On the go: The Greater Gwent Pension Fund has reported a loss of £137mn in the first quarter of 2022, mainly due to the global economic climate.
According to the council’s pensions committee investment report, published on June 13, the fund posted a negative return of 3.51 per cent in the first three months of the year, underperforming its benchmark return of minus 2.91 per cent by minus 0.6 per cent.
The fund value decreased by £137mn and now stands at £3.76bn.
The report cited macro themes such as “slowing growth, rising inflation and tightening monetary policy”, as well as the fund’s exposure to equities, as reasons for the poor performance in Q1.
Despite mentioning the Russian-Ukraine conflict, the report stated that the fund had a “relatively small” exposure to Russia (roughly 0.2 per cent) prior to the invasion.
Fund managers had brought this to 0 per cent due to the sanctions imposed by the US, the UK and the EU, it added.
However, the pensions committee did add that the scheme’s performance should be judged over a longer timeframe.
Alex Bull, Torfaen County Borough Council’s head of pension fund management and investment, said: “Generally, it’s a disappointing quarter following a string of positive quarters. It is unsurprising given what is going on in the world right now.”
In the previous quarter, the Greater Gwent Pension Fund posted a positive return of 3.71 per cent, equating to an increase of £141mn.
The fund’s performance in 2021 achieved returns of 30.5 per cent, exceeding its 25.7 per cent benchmark, increasing the value of the fund by £830mn.
The report noted that the fund “is well positioned to benefit from market rallies, but remains suitably diversified to mitigate many of the short-term effects”, and that members should “remain mindful of the long-term nature of the fund’s investment strategy and manage expectations”.
Bull added: “I don't believe this is due to any local decisions, this is a global issue. We look to longer-term liabilities rather than short term.
“I would assume that as a lot of local government schemes invest along the same lines as we do, they would also have experienced the same volatility, leading to negative short-term performance.”
The Greater Gwent (Torfaen) Pension Fund members include those who work for Torfaen, Blaenau Gwent and Caerphilly County Borough Councils, Monmouthshire County Council and Newport City Council. The scheme had 61,942 members as of March 2021.
