Agenda Document Pack - Investment Review Board - 20/11/2024
Renfrewshire Council · 20 November 2024
Back to Investment Review Board — 20 November 2024 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
Page 1
13/11/2024 Notice of Meeting and Agenda Investment Review Board Date Time Venue Wednesday, 20 November 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 Neill Graham. 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 https://youtu.be/b6rk1D6KCiA 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 Page 1 of 64
Page 2
13/11/2024 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 Minutes of Previous Meetings Minute of meeting held on 22 November 2023 and note of inquorate meeting held on 12 June 2024. 3 - 8 2 Paisley and Renfrew Common Good Funds six-month report to 30 September 2024 Report by Director of Finance & Resources. 9 - 52 3 Review of Investment Policy Statement Report by Director of Finance & Resources. 53 - 64 4 Date of Next Meeting Members are asked to note that the next meeting of the Investment Review Board is scheduled for 11 June 2025. Page 2 of 64
Page 3
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 IRB201124 Page 3 of 64
Page 4
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 Page 4 of 64
Page 5
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. Page 5 of 64
Page 6
Page 6 of 64
Page 7
Note of Inquorate Meeting Investment Review Board Date Time Venue Wednesday, 12 June 2024 11:00 Remotely via MS Teams, Present: Councillor Neill Graham, Councillor John Shaw In Attendance C McCourt, Head of Finance & Procurement, G Borland, Finance Manager and R Devine, Senior Committee Services Officer (all Finance & Resources). Also in Attendance D Watson, Investment Consultant Hymans Robertson LLP and G Brisbane, Senior Investment Manager, Charity Lead LGT, formerly abrdn Capital Limited. Apologies Councillor Allison Ann-Dowling and Councillor Jacqueline Cameron. Quorum Ten minutes after the appointed time for the meeting a quorum was not present and in terms of Procedural Standing Order No. 52, the meeting stood adjourned. Item 1 IRB201124 Page 7 of 64
Page 8
Page 8 of 64
Page 9
1 ___________________________________________________________________ To: Investment Review Board On: 20 November 2024 ___________________________________________________________________ Report by: Director of Finance and Resources __________________________________________________________________ Heading: Paisley and Renfrew Common Good Funds six-month report to 30 September 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 30 September 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 Finance Resources and Customer Services Policy Board approved a new contract with LGT Wealth Management on the 13 June 2024. The new contract commenced on 1 October 2024 for 3 years with the option to extend for up to a further 2 years. Item 2 IRB201124 Page 9 of 64
Page 10
2 ____________________________________________________________ 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. 12. COSLA Policy Position – none arising directly from this report. 13. Climate Risk – none arising directly from this report. Page 10 of 64
Page 11
3 ___________________________________________________________________ List of Background Papers None ___________________________________________________________________ Author: Geoff Borland, Finance Manager 0141 487 0875 geoffrey.borland@renfrewshire.gov.uk Page 11 of 64
Page 12
Hymans Robertson LLP is a limited liability partnership registered in England and Wales with registered number OC310282. A list of members of Hymans Robertson LLP is available for inspection at One London Wall, London EC2Y 5EA, the firm’s registered office. Authorised and regulated by the Financial Conduct Authority and licensed by the Institute and Faculty of Actuaries for a range of investment business activities. Hymans Robertson is a registered trademark of Hymans Robertson LLP. Renfrewshire Council Common Good Funds Review of Investment Managers' Performance for the 6 months to 30 September 2024 Page 12 of 64
Page 13
2 Historic returns for world markets [1] 2 Annual CPI inflation (% year on year) Sterling trend chart (% change) The US economy grew at an annualised pace of 3.0% in Q2, above forecasts and up from 1.6% growth in Q1. UK GDP increased 0.5% in Q2, following 0.7% growth in Q1, while growth in the eurozone slowed to 0.2% due to weak a manufacturing sector and lacklustre demand from China. Annual headline CPI eased across regions: UK and eurozone CPI both fell to a below-target rate of 1.7% in September, from 3.2% and 2.4% in March, respectively. Equivalent US inflation eased to 2.4%, from 3.5%, over the same period. Core CPI inflation, which excludes volatile energy and food prices, remains higher at 3.2%, 3.3%, and 2.7% UK, US, and eurozone, respectively. The decline in inflation prompted central banks to cut interest rates. The European Central Bank (ECB) cut rates twice, to 3.5% pa. The BoE lowered borrowing costs by 0.25% pa to 5% pa. The Federal Reserve (Fed) opted for a higher 0.5% pa reduction, taking the Fed funds target range to 4.75-5.0% pa. Market-implied interest rates fell, as investors once again began to price in further rate cuts ahead. In contrast, The Bank of Japan (BoJ) raised rates for the first time since 2007 in March and again by 0.25% in June, helping the trade-weighted yen rise 3.1%. Meanwhile, the equivalent US dollar measure eased 0.4% as rate differentials narrowed. Sterling rose 3.6% due to a slower pace of anticipated rate cuts. Oil prices dropped 17.7% as weak demand outweighed rising tensions in the Middle East, while geopolitical concerns and rate cuts pushed gold prices up 19%. Source: DataStream. [1] Returns shown in Sterling terms. Indices shown (from left to right) are: FTSE All World, FTSE All Share, FTSE AW Developed Europe ex-UK, FTSE North America, FTSE Japan, FTSE AW Developed Asia Pacific ex-Japan, FTSE Emerging, FTSE Fixed Gilts All Stocks, FTSE Index-Linked Gilts All Maturities, iBoxx Corporates All Investment Grade All Maturities, ICE BofA Global Government Index, MSCI UK Monthly Property; UK Interbank 7 Day Market Background – 6 Months to 30 September 2024 Page 13 of 64
Page 14
3 3 Amid ongoing disinflation and rate cuts, US 10-year sovereign bond yields fell 0.4% pa to 3.8% pa. Equivalent German 10-year yields fell 0.2% pa to 2.1% pa. Despite the BoE’s rate cut, 10-year gilt yields rose by a modest 0.1% pa to 4.0% on the back of resilient growth and stubborn core inflationary pressures. Global investment-grade credit spreads were little changed at 1.0% pa, while speculative- grade credit spreads tightened 0.1% pa to 3.3% pa. Global equities gained 8.7% despite falling sharply in early August. Emerging markets surged in late Q3, buoyed by Chinese monetary and fiscal stimulus, to be the best performing region over the period. North American equities also outperformed due to above-average technology exposure and robust US growth. Japan was the worst performing region, following the biggest one-day sell-off since 1987 in early August, as rapid yen appreciation weighed on the export-heavy market. Europe ex- UK and the UK also lagged, with weak global manufacturing and subdued Chinese demand affecting the former, while the UK's heavy exposure to struggling energy and materials sectors hindered its performance. The MSCI UK Monthly Property Total Return Index rose by 3.5% between March and September as income was supplemented by a small rise in capital values. Aggregate capital values have stabilised in 2024, but there remains dispersion within sectors: capital values have continued to fall in the office sector, down 2.6% over 6 months, while retail and industrial capital values rose 1.5% and 1.7%, respectively. . Source: DataStream, Barings, ICE [1] FTSE All World Indices. Commentary compares regional equity returns in local currency. [2] Returns shown in Sterling terms and relative to FTSE All World. Market Background – 6 Months to 30 September 2024 Investment and speculative grade credit spreads (% p.a.)Gilt yields chart (% p.a.) Global equity sector returns (%) [2] Regional equity returns [1] Page 14 of 64
