The Investment Committee of Kensington and Chelsea Council met on Tuesday, 1 April 2025, to discuss the Pension Fund's exposure to arms sales to Israel, review investment performance, and consider various financial reports. Key decisions included approving the Competition and Markets Authority (CMA) Investment Consultant Review and noting the rebalancing report, while also hearing significant public representations regarding ethical investment concerns.

Pension Fund's Exposure to Arms Sales to Israel

The committee heard significant public representations regarding the Pension Fund's investments in companies involved in arms sales to Israel. Lena El-Malak and Councillor Mona Ahmed spoke on behalf of concerned residents and employees, highlighting potential legal vulnerabilities and reputational risks associated with these investments. They urged the Pension Fund to adopt a proactive ethical investment strategy, including divestment from companies failing to meet ethical and legal standards, and to implement a transparent due diligence process. Councillor Emma Dent Coad emphasised the importance of reflecting the level of concern on this issue, particularly given the borough's large Arab population, and reported on the signatures collected for two petitions. Councillor Sina Lari inquired about the responses from trade unions and fund members, with Councillor Dent Coad noting that a significant majority of pension holders approached were unaware of the fund's exposure to Israel's military activities. Councillor Marwan Elnaghi expressed concern over atrocities and breaches of international law, drawing a parallel with the Grenfell Inquiry and the moral responsibility to address the Israel/Gaza conflict. Lena El-Malak clarified that the practical outcomes sought were greater transparency on investments linked to the conflict and a commitment to divest from these stocks. The Chairman requested that a copy of the presentation be circulated to committee members.

Rebalancing

The committee noted the report on rebalancing as of 31 March 2025. It was agreed that as the assets were within the review ranges and in keeping with the rebalancing policy, no changes were necessary.

Competition and Markets Authority (CMA) Investment Consultant Annual Performance Review

The committee noted the report and appendix, and approved the CMA Investment Consultant Review for 2024/25. The review indicated that Mercer, the fund's consultant, had performed well over the past year, achieving all aims and objectives to a satisfactory standard. The report detailed Mercer's performance against objectives related to assisting the fund in achieving its goals, governance and costs, proactivity, monitoring, and delivery.

Quarterly Performance Review

The Chairman requested that fund manager benchmarks be discussed at the July meeting. James Brundrett tabled a Baillie Gifford Global Alpha Performance Update, and the Chairman asked for Baillie Gifford to be invited to the July meeting to provide its perspective. The committee commented on the altered risk of retaining an active manager given potential changes to the Local Central Investment Vehicle's (LCIV) role from April 2026. Mercer was asked to consider what strategy it would advise for the Fund for the next 12 months and beyond April 2026. The report highlighted that the fund value increased by 4.8% to £1,904 million for the quarter ending 31 December 2024. Baillie Gifford underperformed its quarterly benchmark by 2.43%, while BlackRock slightly underperformed its quarterly target by -0.02%. Adams Street outperformed its quarterly benchmark by 9.87%. The latest actuarial report showed a funding level of 224% as at 31 December 2024.

Any Other Oral or Written Items Which the Chairman Considers Urgent

Members and Co-optees were reminded to fill out the form to register as a gift the Baillie Gifford dinner.