The Pension Fund Panel (PFP) of Ealing Council met to discuss the performance of the pension fund, its administration, and future investment strategies. The panel approved an updated Investment Strategy Statement (ISS) and a proposed £17m commitment to the Gresham House British Sustainable Infrastructure Fund III (BSIF III). They also noted updates on fund performance, investment pooling, and responsible investment initiatives.

Investment Strategy and Asset Allocation

The panel received an update on the implementation of strategic asset allocation changes approved in December 2023, which were delegated to the Strategic Director, Resources. These changes include reducing the equity allocation to 50% and carving out 3% for private equity, increasing the allocation for income assets to 25%, reducing property allocation to 9%, and maintaining a 25% allocation for protection assets split between investment grade bonds and index-linked gilts.

The panel approved a proposed commitment of £17m to Gresham House BSIF III within the infrastructure allocation. This investment aims to enhance diversification, meet the fund's Environmental, Social and Governance (ESG) and net zero objectives, and address the fund's underweight position in infrastructure relative to its new target. The remaining underweight position is expected to be addressed by topping up the existing allocation with JP Morgan.

Hymans Robertson conducted due diligence and concluded that Gresham House BSIF III:

• Targets a 12% net Internal Rate of Return (IRR) and 5% cash yield per annum with diversified UK focused sustainable infrastructure
• Aligns with UN Sustainable Development Goals (SDG), focusing on decarbonisation, regeneration, digital inclusion, and resource efficiency
• Is managed by an experienced team at Gresham House, with robust governance, ESG integration, and processes consistent with earlier BSIF strategies
• Has an existing LGPS investor base and familiarity with the investment approach.

Pension Fund Performance

The panel received an update on the fund managers' investment performance for the quarter ending 31 March 2025. The value of the fund's investments was £1,713.7m as at 31 March 2025, a decrease from £1,758.7m as at 31 December 2024. For the quarter, the fund returned -2.75% against a benchmark of -1.79%. The total fund over/under performance for 12 months, 3 years, and 5 years since inception was -1.42%, -0.98%, -1.29%, and -0.75% respectively.

The report, Cover Report - PF Perf Mon the qtr ended 31 March 2025, noted that Baillie Gifford's poor performance was under close review.

The panel also noted updates on Federated Hermes and Lothbury Property Trust investments, including the closure of Federated Hermes.

LGPS Pooling and Responsible Investment

The panel received updates on the government's response to the Mansion House Accord¹ and the Fit for the Future consultation, which includes proposals requiring all LGPS funds to pool investments by March 2026, as detailed in the LGPS Pooling Reform Update.

The panel also reviewed Ealing's Responsible Investment (RI) Framework and LCIV's emerging RI matrix to support local objectives. The council has committed to achieving net zero carbon emissions by 2045. The strategy includes climate considerations, recognising both physical and transition risks, and integrates RI into the fund's strategic asset allocation to support the net zero glide path.

Pension Fund Administration

The panel received an update on the performance of Local Pensions Partnership Administration (LPPA), the external contractor responsible for pension administration. The Pensions Administration Update Report noted the performance of the LPPA as set out in the LPPA's Quarterly Administration Report Q4 covering the period 01/01/2025 – 31/03/2025 in Appendix 1.