Page 15
4 Valuation and Performance - Paisley Common Good Fund Valuation Income Performance Cumulative Performance 31/03/2024 30/09/2024 Actual % Benchmark % Difference UK Equity 1.38 1.39 26.8% 60.0% Overseas Equity 2.69 2.75 52.8% 20.0% Total Equity 4.07 4.14 79.6% 80.0% UK Government Bonds 0.44 0.42 8.0% 18.0% UK Non Government Bonds 0.38 0.39 7.4% International Bonds 0.09 0.09 1.8% Total Bonds 0.91 0.90 17.3% 18.0% Cash 0.12 0.16 3.1% 2.0% Total 5.10 5.20 Value (£m) Proportions -33.2% 32.8% -0.4% -10.0% 7.4% 1.8% -0.7% 1.1% 31/03/2024 £145,697 30/06/2024 £156,952 30/09/2024 £156,357 Target £125,000 (Standard Life) Estimated Annual Income Page 15 of 64
Page 16
5 Valuation and Performance - Renfrew Common Good Fund Valuation Income Performance Cumulative Performance 31/03/2024 30/09/2024 Actual % Benchmark % Difference UK Equity 5.25 5.25 26.4% 60.0% Overseas Equity 10.33 10.53 53.0% 20.0% Total Equity 15.58 15.78 79.4% 80.0% UK Government Bonds 1.64 1.59 8.0% 18.0% UK Non Government Bonds 1.51 1.46 7.4% International Bonds 0.35 0.36 1.8% Total Bonds 3.51 3.42 17.2% 18.0% Cash 0.42 0.67 3.4% 2.0% Total 19.50 19.87 Value (£m) Proportions -33.6% 33.0% -0.6% -10.0% 7.4% 1.8% -0.8% 1.4% 31/03/2024 £558,909 30/06/2024 £601,100 30/09/2024 £595,659 Target £475,000 (Standard Life) Estimated Annual Income Page 16 of 64
Page 17
6 In the six months leading up to September 2024, the Paisley and Renfrew funds posted returns of 3.7% and 3.6%, respectively, underperforming their benchmark by 2.2% and 2.3%. While these figures reflect positive absolute returns, buoyed by cooling inflation and the growing momentum of global monetary easing, the relative underperformance was primarily due to the Funds' overweight exposure to overseas equities in Q3 2024, which lagged the benchmark. Over the past 12 months, the Paisley and Renfrew funds achieved returns of 18.3%, outperforming their benchmark by 2.6% and 2.5%, respectively. In the second quarter of 2024, global equity markets saw continued positive momentum, driven by strong corporate earnings, particularly from US technology companies, which pushed equity prices higher. This strong performance in equities enabled the funds to return 2.6% in Q2, offsetting headwinds from bond markets, which faced ongoing pressure due to rising yields influenced by central bank actions and geopolitical uncertainties. Moving into the third quarter, volatility increased, spurred by decelerating macroeconomic indicators and shifting global monetary policy expectations. Nonetheless, both equities and bonds posted gains, adding 1.1% and 1.0% to the Paisley and Renfrew funds' performance, respectively. Bonds benefited from the global monetary easing cycle, especially following the Fed's rate cut in September. Equity markets also recovered from August and September declines, finishing the quarter in positive territory, although the appreciation of sterling weighed on returns from overseas assets for unhedged investors. As of September 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 bond allocation stood at 17.3% and 17.2% for Paisley and Renfrew, slightly below the benchmark of 18%. Around 3% of the funds' assets were held in cash, maintaining liquidity for potential market opportunities. Looking longer term, Paisley and Renfrew funds have had positive 3-year returns of 2.4% pa and 2.5% pa, respectively, although they lag the benchmark by 3.1 and 3.0% pa, respectively. Over a 5-year period, performance improves, with returns of 4.9% and 5.0% pa, marginally behind the benchmark. Since the inception of the mandate, however, returns have been stronger at 6.8% pa, outperforming the benchmark return of 6.6% pa over the same period. Commentary Page 17 of 64
Page 18
Hymans Robertson LLP is a limited liability partnership registered in England and Wales with registered number OC310282. A list of members of Hymans Robertson LLP is available for inspection at One London Wall, London EC2Y 5EA, the firm’s registered office. Authorised and regulated by the Financial Conduct Authority and licensed by the Institute and Faculty of Actuaries for a range of investment business activities. Hymans Robertson is a registered trademark of Hymans Robertson LLP. Appendices Page 18 of 64
Page 19
8 Asset Allocation Paisley Common Good Fund Renfrew Common Good Fund 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% 30/09/2024 Benchmark Fund Difference UK Equity 60.0% 26.8% Overseas Equity 20.0% 52.8% Total Equity 80.0% 79.6% UK Government Bonds 18.0% 8.0% UK Non Government Bonds 7.4% International Bonds 1.8% Total Bonds 18.0% 17.3% Cash 2.0% 3.1% Total 100.0% 100.0% -33.2% 32.8% -0.4% -10.0% 7.4% 1.8% -0.7% 1.1% 30/09/2024 Benchmark Fund Difference UK Equity 60.0% 26.4% Overseas Equity 20.0% 53.0% Total Equity 80.0% 79.4% UK Government Bonds 18.0% 8.0% UK Non Government Bonds 7.4% International Bonds 1.8% Total Bonds 18.0% 17.2% Cash 2.0% 3.4% Total 100.0% 100.0% -33.6% 33.0% -0.6% -10.0% 7.4% 1.8% -0.8% 1.4% Page 19 of 64
Page 20
9 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 : Page 20 of 64
Page 21
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. Page 21 of 64
Page 22
© LIECHTENSTEIN. The Princely Collections, Vaduz‒Vienna Renfrewshire Council IRB Presented by GairBrisbane| SeniorInvestment Manager, Charity Lead (Scotland) Wednesday20th November2024 Page 22 of 64
Page 23
Your Investment Manager Gair leads the Scottish charity and endowments offering from LGT, managing portfolios for charities, trusts and public institutions. He joined LGT following the acquisition of abrdn's discretionary investment management business in 2023, bringing over 20 years’ experience in the charity sector as a volunteer, Executive Director and Investment Manager. Gair moved into investment management in 2011 to specialise in charity investments and prior to that, spent six years in Military Intelligence, commissioned in the Royal Air Force. Gair is a former Trustee and Finance Committee member of the Officers’ Association Scotland and the John Muir Trust. He is a Fellow of the Chartered Institute for Securities and Investment and holds the CFA’s Certificates in ESGInvesting and Climate Finance. Gair Brisbane Senior Investment Manager and Charity Lead (Scotland) +44 (0) 131 385 1326 gair.brisbane@lgt.com 2 Page 23 of 64
Page 24
© LGT World markets since 1st January 2022 to 30th September 2024 Following a very weak 2022, global equities only reached positive territory in the final quarter of 2023, and fixed income remains in negative territory -30.00 -25.00 -20.00 -15.00 -10.00 -5.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 Jan 2022 Apr 2022 Jul 2022 Oct 2022 Jan 2023 Apr 2023 Jul 2023 Oct 2023 Jan 2024 Apr 2024 Jul 2024 Oct 2024 UK Equities Global Equities UK Government Bonds UK Corporate Bonds Key: • UK Equities as measured by FTSE All Share • Global Equities as measured by MSCI World (local) • UK Government Bonds as measured by FTA Govt All Stock • UK Corporate Bonds as measured by ML £ Non-Gilt index 3Investors should be aware that past performance is not a reliable indicator to future performance Source: Factset, 30th September 2024 (total returns) Page 24 of 64
Page 25
© LGT Inflation 4 Inflation is subsiding, but likely to remain above the Bank of England & Federal Reserve’s 2% targets for the rest of 2024 Due to falling energy prices and slowing food price growth throughout the second half of last year, headline inflation has come down significantly from the peaks seen at the beginningof2023. Core inflation however, which excludes the forementioned, remains at elevated levels that central bankers will be keeping a watchful eye on. In the UK the core element has been driven by wage growth and service price increases, following the resumption of pre-lockdowntrendsandsignificantboutsofpublicandprivatesectorwage rises. Source: Factset, LGT Wealth Management The ‘Magnificent 7’ have driven index returns; which has been difficult for diversified, active managers to capture The market-cap weighted index has generated a 52.7% return since 1st January 2023; driven by Amazon, Apple, Alphabet, Meta, Nvidia, Tesla and Microsoft rebounding from a negative 2022. The S&P 500 equal weighted index (which de-emphasizes the weight of the larger companies relative to the market capitalisation weighted index) has delivered significantly lowerreturnsacrossthe period,and attimesbeinginnegativeterritory. 52.7% 29.0% A concentrated period of performance for US Equities -10.0 0.0 10.0 20.0 30.0 40.0 50.0 60.0 Dec 2022 Mar 2023 Jun 2023 Sep 2023 Dec 2023 Mar 2024 Jun 2024 Sep 2024 S&P 500 Market Cap Weighted Index - Cumulative Return S&P 500 Equal Weighted Index - Cumulative Return Source: Factset, 31st October 2024 Investors should be aware that past performance is not a reliable indicator to future performance 0.0 2.0 4.0 6.0 8.0 10.0 12.0 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Jul-24 Sep-24 US & UK Inflation UK CPI UK Core CPI US CPI US Core CPI BoE & FED Target Page 25 of 64
