Agenda Document Pack - Investment Review Board - 12/06/2024

Renfrewshire Council · 12 June 2024
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Page 1

05/06/2024 
Notice of Meeting and Agenda
Investment Review Board 
Date Time Venue
Wednesday, 12 June 2024 11:00 Remotely via MS Teams, 
Membership
Councillor John Shaw (Convener): Councillor Iain Nicolson (Depute Convener): Councillor Alison Ann-Dowling: Councillor
Jacqueline Cameron: Councillor Alec Leishman. 
Recording of Meeting
This meeting will be recorded for subsequent broadcast via the Council's internet site. If you
have any queries regarding this please contact committee services on democratic-
services@renfrewshire.gov.uk  
To find the recording please follow the link which will be attached to this agenda once the
meeting has concluded. 
Further Information - online meetings only
This meeting is on-line only but is a meeting which is open to members of the public by prior
arrangement. A copy of the agenda and reports for this meeting will be available for inspection
prior to the meeting at the Customer Service Centre, Renfrewshire House, Cotton Street, Paisley
and online at http://renfrewshire.cmis.uk.com/renfrewshire/CouncilandBoards.aspx 
For further information, please email democratic-services@renfrewshire.gov.uk  
MARK CONAGHAN
Head of Corporate Governance
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05/06/2024
Items of business      
Apologies
Apologies from members. 
Declarations of Interest and Transparency Statements
Members are asked to declare an interest or make a transparency
statement in any item(s) on the agenda and to provide a brief
explanation of the nature of the interest or the transparency statement. 
1 Minute of Previous Meeting
Minute of previous meeting held on 22 November 2023. 
3 - 6 
2 Paisley and Renfrew Common Good Funds six-month
report to 31 March 2024
Report by Director of Finance & Resources. 
7 - 18 
3 Date of Next Meeting
Members are asked to note that the next meeting of the Investment
Review Board is scheduled for 20 November 2024. 
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Minute of Meeting
Investment Review Board 
Date Time Venue
Wednesday, 22 November
2023
11:00 Remotely via MS Teams, 
Present: Councillor Jacqueline Cameron, Councillor David McGonigle, Councillor Iain
Nicolson, Councillor John Shaw 
In Attendance
C McCourt, Head of Finance & Business Services, G Borland, Finance Manager,  A
Burns, Corporate Finance Manager,  R Devine, Senior Committee Services Officer and J
Barron, Committee Services Officer (all Finance & Resources). 
Also in Attendance
D Watson,  Investment Consultant Hymans Robertson LLP, and C Joiner,  LGT, formerly
abrdn Capital Limited. 
Recording of Meeting
Prior to the commencement of the meeting, the Convener intimated that this meeting of this
Board would be recorded and that the recording would be available to watch on the
Council’s website.  
Item 1
IRB120624 Page 3 of 18

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Apology
Councillor Ann-Dowling.  
Declarations of Interest and Transparency Statements
There were no declarations of interest or transparency statements intimated prior to
the commencement of the meeting. 
1 Minute of Previous Meeting
There was submitted the Minute of the meeting of the Investment Review Board held
on 7 June 2023. 
DECIDED: That the Minute be approved. 
2 Paisley and Renfrew Common Good Funds Six Month Report to 30
September 2023
There was submitted a report by the Director of Finance and Resources together with
a presentation by D Watson from Hymans Robertson LLP, relative to the Paisley and
Renfrew Common Good Funds, a review of investment income and the key issues
pertaining thereto. C Joiner, Senior Charity Portfolio Manager (Scotland) LGT
(formerly abrdn) (formerly Aberdeen Standard Capital Limited) also provided a
presentation relative to the Paisley and Renfrew Common Good fund investments
performance. 
The presentations referred to a review of the Investment Managers’ performance for
the six months to 30 September 2023; an update of markets; and the current
economic climate. 
DECIDED: That the report and presentations be noted. 
3 Paisley and Renfrew Common Good Funds: review of Investment
Policy Statement
There was submitted a report by the Director of Finance & Resources relative to the
scope and content of the proposed Investment Policy Statement. 
The Council had arranged for the investments of the Paisley and Renfrew Common
Good Funds to be managed by LGT (formally abrdn Capital Limited), and had agreed
with the manager a number of principles which would govern decisions regarding
those
investments. 
