The Pensions Fund Committee - Investment Sub-Committee met on Monday 7 September 2026 to review investment performance, stewardship activities, and current market conditions. The meeting's agenda included updates on the fund's quarterly performance, stewardship and engagement reports, and current investment topics.

Stewardship and Engagement Report

The committee was scheduled to receive an update on stewardship and engagement activities for the period ending 31 March 2026. This report detailed the fund's voting activity within the ACCESS pool, where investment managers are expected to exercise voting rights and engage with companies to promote good governance. The report noted that during the period, there were 198 resolutions to vote on, with 172 votes cast in favour and 19 against management proposals. It also highlighted instances where investment managers voted contrary to ACCESS guidelines, providing explanations for their decisions.

The report also covered engagement activities by ACCESS pool managers, with 23 confirmed engagements with companies, focusing on environmental, social, and governance (ESG) topics. Direct engagement with investment managers by the fund was paused due to a transition between investment pools, but regular arrangements were set to resume. The report also detailed engagement activities undertaken by the Border to Coast Pensions Partnership (BCPP) and the Local Authority Pension Fund Forum (LAPFF).

A significant point raised in the report was correspondence received from the Palestine Solidarity Campaign (PSC) regarding the fund's investments in companies alleged to be linked to breaches of International Humanitarian Law. The PSC requested that the fund consider divestment from such companies. The report indicated that legal advice had been obtained, and a draft response was being prepared.

Current Investment Topics - Update

The committee was scheduled to receive an update on current investment topics, including developments in the Middle East and their potential implications for financial markets. The report noted initial negative market reactions due to concerns about the Strait of Hormuz and rising oil prices, leading to inflationary impacts and potential interest rate increases. However, the situation had reportedly stabilised, with oil prices falling back and equity markets largely recovering.

The report also discussed various economic scenarios, with a return to stable environment appearing most likely. The impact of macro trends such as artificial intelligence (AI), the reversal of globalisation, and aging populations were also on the agenda. Currency hedging was another topic, with Border to Coast set to become the fund's principal investment adviser, and future discussions on this matter to be part of broader portfolio implementation arrangements.

Quarterly Performance Report for the period ending 30 June 2026

The committee was to review the quarterly performance report for the period ending 30 June 2026. This report indicated that the fund was in a strong financial position with a funding level of 127%, despite a reduction during the quarter attributed to negative equity performance and valuation prudence. Longer-term performance was reported as strong and ahead of the funding target.

The report detailed that equities had underperformed the benchmark over the year, primarily due to active global equity mandates. Specific managers like Baillie Gifford and Longview were mentioned in relation to volatility and performance challenges. Bond portfolios were reported to have performed as intended, while infrastructure continued to deliver positive returns. Property and private equity were noted as more challenging, partly due to higher interest rates and slower market activity. The report also mentioned that action was underway to move away from pooled property funds as part of the transition to Border to Coast.

The report also included a Monitoring Snapshot with a traffic light overview of various asset classes, assessing their performance and providing commentary. This included details on the fund's funding position, overall fund monitoring, and performance monitoring for listed equity, bonds, and alternatives. The strategic asset allocation for the fund was also presented, outlining the target allocations for listed equities, bond assets, and alternative assets.

Other Scheduled Discussions

The meeting agenda also included a review of the action log from the previous meeting, which indicated that all actions had been completed. The committee was also scheduled to discuss urgent business, if any, and to consider excluding the press and public for certain items of business, including a private quarterly performance report, private minutes of the previous meeting, and updates on asset transition, BCPP capabilities, and an introductory briefing on BCPP.