Page 26
© LGT Election outlook 5 Historically, there is little relationship between ruling parties and stock performance Historically stocks can be volatile in the period running up to an election, however once clarity is provided about the likely policies to be introduced, market volatility subsides. Over the longer-term however, the incumbent president or prime minister has little effect on the growth of thematic investment trends that we look to invest in. In the last presidential election in 2020, it was the tides of lockdown and reopening from the COVID-19 pandemic that impacted broad markets most significantly, rather than the differing ideologies between now-President Biden and then-President Trump. -60 -40 -20 0 20 40 60 1929 1932 1935 1938 1941 1944 1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 S&P 500 Calendar Year Returns (%) % Change - Democrat % Change - Republican -60 -40 -20 0 20 40 60 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 FTSE All-Share Calendar Year Returns (%) % Change - Conservative % Change - Labour % Change - Other/Coalition Source: Factset Page 26 of 64
Page 27
© LGT Investment guidelines Renfrewshire Council IRB The value of investments as well as the income derived from them can go down as well as up and investors may get back less than the original amount invested. Please note that LGT Wealth Management takes responsibility for the ongoing suitability of your portfolio. Please make us aware if your circumstances have changed. Investmentobjective Renfrew & Paisley Common Good Funds are managed with the objective of achieving a balance between capital growth and income through investing in a combination of UK and overseas equities, fixed interest securities and cash. IncomeRequirement Renfrew Common Good Fund seeks to generate an annual income of £475,000 and Paisley Common Good Fund seeks to generate an annual income of £125,000; income is paid to the Council bank account on a quarterly basis. InvestmentRestriction The investment restrictions in addition to those stated in the standard Terms & Conditions of your Investment Management Agreement are detailed in the Appendix. Benchmark/ComparatorIndex FTSE AllStocks Gilt Index (£) 18% FTSE AllShare Index (£) 60% FTSE World ex-UK Index (£) 20% SONIA (£) 2% RiskProfile Based on the information supplied by the Trustees a medium-high risk approach is being followed. This approach is appropriate for Charities who are prepared to accept a moderate to high level of risk over their time horizon. The Trustees understand that this may increase the risk of greater fluctuations in the value of your investments. TimeHorizon 10 years plus Capacityfor CapitalLoss 20-30% Capacityfor IncomeLoss 10-15% 6 Asset Class Renfrew Common Good Fund Portfolio* (%) Benchmark weightings (%) Indices (£) Government Bonds Corporate Bonds 10.4 8.2 18 FTSE All Stocks Gilt Index UK Equities (including Alternatives) Overseas Equities 26.8 53.7 60 20 FTSE All Share Index FTSE World ex-UK Index Cash 0.9 2 SONIA Total 100 100 Annual Income Yield 3.1 3.4 Portfolio Value as of 11th November 2024 (£) Renfrew Common Good Fund 19,897,576 Estimated annual income 609,066 Paisley Common Good Fund 5,204,300 Estimated annual income 159,490 *Source: LGT, Figaro, average weighting for Q3 2024 Page 27 of 64
Page 28
© LGT Portfolio Values and Performance Portfolio Values 30th September 2024 (£) 30th June 2024 (£) 31st March 2024 (£) 31st December 2023 (£) Renfrew Common Good Fund 19,867,491 19,815,083 19,501,628 18,565,103 Estimated Annual Income 595,659 601,100 558,909 554,325 Paisley Common Good Fund 5,196,763 5,179,629 5,097,990 4,853,554 Estimated Annual Income 156,357 156,952 145,697 144,591 7 Portfolio Performance as of 30th September 2024 1 year (%) 3 years Cumulative (%) 5 years Cumulative (%) Renfrew Common Good Fund 18.2 7.6 27.3 Paisley Common Good Fund 18.2 7.2 27.1 Composite Benchmark* 15.3 17.9 29.6 ARC** Charities Steady Growth Benchmark (£) 13.3 8.3 24.4 FTSE All-Share Index (£) 13.4 23.9 32.2 FTSE World ex UK Index (£) 20.9 31.1 73.2 FTSE Govt. All-Stocks Index (£) 7.9 -19.3 -22.2 SONIA (£) 5.0 10.0 10.5 Source: LGT performance to 30th September 2024, unless otherwise stated. *The Composite Benchmark constituents are detailed on the Investment Guidelines page. **For information on ARC see appendix disclaimer page. All performance returns are Total Returns unless otherwise specified. Performance figures for the Fund are calculated net of the management fee. Investors should be aware that past performance is not a reliable indicator to future performance Page 28 of 64
Page 29
Renfrew Common Good Fund Source: LGT, average weighting for Q3 2024. Equities 71.9% Technology 14.6 Telecommunications 2.2 Healthcare 11.1 Financials 5.6 Real Estate 1.9 Consumer Discretionary 9.2 Consumer Staples 4.4 Industrials 12.3 Basic Materials 2.8 Energy 0.0 Utilities 7.8 Bonds 18.6% Corporate 10.4 Government 8.2 Alternatives 8.6% Renewables 3.6 Infrastructure 3.6 Private Equity 1.4 Cash 0.9% 71.9% 18.6% 8.6% 0.9% Equities Bonds Alternative Cash 8 Asset allocation Page 29 of 64
Page 30
Case Study: fuelling the energy transition Example of Italian energy company Enel Enel Company Enel operates e.g. wind parks and finances these, amongst other sources, with green bonds Green bond Green Bond Principles based on International Capital Market Association (ICMA) to reduce greenwashing risks LGT as an investor Via the capital markets, investors can seek dedicated exposure to environmental projects Enel wind park Proceeds used to finance development of generation plants from renewable sources OPERATES FINANCES GUARANTEES INVESTS 9 Enel is an Italian electric utility and the world’s largest private electricity distribution company, providing electricity to over 70 million users Its green bond issuance allows investors to directly finance the continued expansion of Enel’s renewable capacity. The company still generates electricity produced from fossil fuel combustions but is also the world’s largest private renewable energy operator, accounting for over 60% of total generation capacity Page 30 of 64
Page 31
© LGT Appendices 10Page 31 of 64
Page 32
© LGT Investment Guidelines - Restrictions 11 Renfrew & Paisley Common Good Fund The portfolio is managed according to your ethical policy and is implemented in conjunction with MSCI as required. (MSCI is a leading provider of ESG [environmental, social and corporate governance] services and research). This is also applied along with internal resources: please note that MSCI ethical screens may change. These restrictions relate to direct investment (see belowforthedefinitionofthis)*. All ethicalrestrictions are implementedona bestendeavours basis. Ifan existingholding is foundto be unacceptable underthe restrictions detailed, now orin the future,we will review the holdingandwhere deemedappropriatecontacttheTrustees. We define direct investment as investing in an equity or bond directly rather than via a pooled fund. We define indirect investment as applying to any holdings (equities or bonds) via a pooledfund. Thefollowingrestrictionsare in additiontothosein thestandardTermsand ConditionsofyourInvestmentManagementAgreement: Tobacco No directinvestmentin tobaccoproduction(i.e.excludethe tobaccosector)(TOB) No directinvestmentin companiesthatderivemorethan10% ofturnoverfromtobaccoproduction(MSCI- E05) Gambling No directinvestmentin acompanyif thereismorethan5% turnoverfromgambling-relatedbusinessactivities(MSCI– E80) Military No directinvestmentin armaments/ defence (i.e.excludetheaerospace& defencesector)(ARM) No directinvestmentin companiesthathave any industrytietothemanufactureoflandminesexceptforsafety,whichmaybe a positiveindicator.(MSCI- E17) No directinvestmentin companiesthatmanufactureclustermunitionswholeweaponssystems,components,ordeliveryplatforms.(MSCI- E38) No directinvestmentin acompanywithmorethan10% turnoverinweapons& components.(MSCI- E76)] FossilFuels No oil/gasstocks- excludeOil& Gas Sectorandthermalcoalproducers(Y23) No directinvestmentsina companyif therehasbeenprovenreservesofshalegasand/oroilownedby the company(MSCI- E73) FixedInterestrestriction FixedIntereststocksa targetassetallocationof15%,variablebetween10% and 20% at thediscretionofthe InvestmentManager. Page 32 of 64