The principles covered a range of issues, such as what benchmark should be
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employed against to assess the manager’s performance and any restrictions the
manager must observe in choosing sectors or classes of asset in which to invest. 
These requirements were formalised in an Investment Policy Statement, which was
reviewed annually to ensure that the principles remain appropriate to the
Council's requirements. 
The Statement of Investment Policy was last reviewed in November 2022,  and
having undertaken the annual review the Finance Manager outlined the main
amendments proposed.  A copy of the revised Statement of Investment Principles
document was appended to the report. 
DECIDED: That the Statement of Investment Principles, a copy of which was
attached to the report, be approved as a replacement for the existing Statement of
Investment Principles. 
4 Date of Next Meeting
DECIDED:  That the next meeting of the Investment Review Board be held on 12
June 2024. 
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1 
___________________________________________________________________
To: Investment Review Board
On: 12 June 2024
___________________________________________________________________
Report by: Director of Finance and Resources
__________________________________________________________________
Heading: Paisley and Renfrew Common Good Funds
six-month report to 31 March 2024
___________________________________________________________________
1. Summary
1.1 Hymans Robertson LLP have been engaged by the Council to provide
investment advice pertaining to the Paisley and Renfrew Common
Good Funds, and to assess the performance of the Funds’ investment
managers, LGT Wealth Management (formerly abrdn Capital Limited). 
1.2 A report by Hymans Robertson LLP is attached for Members’
consideration. The report provides an assessment of the performance
of the Funds’ investments and income levels during the six-month
period ending 31 March 2024. Hymans Robertson LLP will be
represented at the meeting by David Watson (Investment Consultant),
who will present his report to Members. Mr Watson will also give a
presentation covering an update on markets and the current economic
climate. 
1.3 Gair Brisbane, Head of Charities - Scotland, LGT Wealth Management,
will give a short presentation during which there will be an opportunity
for Members to question him directly in regard to his presentation and
Fund performance. 
1.4  The current investment management contract with LGT Wealth
Management expires on 31 August 2024. The procurement process for
a new contract is ongoing, and will be presented to the Finance
Item 2
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2 
Resources and Customer Services Policy Board for approval on 13
June 2024.
___________________________________________________________________ 
2. Recommendations
2.1 To consider the attached report and presentation from Hymans
Robertson LLP and the presentation by LGT Wealth Management.
___________________________________________________________________
Implications of the Report 
1. Financial – fund income generated by the Investment Manager is
made available for distribution through grants and other awards agreed
by Local Partnerships and the Finance, Resources and Customer
Services Policy Board. All funds are managed in line with the
requirements of local government regulations, and in line with the
Investment Policy Statement. 
2. HR & Organisational Development – none arising directly from this
report. 
3. Community Planning – none arising directly from this report. 
4. Legal – none arising directly from this report. 
5. Property/Assets – none arising directly from this report. 
6. Information Technology – none arising directly from this report. 
7. Equality & Human Rights – none arising directly from this report. The
Investment Policy Statement that governs the Environmental, Social
and Governance impacts of the Common Good Fund investment is set
and agreed by the Investment review Board annually..
8. Health & Safety – none arising directly from this report.
9. Procurement – none arising directly from this report.
10. Risk –  there is an inherent risk that investment returns will not meet
their target due to a number of external factors. It is the job of the
investment manager to mitigate against this risk by their investment
approach, and decisions taken throughout the year.
11. Privacy Impact – none arising directly from this report. 
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3 
12. COSLA Policy Position – none arising directly from this report.
13. Climate Risk – none arising directly from this report.
___________________________________________________________________
List of Background Papers 
None 
___________________________________________________________________ 
Author: Geoff Borland, Finance Manager
0141 487 0875
geoffrey.borland@renfrewshire.gov.uk
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Hymans Robertson LLP is authorised and
regulated by the Financial Conduct Authority
Renfrewshire Council
Common Good Funds
Review of Investment Managers'
Performance for the 6 months to 31 March
2024
David Watson, Investment Research Consultant
Keziah Nathania, Investment Analyst
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2
Global GDP growth was stronger than expected in Q4, largely due to unexpected resilience in US activity. Growth was
weaker in other major advanced economies, but survey data suggest the worst is over and indicate global activity
gained momentum in the first quarter of 2024: An increase in service-sector activity has been accompanied by signs of
recovery in global manufacturing activity is gaining traction. Forecasts for global growth have been revised up,
suggesting only a marginal slowdown in 2024 versus 2023.
