more tweaks rather than huge changes. It was good to get to help with risk management and manager oversight. The main key issue was that they were moving from a stage seen as being a procurement platform to really working with clients on a partnership basis, designing products clients required. Selecting the managers, selecting the funds and having a rigorous self-discipline in place in case anything happened to those funds was important. Value could be added throughout all of those which hopefully would be seen from hereon. Transparency and communication was key and fundamental to that was listening. They had recruited another person in the client relationship team to increase the  ...  view the full minutes text for item 10.

Report of the Executive Director Corporate Services.

The Pension Fund is required to produce an Annual Report under the Local Government Pension Scheme Regulations 2013. This report presents the 2019/20 Annual Report to the Pension Committee.

Consideration was given to a report of the Executive Director Corporate Services.

It was noted that the Pension Fund was required to produce an Annual Report under the Local Government Pension Scheme Regulations 2013. The Committee noted the 2019/20 Annual Report.

The Chair informed the Committee that he would need to make a few administrative changes to his Forward set out on pages 153-154 and confirmed that the content of the report would not change.

RESOLVED –

THAT the 2019/20 Pension Fund Annual Report, as attached at Appendix A, be approved, subject to administrative changes being made by Councillor Madlani to the Chair’s Forward.

          ACTION BY: Executive Director Corporate Services

                              Councillor Madlani

Report of the Executive Director Corporate Services

This report presents comparative analysis of the Fund’s investment managers’ performance on Environment, Social and Governance (ESG) issues against peers and national indicators.                                                                      

Consideration was given to a report of the Executive Director Corporate Services.

The Committee noted the comparative analysis of the Fund’s investment managers’ performance on Environment, Social and Governance (ESG) issues against peers and national indicators. Committee Members welcomed this report and felt that it would be useful for the data to be extracted for the Investment Manager meetings.

ACTION BY: Executive Director Corporate Services

It was noted that all of the Fund’s investment managers had confirmed that they were signatories to the United Nations Principle for Responsible Investment (UNPRI). Each signatory to the UNPRI was required to undergo an annual review which assesses how a participant had implemented the principles of UNPRI in their investment process. Committee Members referred to paragraph 3.4, Table 2 – Fund Managers’ UNPRI Ratings and were concerned that Harris was the only manager showing ‘red’ indicating that gender pay gap was higher than national average.

Officers were asked to write to Harris and those managers to express the Committee’s concern where the direction of travel of the gender pay gap was predominately downward and was more than 30% for senior management and if they had a UNPRI less than A grade.

ACTION BY: Executive Director Corporate Services

The Chair referred to paragraph 3.14, which detailed the diversity within

companies’ Boards, senior management teams and the overall mix of

employees. Councillor Madlani asked officers to include the London CIV in future reports.

ACTION BY: Executive Director Corporate Services

Officers were asked to investigate if the Council’s supply chain were asked about work experience and/or apprentice opportunities. If not, then it was suggested the Pension Fund managers should be asked about the possibility of providing placements for apprentices and or work experience.

ACTION BY: Executive Director Corporate Services

RESOLVED –

THAT the contents of the report be noted.

Report of the Executive Director Corporate Services

This report brings Members up to date with engagement activity undertaken by the Fund and on its behalf by LAPFF (the Local Authority Pension Fund Forum) since the last Committee meeting. This work is important to the Fund’s ambition to be a fully engaged investor and demonstrates its commitment to Responsible Investment and engagement in Environmental, Social and Governance (ESG) issues as a way to achieve its objectives.

Consideration was given to a report of the Executive Director Corporate Services.

The Committee noted the engagement activity undertaken by the Fund and on its behalf by LAPFF (the Local Authority Pension Fund Forum) since the last Committee meeting. This work was important to the Fund’s ambition to be a fully engaged investor and demonstrated its commitment to Responsible Investment and engagement in Environmental, Social and Governance (ESG) issues as a way to achieve its objectives.

RESOLVED –

THAT the contents of the report be noted.

Report of the Executive Director Corporate Services

This report sets out items scheduled for future agendas of this Committee together with a record of training/ meetings attended and a list of future training opportunities.

Consideration was given to a report of the Executive Director Corporate Services.

The Committee noted the items scheduled for future agendas of this Committee together with a record of training/meetings attended and a list of future training opportunities.

The Chair asked Committee Members to inform the Head of Treasury and Financial Services if they wished to attend the meetings with Investment Managers or any training sessions, including refresher training.

          TO NOTE: ALL

RESOLVED –

THAT the contents of the report be noted.

There was no urgent business.