Page 33
Authorised Signatories Renfrew & Paisley Common Good Fund Current Authorised Signatories Geoffrey Borland Christine McCourt Lisa Dickie Signing Requirements and Restrictions In accordance with the terms and conditions of the Investment Management Agreement, LGT WM will act on instructions and requests it reasonably believes to have been given by the following signatory(s) on your behalf. LGT WM will not be liable for loss, claims damages or expenses that might arise as a result of LGT WM acting in accordance with the authorised person’s instructions. Instructions are subject to the restrictions orlimitations imposedby you(the Client) as set out below: Onesignatoryforadministrativechanges,twoforcashwithdrawals 12 Please advise us if any updates or amendments are required. We can send out the Authorised Signatory Form to be completed via Docusign or email. For completion via Docusign, we will require the full names and email address of any new signatories to be added, as well as certified ID andaddressdocuments. Information Only Hymans Robertson Page 33 of 64
Page 34
© LGT Top 10 holdings (%) Top 10 holdings and equities Name Value % 1. VOLARE STERLING FIXED INTEREST OFFSHORE FUND 6.3 2. MICROSOFT 3.9 3. TAIWAN SEMICONDUCTOR MANUFACTURING 3.6 4. ASTRAZENECA 3.4 5. SCHNEIDER 3.2 6. CRH 3.1 7. AMAZON 3.0 8. RIO TINTO 2.9 9. ELI LILLY 2.9 10. RELX 2.9 Top 10 equity holdings (%) 13 Renfrew Common Good Fund Name Value % 1. MICROSOFT 3.9 2. TAIWAN SEMICONDUCTOR MANUFACTURING 3.6 3. ASTRAZENECA 3.4 4. SCHNEIDER 3.2 5. CRH 3.1 6. AMAZON 3.0 7. RIO TINTO 2.9 8. ELI LILLY 2.9 9. RELX 2.9 10. ASML 2.8 Source: LGT, Figaro, 30th September 2024 Page 34 of 64
Page 35
© LGT Top 10 performers Stock Contribution – Q3 2024 Name Average Weight % Total Return % Contribution % CRH 2.93 16.10 0.44 NATIONAL GRID 2.56 16.70 0.39 NEXTERA ENERGY 2.60 13.23 0.33 HALEON 1.19 22.45 0.24 AIA GROUP 0.87 25.50 0.22 ENEL 1.81 12.00 0.21 ADYEN 0.82 23.65 0.18 VOLARE OFFSHORE STERLING FIXED INTEREST FUND 6.39 2.47 0.16 ZURICH INSURANCE 2.28 6.82 0.15 ORSTED 0.89 17.93 0.15 Bottom 10 performers 14 Renfrew Common Good Fund – 3 months to 30th September 2024 Source: LGT, Figaro, Q3 2024 Stock contribution is measured gross of management fees. Investors should be aware that past performance is not a reliable indicator to future performance. Name Average Weight % Total Return % Contribution % ASML 3.13 -23.97 -0.88 MICROSOFT 4.07 -9.11 -0.39 ALPHABET 2.35 -14.08 -0.37 AMAZON.COM 3.04 -9.13 -0.30 ELI LILLY 3.11 -7.65 -0.25 ASTRAZENECA 3.74 -5.64 -0.21 AIRBNB 0.80 -21.19 -0.21 TAIWAN SEMICONDUCTOR MANUFACTURING CO. 3.68 -5.56 -0.19 WEST PHARMACEUTICAL SERVICES 1.18 -14.06 -0.19 MERCEDES-BENZ 1.53 -7.80 -0.18 Page 35 of 64
Page 36
© LGT Top 10 holdings (%) Top 10 holdings and equities Name Value % 1. VOLARE STERLING FIXED INTEREST OFFSHORE FUND 6.2 2. TAIWAN SEMICONDUCTOR MANUFACTURING 4.1 3. MICROSOFT 4.0 4. ASTRAZENECA 3.4 5. CRH 3.4 6. SCHNEIDER ELECTRIC 3.2 7. ELI LILLY 3.0 8. AMAZON 3.0 9. RELX 3.0 10. RIO TINTO 2.8 Top 10 equity holdings (%) 15 Paisley Common Good Fund Name Value % 1. TAIWAN SEMICONDUCTOR MANUFACTURING 4.1 2. MICROSOFT 4.0 3. ASTRAZENECA 3.4 4. CRH 3.4 5. SCHNEIDER ELECTRIC 3.2 6. ELI LILLY 3.0 7. AMAZON 3.0 8. RELX 3.0 9. RIO TINTO 2.8 10. NEXTERA ENERGY 2.6 Source: LGT, Figaro, 30th September 2024 Page 36 of 64
Page 37
© LGT Top 10 performers Stock Contribution – Q3 2024 Name Average Weight % Total Return % Contribution % CRH 3.07 16.10 0.46 NATIONAL GRID 2.57 16.70 0.39 NEXTERA ENERGY 2.60 13.23 0.33 HALEON 1.37 22.45 0.27 AIA GROUP 0.86 25.50 0.22 ENEL 1.82 12.00 0.21 ADYEN 0.79 23.65 0.17 VOLARE OFFSHORE STERLING FIXED INTEREST FUND 6.39 2.47 0.16 ZURICH INSURANCE 2.28 6.82 0.15 ORSTED 0.89 17.93 0.15 Bottom 10 performers 16 Paisley Common Good Fund – 3 months to 30th September 2024 Source: LGT, Figaro, Q3 2024 Stock contribution is measured gross of management fees. Investors should be aware that past performance is not a reliable indicator to future performance. Name Average Weight % Total Return % Contribution % ASML 3.12 -23.97 -0.88 MICROSOFT 4.05 -9.11 -0.39 ALPHABET 2.35 -14.08 -0.37 AMAZON.COM 2.97 -9.13 -0.29 ELI LILLY 3.10 -7.65 -0.25 ASTRAZENECA 3.76 -5.64 -0.21 AIRBNB 0.80 -21.19 -0.21 TAIWAN SEMICONDUCTOR MANUFACTURING 3.66 -5.56 -0.19 WEST PHARMACEUTICAL SERVICES 1.18 -14.06 -0.19 MERCEDES-BENZ 1.54 -7.80 -0.18 Page 37 of 64
Page 38
Engagement Case Study: Proctor & Gamble 17 Image: https://www.wildsingapore.com (Google Creative Commons License) https://www.natureaction100.org/ LGT engaged Nature Alpha a leading biodiversity data provider to carry out geospatial analysis on P&G’s operations and those areas of biodiversity crisis. We voted against the public accountability board and continue to advocate for stronger commitments from P&G over sourcing of wood-pulp from primary forests, their narrow definition of deforestation and their use of3rdparty carboncertificates. To amplify our voice, we have recently joined Nature Action 100, a global investor engagement initiative focused on driving greater corporate ambition and action to reverse nature and biodiversity loss. Friends of the Earth filed a notice of exempt solicitation, urging shareholders to "Vote No" on the election of Board Chair/CEO, Chair of the Governance and Public Responsibility Committee, due to concerns regarding the board's insufficient actions to adopt adequate no-deforestation commitments. P&G sources a large amount of palm oil and wood pulp and that its sourcing of these forest products is driving deforestation and the degradation of primary forests. Forests play an important role in sequestering carbon to protect against global warming and allowing forbiodiversity. Page 38 of 64
Page 39
The world’s largest private bank and asset manager owned by a single family LGT has been owned by the Princely Family of Liechtenstein for over 90 years, creating long-term stability and an entrepreneurial approach. This forward-thinking, private ownership structure enables investment into the business to enhance and continuously improve client service. Private ownership Strong balance sheet with a history of stable growth and profits. The Princely Family invest in LGT, alongside clients and employees, creating an alignment of interests. LGT has one of the strongest balance sheets in the industry, with high levels of liquidity and an equity capitalisation significantly above regulatory requirements. Sound financial stability Resources and knowhow of our research and investment teams have been developed with a global outlook. Represented in all the major financial centres worldwide, our clients have access to multiple booking centres. A global perspective As a highly values-oriented family-owned company, we think and act in terms of generations.” H.S.H. Prince Max von und zuLiechtenstein, Chairman LGT 18 A portrait of LGT Page 39 of 64
Page 40