Amid declines in inflation and market-implied interest-rates, sovereign bond yields fell sharply. UK and German 10-
year yields both fell 0.5% pa, to 3.9% pa and 2.3% pa, respectively, while US yields fell 0.4% pa, to 4.2% pa. Despite
the Bank of Japan raising rates and ending yield curve control, Japanese yields fell by 0.1% pa, to 0.7% pa. Global
credit investment-grade credit spreads declined 0.3% pa to 1.0% pa over the past 6 months, while global speculative
credit spreads declined by 1.0% pa to 3.4% pa.
Global equities rose 19.7% in local-currency terms amid improving global activity data, expectations of interest rate
cuts, and enthusiasm for all things AI. North American equities outperformed, given their exposure to the
outperforming technology sector. Japan also outperformed amid growing optimism around corporate governance
reforms. The UK market was the laggard, given little exposure to technology and above-average exposure to
underperforming energy and basic materials. Emerging markets and Asia ex-Japan also notably underperformed as
investors remained concerned about China’s growth prospects amid ongoing property market weakness and
disappointment with policy stimulus unveiled so far. The MSCI UK Monthly Property Index fell 0.6% over the last 6-
month period as income was offset by capital value declines. Over the past 6 months, capital values fell more steeply
in the office sector, relative to the retail and industrial sectors.
Market Background – 6 Months to 31 March 2024 [1]
6 Months %
12 Months %
3 Years % pa
Source: DataStream. [1] Returns shown in Sterling terms. Indices shown (from left to right) are: FTSE All Share, FTSE all World ex UK £, FTSE All World ex UK Local, FTSE North America, FTSE AW
Developed Europe ex-UK, FTSE Japan, FTSE AW Developed Asia Pacific ex-Japan, MSCI Emerging, FTSE Gilts All Stocks, FTSE Index-Linked Gilts All Maturities, iBoxx Corporates All Investment
Grade All Maturities, ICE BoA Global Govt Bond ex UK, MSCI UK Monthly Property; UK Interbank 7 Day. [2] FTSE All World Indices. Commentary compares regional equity returns in local currency. [3]
Returns shown relative to FTSE All World. FTSE indices migrated to a new ICB structure in Q1 2021 – returns for Real Estate will be included when there is a sufficient track record.
Regional Equity Returns % [2] Global Equity Sector Returns % [3]
6.9%
16.4%20.2%19.0%15.2%15.3%8.1% 6.8% 6.4% 6.8% 8.4%
1.0%
-0.6%
0.1%
-30%
-20%
-10%
0%
10%
20%
30%
UK
Equities
All W
orld ex UK
£
All W
orld ex UK
Local
North America
Europe (ex UK)
Japan
Pacific (ex Japan)
Emerging Markets
Gilts (All Stocks)
Index-Linked (All)
Corporate Bonds
Overseas Bonds
Property
Cash
8.4%
21.4%25.6%26.8%
13.7%
22.3%
4.8% 6.3%
0.0%-5.0%
7.5%
-4.7%
0.3%0.2%
-30%
-20%
-10%
0%
10%
20%
30%
8.0%10.6%9.0%
13.9%9.5% 6.8%
1.1%
-1.8%
-7.4%-9.9%
-3.2%-3.5%
2.0%0.1%
-30%
-20%
-10%
0%
10%
20%
30%
16.0
6.9
14.9
19.0
15.3
8.1
5.5
19.7
6.9
17.0
23.2
21.0
11.1
9.3
Global
UK
Europe ex UK
N America
Japan
Asia Pacific ex…
Emerging Markets
Sterling Local Currency
-10.8
-7.7
2.5
-11.6
-5.5
-1.0
-7.1
-4.3
1.5
9.4
-4.3
Energy
Basic Materials
Industrials
Consumer Staples
Healthcare
Consumer Discretionary
Telecommunications
Utilities
Financials
Technology
Real Estate
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3
Valuation and Performance - Paisley Common Good Fund
Valuation Income
Performance Cumulative Performance
30/09/2023 31/03/2024 Actual % Benchmark % Difference
UK Equity 1.28 1.38 27.1% 60.0%
Overseas Equity 2.28 2.69 52.7% 20.0%
Total Equity 3.56 4.07 79.8% 80.0%
UK Government Bonds 0.42 0.44 8.6% 18.0%
