The Investment Committee of Kensington and Chelsea Council met on Wednesday 24 January 2024, making decisions on investment rebalancing and reviewing the performance of their investment consultant. The committee also discussed approaches to levelling up investments and noted updates on the council's business plan and quarterly performance.

Levelling Up Investments

The committee discussed the types of investments that fall under the government's levelling up agenda, with a focus on ensuring such investments financially benefit the communities of Kensington and Chelsea. They requested that Mercer, their investment advisor, provide more information on different approaches to levelling up investments and how their returns will be monitored. Phil Triggs, TriBorough Director of Treasury and Pensions, read out the 12 areas the government categorises as levelling up investment, which will be circulated to the committee. The committee resolved to note the report on this topic.

Investment Rebalancing

A significant decision was made to rebalance the BlackRock global equity fund. This involves redeeming a fixed nominal sum of £105 million, which will be implemented on 25 January 2024 and the proceeds held in cash. Additionally, the committee resolved to purchase £12 million of gilts from cash deposits. This transaction will be delegated to officers in consultation with the Chairman, Councillor Quentin Marshall, and Mercer. The Chairman also requested that a paper on a liquidity management policy and liquidity risk be drafted for discussion at the next meeting.

Competition and Markets Authority (CMA) Consultant Review

The committee reviewed and commented on the performance of their investment consultant, Mercer Ltd, for the 2022/23 period. They approved the CMA Investment Consultant Review for 2022/23 and agreed to roll forward the investment consultant objectives for 2023/24.

Next Steps on Investments

The committee noted that it would be beneficial to track the approach followed by the fund against the achievements of a pooled approach. In relation to training for committee members, it was acknowledged that discussions with investment managers count as training and have been useful in increasing member understanding of investment strategies. The Chairman suggested that an analysis of skill gaps among committee members should be the first step in developing a training plan, with subsequent training focusing on identified areas to maximise participation. Phil Triggs agreed that a questionnaire would be circulated to identify these skill gaps. The committee resolved to note the report on this item.

Business Plan and Quarterly Performance Review

The committee noted that their responsibility for risk management is limited, as highlighted by members in the previous year. They resolved to note the report on the Business Plan. Regarding the Quarterly Performance Review, the committee noted questions raised at the November full Council meeting concerning the fund's investment in defence stocks. The report included details of exposure to companies involved in defence and weapons manufacture, which had been included in response to Freedom of Information (FoI) requests. No change in investment approaches was proposed. The Chairman commented that the companies listed were not operating illegally and that any decision to change investment approaches could raise practical and ethical concerns, suggesting that an Investment Committee meeting was not the appropriate forum for such an initial discussion. The committee resolved to note the report.

Other Matters

The committee also noted the rolling forward of the Business Plan objectives from 2023/24, which will be updated for the 2024/25 plan. The minutes of the previous meeting held on 1 November 2023 were confirmed as a correct record.