What makes us different? Privately owned, entrepreneurial firm Entrepreneurial spirit drives a flexible and dynamic approach, underpinned by the financial strength and long-term stability of our private ownership. Genuine focus on putting our clients first A highly personalised ethos focused on developing long-term relationships, demonstrated by our 98.8% client retention rate. High conviction, quality investment approach Rigorous investment process and research. Long-term investment approach focused on consistent and stable returns. Commitment to sustainability Recognised early on how important sustainability is for our environment, society and future. Being entrusted with your money is a privilege we never take for granted. Ben Snee, CEO LGT Wealth Management 19 Page 40 of 64
Page 41
Your partner for investing sustainably Global and well-resourced team of sustainability experts across research and portfolio management Our owner, the Princely Family of Liechtenstein, recognised early on how important sustainability is for our environment, society and future. Private ownership allows us to commit to significant targets ahead of the industry: LGT has been carbon neutral since 2010 and is committed to net zero by 2030 across our own investments and operations. Private ownership Across LGT Group, investment exclusions apply to controversial weapons and thermal coal. A globally coordinated approach to stewardship includes active engagement and proxy-voting. A global perspective LGT Group has a range of options for clients including sustainable investing, philanthropy via LGT Venture Philanthropy and impact investing solutions offered by Lightrock. We have built our own proprietary LGT Sustainability Rating tools to assess the sustainability of companies, which we continually evolve and improve. In-house expertise 20 For us, sustainability means managing our company with a sense of social responsibility and with a long-term as well as a holistic perspective. Olivier de Perregaux, CEO LGT Private Banking Page 41 of 64
Page 42
Global investment capabilities A personalised experience with leading capabilities and expertise across the globe As part of LGT Group, we leverage the resources and knowhow of our global research and investment teams. Our experts are continuously analysing economic developments and global financial markets to provide a solid basis for well-considered, conviction- led investment decisions. Our clients benefit from the wider services of the group, including multiple booking centres, all whilst receiving a personalised experience. 5,600+ employees across 30 locations in Europe, Asia, Australia, the Americas and the Middle East* LGT Private Banking key facts £313.4 billion of clients assets under management 6 booking locations Ratings (LGT Bank Ltd.) Moody’s/Standard & Poor’s Aa2/A+ Regional expertise in all key financial markets Strong focus on sustainable and alternative investments *as at 30 June 2024 21 Page 42 of 64
Page 43
Offices: 30+ locations worldwide LGT Group Employees: 5,600+ Assets under management: £294.7 billion as at 31.12.2023 22 Our business at a glance Our entrepreneurial philosophy, together with LGT Group’s stability, enables us to make decisions that we believe will provide long-term benefits for our clients. This flexibility allows us to tailor our business model to suit our vast range of client types and the unique requirements that they have. A boutique approach with a global reach Page 43 of 64
Page 44
Our commitment to sustainability 23 We cannot tackle big challenges like climate change, social inequality or political polarisation alone. Together we can achieve more and change the future Memberships and signatories Principles for Responsible Investment (PRI) United Nations Global Compact (UNGC) Principles for Responsible Banking (PRB) Institutional Investors Group on Climate Change (IIGCC) Partnership for Carbon Accounting Financials (PCAF) Net-Zero Banking Alliance (NZBA) Climate Action 100+ (CA100+) Task Force on Climate-related Financial Disclosures (TCFD) Finance For Biodiversity Pledge Nature Action 100 UK 10+ SI experts, research analysts EUROPE 10+ SI experts, analysts, portfolio advisers APAC 5+ SI experts, specialists As well as drawing on expertise at LGT globally, we work with other organisations and within our sector to pursue similar goals and exchange ideas. We have received a number of awards to recognise our commitment to a more sustainable future. Wealth for Good Awards 2023 Winner International Investment Awards 2022 Winner International Investment Awards 2021 Winner Page 44 of 64
Page 45
Intentionality Are positive sustainable outcomes intentional or is this a function of chance? Integration How are sustainability factors integrated into decision-making? Impact What is the impact generated from the investment decisions? We do not rely on third parties to provide us with assurance. We leverage our global sustainable investment teams to screen and scrutinise all of our underlying investments. Via our proprietary sustainability tool, SMax, we screen all investments to inform our understanding. Implemented by your Portfolio Managers, supported by sustainability specialists Our sustainable investment framework 24 Page 45 of 64
Page 46
Investment approach Quality, sustainable growth Quality focused Seek to avoid the blow-ups Focus on delivering consistent outperformance Start by considering risk in terms of permanent loss of capital Investment in companies with generating robust returns, strong management and healthy balance sheets Structural growth, not speculation High visibility of growth provides confidence in generating sustainable returns over the long term Focus on beneficiaries of long- term structural growth trends Globally active, robust process We engage and advocate We engage and advocate for positive change on our clients’ behalf We engage and advocate for positive change on our clients’ behalf for positive change on our clients’ behalf In-depth research process; consideration of ESG factors helps us to understand key risks and assess quality Company engagement on a global basis Active stewards of our clients’ investments returns. Flexible and transparent outcomes Portfolios meet a range of objectives and risk profiles Tailored to align to your specific values Transparent and cost effective Direct holdings enable flexibility and transparency Institutional-level resources underpin discretionary investment approach 25Page 46 of 64
Page 47
Energy transition Decarbonisation; circular economy; electrification of transport; emissions regulation; EU Taxonomy; EVs Healthcare innovation Ageing demographic; growth in biologics and GLP-1s; personalised medicine; evolving healthcare provision and preventative treatments Next gen technology AI, The Internet of Things; automation/advanced robotics; cloud; digital infrastructure; virtual reality; blockchain applications; digital analytical tools Changing consumer Digital payments; ecommerce; athleisure; eSports; gaming; experiential consumption, democratisation of wealth Diminishing global interdependence De-globalisation, onshoring, domestic self-sufficiency © owned by each of the corporate entities named in the respective logos. Sample companiesare for illustrative purposes only and are not a recommendation for investment. Sample companies Appendices Our strategy for maintaining investment performance Quality, sustainable growth 26Page 47 of 64
Page 48
Discharging our stewardship responsibilities 27 Global approach underpinning our net zero ambition and Sustainability strategy 2030 Climate change Dedicated stewardship strategy in NZI project SBTI or equivalent Integration of a Just Transition in decarbonisation plans TCFD aligned disclosures Fairer societies Current business focus on Human Rights Underpinning the UN Guiding Principles on Business and Human Rights In developed markets we take Human Rights as umbrella term (Human Capital Management in Asia) In UK – Find it, Fix it, Prevent it Decent Work + Diversity & Inclusion Nature & Biodiversity We consider the loss of biodiversity to be among the most pressing challenges of our time Building an understanding of impacts and dependencies on nature Disclosure of risks and opportunities Deforestation (palm oil/primary forests) Forever chemicals (agricultural & manufacturers) Strong governance © owned by each of the corporate entities named in the respective logos. Page 48 of 64