UK Non Government Bonds 0.39 0.38 7.5%
International Bonds 0.09 0.09 1.8%
Total Bonds 0.89 0.91 17.9% 18.0%
Cash 0.07 0.12 2.3% 2.0%
Total 4.52 5.10
Value (£m) Proportions
-32.9%
32.7%
-0.2%
-9.4%
7.5%
1.8%
-0.1%
0.3%
30/09/2023 £143,538
31/12/2023 £144,591
31/03/2024 £145,697
Target £125,000
(Standard Life) Estimated Annual
Income
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4
Valuation and Performance - Renfrew Common Good Fund
Valuation Income
Performance Cumulative Performance
30/09/2023 31/03/2024 Actual % Benchmark % Difference
UK Equity 4.86 5.25 26.9% 60.0%
Overseas Equity 8.75 10.33 53.0% 20.0%
Total Equity 13.61 15.58 79.9% 80.0%
UK Government Bonds 1.56 1.64 8.4% 18.0%
UK Non Government Bonds 1.53 1.51 7.8%
International Bonds 0.33 0.35 1.8%
Total Bonds 3.42 3.51 18.0% 18.0%
Cash 0.25 0.42 2.1% 2.0%
Total 17.28 19.50
Value (£m) Proportions
-33.1%
33.0%
-0.1%
-9.6%
7.8%
1.8%
0.0%
0.1%
30/09/2023 £549,647
31/12/2023 £554,325
31/03/2024 £558,909
Target £475,000
(Standard Life) Estimated Annual
Income
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5
In the six months leading up to March 2024, the Paisley and Renfrew funds posted returns of 14.1%, outperforming the benchmark by 4.9%. Over
the last twelve months the funds outperformed their benchmark by 1.1% with a return of 10.8%. Despite facing setbacks in Q2 and Q3 of 2023, the
funds delivered strong returns versus their benchmark over the past 6 months, amidst favourable economic data and shifting views on rates.
The fourth quarter of 2023 initially began with subdued expectations, but the tide soon turned with the release of positive economic data and faster-
than-anticipated inflation softening. Growing excitement that central banks would cut interest rates sooner in 2024 boosted investor risk appetite,
leading to a rally in both the stock and bond markets from late October. Consequently, the funds posted a return of 8.0% in Q4 23.
As the new year unfolded, the rally in bond markets faded as investors pushed back their timing of potential interest rate cuts by central banks. It
was a different story for equities, however. The first quarter of 2024 witnessed continuation of solid gains for global equity markets, which was
mirrored in the overall funds’ return of 5.7%.
The funds’ outperformance against the benchmark over the six-month period was primarily driven by the strong performance of their equity
holdings. Several stocks within the portfolio appreciated in value, and the manager held overweight positions in these stocks.
As at the end of March 2024, the allocation to equities was broadly in line with the benchmark allocation (80%). The portfolio continues to be
significantly underweight to UK equities and overweight in overseas equities. The underweight to UK equities has been beneficial over the longer
term as UK equities have lagged other regions.
The funds were slightly overweight in bonds during the previous reporting period, but they have since realigned with the benchmark allocation of
18% at end March 2024. The remaining c2% of the funds’ assets are held in cash or cash equivalents (liquidity fund).
Looking longer term, Paisley and Renfrew funds have had positive 3-year returns of 3.2% pa and 3.4% pa, respectively, although they lag the
benchmark by 2.5/2.3% pa. Nonetheless, when considering a 5-year time horizon, the returns improve to 6.0/6.1% pa, both ahead of benchmark,
and they have been even stronger at 6.8% pa since the inception of the mandate, outperforming the benchmark return of 6.4% pa over the same
period.