Page 49
© LGT Charity resource hub We offer practical added value, insights, training for trustees and guidance on best practice. 28 www.lgtwm.com/uk-en/charities Page 49 of 64
Page 50
Your team Gair leads the Scottish charity and endowments offering from LGT, managing portfolios for charities, trusts and public institutions. He joined LGT following the acquisition of abrdn's discretionary investment management business in 2023, bringing over 20 years’ experience in the charity sector as a volunteer, Executive Director and Investment Manager. Gair moved into investment management in 2011 to specialise in charity investments and prior to that, spent six years in MilitaryIntelligence,commissioned in theRoyal Air Force. Gair is a former Trustee and Finance Committee member of the Officers’ Association Scotland and the John Muir Trust. He is a Fellow of the Chartered Institute for Securities and Investment and holdstheCFA’s Certificatesin ESG InvestingandClimate Finance. Gair Brisbane Senior Investment Manager and Charity Lead (Scotland) Josh works in our Charities Team in Edinburgh office as an Investment Assistant. He is a University of Bristol and Durham University graduate. Josh holds the following CISI qualifications: Level 4 Investment Advice Diploma (IAD) in Financial Planning and Advice, Level 4 Certificate in Paraplanning, Level 3 Extended Certificate in Investment Operations (IOC), and the Level 3 Certificatein Derivatives(Capital MarketsProgramme). Joshua Ryan Investment Assistant +44 (0) 131 385 1326 gair.brisbane@lgt.com +44 (0) 131 385 1256 joshua.ryan@lgt.com 29 Page 50 of 64
Page 51
© LGT Disclaimers Any data contained herein which is attributed to a third party (“Third Party Data”) is the property of (a) third party supplier(s) (the “Owner”) and is licensed for use by LGT Wealth Management. Third Party Data may not be copied or distributed. Third Party Data is provided “as is” and is not warranted to be accurate, complete or timely. To the extent permitted by applicable law, none of the Owner, by LGT Wealth Management or any other third party (including any third party involved in providing and/or compiling Third Party Data) shall have any liability for Third Party Data or for any use made of Third Party Data. Neither the Owner nor any other third party sponsors, endorses orpromotes the fund orproduct to which Third Party Datarelates. ARC Private Client Indices (“PCI”) are based on historical information and past performance is not indicative of future performance. PCI are computed using a complex calculation and the results are provided for information purposes only and are not necessarily an indicator of suitability for your specific investment or other requirements. ARC does not guarantee the performance of any investment or portfolio or the return of an investor’s capital or any specific rate of return. ARC accepts no liability for any investment decision made on the basis of the information contained in this report. You should always complete your own analysis and/or seek appropriate professional advice before entering into an agreement with any PCI Data Contributor. The content is the property of ARC or its licensors and is protected by copyright and other intellectual property laws. Use of the information herein is governed by strict Conditions of Use as detailed on https://www.assetrisk.com/research/ ©2024 Morningstar. AllRights Reserved. Neither any of the Factset companies nor any of their information providers shall have any liability, contingent or otherwise for (i) the accuracy, completeness, timeliness, or correct sequencing of any information provided on it or through this website; (ii) the performance of any software, products or services, available on or through this website; (iii) any interruption in your being able to access any of the foregoing or any other aspect to the website; or (iv) any decision made or action taken by you in reliance upon any of them. The past performance of an investment or investment strategy does not guarantee its future performance. 30Page 51 of 64
Page 52
LGT Wealth Management UK LLP is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales: OC329392. Registered office: 14 Cornhill, London, EC3V 3NR. LGT Wealth Management Limited is authorised and regulated by the Financial Conduct Authority. Registered in Scotland number SC317950 at Capital Square, 58 Morrison Street, Edinburgh, EH3 8BP. LGT Wealth Management Jersey Limited is incorporated in Jersey and is regulated by the Jersey Financial Services Commission in the conduct of Investment Business and Funds Service Business: 102243. Registered office: Sir Walter Raleigh House, 48-50 Esplanade, St Helier, Jersey JE2 3QB. LGT Wealth Management (CI) Limited is registered in Jersey and is regulated by the Jersey Financial Services Commission: 5769. Registered Office: at IFC1, The Esplanade, St Helier, Jersey, JE1 4BP. LGT Wealth Management US Limited is authorised and regulated by the Financial Conduct Authority and is a Registered Investment Adviser with the US Securities & Exchange Commission (“SEC”). Registered in England and Wales: 06455240. Registered Office: 14 Cornhill, London, EC3V 3NR. This publication is marketing material. It is for information purposes only. Certain services described herein are not available to retail clients as defined by the FCA or the JFSC, as applicable; please speak to your investment adviser for further clarification in this regard. All services are subject to status and where local regulations permit. The wording contained in this document is not to be construed as an offer, advice, invitation or solicitation to enter into any financial obligation, activity or promotion of any kind. You are recommended to seek advice concerning suitability from your investment adviser. Any information herein is given in good faith, but is subject to change without notice and may not be accurate and complete for your purposes. This document is not intended for distribution to, or use by, any individual or entities in any jurisdiction where such distribution would be contrary to the laws of that jurisdiction or subject any LGT Wealth Management entity to any registration requirements. When we provide investment advice it is on the basis of a restricted approach that is to say, whilst we review and advise on retail investment products from the whole of the investment market. Investors should be aware that past performance is not an indication of future performance, the value of investments and the income derived from them may fluctuate and you may not receive back the amount you originally invested. Legal information 31 Page 52 of 64
Page 53
1 ___________________________________________________________________ To: Investment Review Board On: 20 November 2024 ___________________________________________________________________ Report by: Director of Finance and Resources ___________________________________________________________________ Heading: Review of Investment Policy Statement ___________________________________________________________________ 1. Summary 1.1 The Council has arranged for the investments of the Paisley and Renfrew Common Good Funds to be managed by LGT Wealth Management and has agreed with the manager a number of principles which govern decisions regarding those investments. 1.2 These principles cover a range of issues, such as what benchmark should be employed against which to assess the manager’s performance, income targets and any restrictions the manager must observe in choosing sectors or classes of asset in which to invest. These requirements are formalised in an Investment Policy Statement, and this document is reviewed annually to ensure that the principles remain appropriate to the requirements of the Common Good Funds. 1.3 The Statement of Investment Policy was last reviewed in November 2023, and is due for review. 1.4 The current income targets are set at £125,000 for the Paisley Common Good Fund and £475,000 for Renfrew Common Good Fund. An appropriate revision to the income targets would be to apply a proportional increase in the absolute annual income target so that the target yield, based on the average fund valuations over the previous 3 financial years, is kept relatively static. 1.5 The proposed revised annual income targets, £129,000 for the Paisley Common Good Fund and £492,000 for the Renfrew Common Good Fund, equate to approximately a 2.48% yield and are line with the benchmark yield over the preceding 3 financial years. This represents a demanding target but Item 3 IRB201124 Page 53 of 64
Page 54
2 not so much that the Investment Manager is forced to sacrifice potential capital in the pursuit of income. 1.6 The performance of the respective elements of the portfolio is measured against the respective composite benchmark for that investment. This includes 60% UK Equities using the FTSE All-Share Index and 20% Global Equities using the FTSE World ex UK Index. 1.7 The proposed change to 40% UK Equities and 40% Global Equites would result in the composite benchmark more closely reflecting the actual portfolio of both the Paisley Common Good Fund and the Renfrew Common Good Fund. ___________________________________________________________________ 2. Recommendations 2.1 To consider and approve the Investment Policy Statements which are attached to this report. ___________________________________________________________________ Page 54 of 64
Page 55
3 Implications of the Report 1. Financial – funds generated by the Investment Manager are 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 3. Community Planning – none 4. Legal – none 5. Property/Assets – none 6. Information Technology – none 7. Equality & Human Rights – the recommendations contained within this report have been assessed in relation to their impact on equalities and human rights. No negative impacts on equality groups or potential for infringement of individuals’ human rights have been identified arising from the recommendations contained in the report. If required following implementation, the actual impact of the recommendations and the mitigating actions will be reviewed and monitored, and the results of the assessment will be published on the Council’s website. 8. Health & Safety – none 9. Procurement – none 10. Risk – the Investment Policy Statement outlines a medium level of risk to be adopted by the Investment Manager. 11. Privacy Impact – none 12. COSLA Policy Position – none 13. Climate Risk – none ___________________________________________________________________ Author: Geoff Borland, Finance Manager (Financial Accounting) 0141 487 0875 geoffrey.borland@renfrewshire.gov.uk Page 55 of 64
Page 56
Renfrewshire Council Paisley Common Good Fund Investment Policy Statement A: Introduction 1. The Paisley Common Good Fund operates for the benefit (or “common good”) of the inhabitants living within the former burghs of Paisley. The Paisley Common Good Fund (hereinafter “the common good”) provides financial support to third party organisations and also support activities taking place within the former burgh boundaries. 2. The elected members of Renfrewshire Council are ex-officio Trustees of the common good. Decisions regarding the operation, assets, processes or policies are delegated by the Council to the Finance, Resources and Customer Services Policy Board (FRCSPB). The investment performance of the Common Good is monitored regularly by Council officers, and is reported bi-annually to the Investment Review Board (a sub-committee of the FRCSPB), which is comprised of 5 cross party elected members. Purpose of statement 3. This policy statement sets out the principles and governance under which the investment of the assets of the common good is managed. The Director of Finance and Resources of Renfrewshire Council has issued this statement as Treasurer on behalf of the common good. Consultation 4. The Director of Finance and Resources of Renfrewshire Council has consulted with LGT (the investment manager) and with Hymans Robertson LLP (the investment advisor) about the content of the statement. Investment powers 5. The Director of Finance and Resources has authority as Treasurer of the Common Good to invest the funds in such investments, securities or property, as may be thought fit. 6. The investment manager, LGT Wealth Management, is responsible for the allocation of assets between types of investments and for the selection of individual stocks within each type of investment. The funds are managed on a discretionary basis where the investment manager makes all investment decisions in line with this policy. Page 56 of 64
Page 57
7. Other than heritable property held as investment assets, and cash required in the short term, the Director and officers rely on professional investment managers for the day-to-day management of the assets of the common good. Investment objectives 8. The investment manager has been instructed as a primary objective to achieve a regular stream of income, the current income target is set at £129,000. The outgoings shall be as determined on an annual basis by the Investment Review Board. A secondary objective is to grow the real value of capital over the longer term. B: Diversification and risk controls Risk 9. The Trustees seek a moderate risk approach (classed as “medium high” in the rating methodology employed by LGT) through a diversified portfolio invested in a broad spread of equities but also including a proportion of fixed interest securities, property, cash and other such investments as the Trustees approve. Custody 10. Our appointed investment manager is responsible for appointing a recognised custodian for the assets of the common good. Investment Manager restrictions 11. The Trustees require their investment manager to consider environmental, social and governance (ESG) factors in making investment decisions. Each investment decision shall be made on a balanced view on the overall investment case for a particular sector or stock. In general terms, this means that ESG investment concerns should be taken into account when the decision whether to invest is being made. This does not mean that the decision whether or not to invest depends entirely on the assessment of these factors, but that they should be considered along with all relevant factors when decisions to buy, hold or sell investments are being made. 12. The Trustees note the UN Principles for Responsible Investment (UNPRI) as an approach which sets out global best practice in the area of ESG. The Trustees prefer to work with an investment manager who is a signatory to the UNPRI and note LGT, as part of LGT Capital Partners LTD, is a signatory. 13. The common good has an interest in environmental sustainability and the impact of climate change on the planet and communities, the Trustees consider that there are some investments which they would wish to exclude from the portfolio as they are not aligned with or run contrary to the objectives of the Common Good; or because they may cause reputational damage to the Page 57 of 64
Page 58
Common Good. The Investment Review Board (on behalf of Trustees) has agreed the following specific restrictions: • Ethical screening criteria o No direct investment in tobacco stocks. o No direct investment in any company generating more than 5% of revenue from gambling o No direct investment in any company involved in the production of armaments (noting that LGT, as part of LGT Capital Partners Ltd, supports the principles in both the Convention on Cluster Munitions 2008 and the 1997 Convention on Anti-Personnel Mines, which ban these weapons as defined by the conventions; and will not knowingly invest in companies producing or selling these weapons) o No direct investment in fossil fuel stocks, by which we mean the oil and gas majors and thermal coal extractive companies • Other restrictions o A target of 15%, variable to any level between 10% and 20% at the discretion of the investment manager depending on market conditions, to be held in fixed interest stocks. Manager controls 14. Powers of investment delegated to the investment manager must be exercised with a view to giving effect to the principles contained in this policy so far as is reasonably practicable. Taxation 15. The investment manager shall provide annually an HM Revenue & Customs approved tax voucher with supporting schedules detailing dividend income received. Performance measurement 16. The Treasurer on behalf of Trustees will monitor the performance of the portfolio against its objectives on a quarterly basis. The performance of the respective elements of the portfolio will be measured against the respective benchmark for that investment as outlined in the table below: Page 58 of 64