Commentary
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Hymans Robertson LLP is authorised and
regulated by the Financial Conduct Authority
Appendices
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7
Asset Allocation
Paisley Common Good Fund
Renfrew Common Good Fund
30/09/2023 Benchmark Fund Difference
UK Equity 60.0% 28.3%
Overseas Equity 20.0% 50.4%
Total Equity 80.0% 78.7%
UK Government Bonds 18.0% 9.2%
UK Non Government Bonds 8.7%
International Bonds 1.9%
Total Bonds 18.0% 19.8%
Cash 2.0% 1.5%
Total 100.0% 100.0%
-31.7%
30.4%
-1.3%
-8.8%
8.7%
1.9%
1.8%
-0.5%
30/09/2023 Benchmark Fund Difference
UK Equity 60.0% 28.1%
Overseas Equity 20.0% 50.6%
Total Equity 80.0% 78.8%
UK Government Bonds 18.0% 9.0%
UK Non Government Bonds 8.9%
International Bonds 1.9%
Total Bonds 18.0% 19.8%
Cash 2.0% 1.5%
Total 100.0% 100.0%
-31.9%
30.6%
-1.2%
-9.0%
8.9%
1.9%
1.8%
-0.5%
31/03/2024 Benchmark Fund Difference
UK Equity 60.0% 27.1%
Overseas Equity 20.0% 52.7%
Total Equity 80.0% 79.8%
UK Government Bonds 18.0% 8.6%
UK Non Government Bonds 7.5%
International Bonds 1.8%
Total Bonds 18.0% 17.9%
Cash 2.0% 2.3%
Total 100.0% 100.0%
-32.9%
32.7%
-0.2%
-9.4%
7.5%
1.8%
-0.1%
0.3%
31/03/2024 Benchmark Fund Difference
UK Equity 60.0% 26.9%
Overseas Equity 20.0% 53.0%
Total Equity 80.0% 79.9%
UK Government Bonds 18.0% 8.4%
UK Non Government Bonds 7.8%
International Bonds 1.8%
Total Bonds 18.0% 18.0%
Cash 2.0% 2.1%
Total 100.0% 100.0%
-33.1%
33.0%
-0.1%
-9.6%
7.8%
1.8%
0.0%
0.1%
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Appendix 4 – Explanation of Performance Calculations
Hymans Robertson are among the investment professionals who calculate relative performance geometrically as follows:
( (1 + Fund Performance) / (1 + Benchmark Performance) ) - 1                                                                                                                                                   
Some industry practitioners use the simpler arithmetic method as follows:
Fund Performance - Benchmark Performance
Arithmetic Method
Fund
Performance
Benchmark
Performance
Relative
Performance
Quarter 1 7.0% 2.0% 5.00%
Quarter 2 28.0% 33.0% -5.00%
Linked 6 months -0.25%
6 month performance 37.0% 35.7% 1.30%
• If fund performance is measured quarterly, there is a relative underperformance of 0.25% over the six month period.
• If fund performance is measured half yearly, there is a relative outperformance of 1.3% over the six month period.
• The arithmetic method makes it difficult to compare long term relative performance with shorter term relative performance.
Geometric Method
Fund
Performance
Benchmark
Performance
Relative
Performance
Quarter 1 7.0% 2.0% 4.90%
Quarter 2 28.0% 33.0% -3.76%
Linked 6 months 0.96%
6 month performance 37.0% 35.7% 0.96%
• If fund performance is measured quarterly, there is a relative outperformance of 0.96% over the six month period. 
• If fund performance is measured half yearly, an identical result is produced.
• The geometric method therefore makes it possible to directly compare long term relative performance with shorter term relative
performance.
The following example illustrates the shortcomings of the arithmetic method in comparing short term relative performance with the longer term
picture :
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Risk Warning
Please note the value of investments, and income from them, may fall as
well as rise. This includes equities, government or corporate bonds, and
property, whether held directly or in a pooled or collective investment
vehicle. Further, investment in developing or emerging markets may be
more volatile and less marketable than in mature markets. Exchange
rates may also affect the value of an investment. As a result, an investor
may not get back the amount originally invested. Past performance is
not necessarily a guide to future performance.
In some cases, we have commercial business
arrangements/agreements with clients within the financial sector where
we provide services. These services are entirely separate from any
advice that we may provide in recommending products to our advisory
clients. Our recommendations are provided as a result of clients’ needs
and based upon our independent research. Where there is a perceived
or potential conflict, alternative recommendations can be made available.
Hymans Robertson LLP has relied upon third party sources and all
copyright and other rights are reserved by such third party sources as
follows: DataStream data: © DataStream; Fund Manager data: Fund
Manager; Morgan Stanley Capital International data: © and database
right Morgan Stanley Capital International and its licensors 2023. All
rights reserved. MSCI has no liability to any person for any losses,
damages, costs or expenses suffered as a result of any use or reliance
on any of the information which may be attributed to it; Hymans
Robertson data: © Hymans Robertson. Whilst every effort has been
made to ensure the accuracy of such estimates or data - including third
party data - we cannot accept responsibility for any loss arising from
their use. © Hymans Robertson LLP 2024.
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