Page 59
The Investment Review Board will review the suitability of the benchmarks annually. Reporting 17. The investment manager will prepare an investment report on the funds every quarter plus an annual review of the year. The investment manager will also attend bi-annual meetings of the Investment Review Board. Duration of contract 18. The contract with LGT Wealth Management is until the 30 September 2027 and includes an option to extend for up to a further 2 years. Frequency of review 19. The Investment Review Board will review this policy annually, or sooner if circumstances demand it. Asset class Index Weighting UK Equities FTSE All-Share Index 40% Global Equities FTSE World ex UK 40% Fixed interest securities FTA All-UK Government Stocks Index 18% Cash UK Interbank 7 day 2% Page 59 of 64
Page 60
Renfrewshire Council Renfrew Common Good Fund Investment Policy Statement A: Introduction 1. The Renfrew Common Good Fund operates for the benefit (or “common good”) of the inhabitants living within the former burghs of Renfrew. The Renfrew Common Good Fund (hereinafter “the common good”) provides financial support to third party organisations and also support activities taking place within the former burgh boundaries. 2. The elected members of Renfrewshire Council are ex-officio Trustees of the common good. Decisions regarding the operation, assets, processes or policies are delegated by the Council to the Finance, Resources and Customer Services Policy Board (FRCSPB). The investment performance of the Common Good is monitored regularly by Council officers, and is reported bi-annually to the Investment Review Board (a sub-committee of the FRCSPB), which is comprised of 5 cross party elected members. Purpose of statement 3. This policy statement sets out the principles and governance under which the investment of the assets of the common good is managed. The Director of Finance and Resources of Renfrewshire Council has issued this statement as Treasurer on behalf of the common good. Consultation 4. The Director of Finance and Resources of Renfrewshire Council has consulted with LGT (the investment manager) and with Hymans Robertson LLP (the investment advisor) about the content of the statement. Investment powers 5. The Director of Finance and Resources has authority as Treasurer of the Common Good to invest the funds in such investments, securities or property, as may be thought fit. 6. The investment manager, LGT Wealth Management, is responsible for the allocation of assets between types of investments and for the selection of individual stocks within each type of investment. The funds are managed on a discretionary basis where the investment manager makes all investment decisions in line with this policy. Page 60 of 64
Page 61
7. Other than heritable property held as investment assets, and cash required in the short term, the Director and officers rely on professional investment managers for the day-to-day management of the assets of the common good. Investment objectives 8. The investment manager has been instructed as a primary objective to achieve a regular stream of income, the current income target is set at £492,000. The outgoings shall be as determined on an annual basis by the Investment Review Board. A secondary objective is to grow the real value of capital over the longer term. B: Diversification and risk controls Risk 9. The Trustees seek a moderate risk approach (classed as “medium high” in the rating methodology employed by LGT) through a diversified portfolio invested in a broad spread of equities but also including a proportion of fixed interest securities, property, cash and other such investments as the Trustees approve. Custody 10. Our appointed investment manager is responsible for appointing a recognised custodian for the assets of the common good. Investment Manager restrictions 11. The Trustees require their investment manager to consider environmental, social and governance (ESG) factors in making investment decisions. Each investment decision shall be made on a balanced view on the overall investment case for a particular sector or stock. In general terms, this means that ESG investment concerns should be taken into account when the decision whether to invest is being made. This does not mean that the decision whether or not to invest depends entirely on the assessment of these factors, but that they should be considered along with all relevant factors when decisions to buy, hold or sell investments are being made. 12. The Trustees note the UN Principles for Responsible Investment (UNPRI) as an approach which sets out global best practice in the area of ESG. The Trustees prefer to work with an investment manager who is a signatory to the UNPRI and note LGT, as part of LGT Capital Partners LTD, is a signatory. 13. The common good has an interest in environmental sustainability and the impact of climate change on the planet and communities, the Trustees consider that there are some investments which they would wish to exclude from the portfolio as they are not aligned with or run contrary to the objectives of the Common Good; or because they may cause reputational damage to the Page 61 of 64
Page 62
Common Good. The Investment Review Board (on behalf of Trustees) has agreed the following specific restrictions: • Ethical screening criteria o No direct investment in tobacco stocks. o No direct investment in any company generating more than 5% of revenue from gambling o No direct investment in any company involved in the production of armaments (noting that LGT, as part of LGT Capital Partners Ltd, supports the principles in both the Convention on Cluster Munitions 2008 and the 1997 Convention on Anti-Personnel Mines, which ban these weapons as defined by the conventions; and will not knowingly invest in companies producing or selling these weapons) o No direct investment in fossil fuel stocks, by which we mean the oil and gas majors and thermal coal extractive companies • Other restrictions o A target of 15%, variable to any level between 10% and 20% at the discretion of the investment manager depending on market conditions, to be held in fixed interest stocks. Manager controls 14. Powers of investment delegated to the investment manager must be exercised with a view to giving effect to the principles contained in this policy so far as is reasonably practicable. Taxation 15. The investment manager shall provide annually an HM Revenue & Customs approved tax voucher with supporting schedules detailing dividend income received. Performance measurement 16. The Treasurer on behalf of Trustees will monitor the performance of the portfolio against its objectives on a quarterly basis. The performance of the respective elements of the portfolio will be measured against the respective benchmark for that investment as outlined in the table below: Page 62 of 64
Page 63
The Investment Review Board will review the suitability of the benchmarks annually. Reporting 17. The investment manager will prepare an investment report on the funds every quarter plus an annual review of the year. The investment manager will also attend bi-annual meetings of the Investment Review Board. Duration of contract 18. The contract with LGT Wealth Management is until the 31 August 2027 and includes an option to extend for up to a further 2 years. Frequency of review 19. The Investment Review Board will review this policy annually, or sooner if circumstances demand it. Asset class Index Weighting UK Equities FTSE All-Share Index 40% Global Equities FTSE World ex UK 40% Fixed interest securities FTA All-UK Government Stocks Index 18% Cash UK Interbank 7 day 2% Page 63 of 64
Page 64
Page 64 of 64