Investment Governance Meeting Summary – 23 February 2021

The Investment Advisory Committee (IAC) meet every quarter to review our Governed Range and funds.
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Strategic Asset Allocation:

No SAA changes were recommended for the Governed Portfolios or GRIPs.

Tactical Asset Allocation:

Last change made on 3rd December 2020.
Global equities rose strongly in November following the US elections and positive Covid-19 vaccine trial data. Investors were reassured by the absence of US political unrest. Likewise, the possibility of a successful vaccine rollout and ‘return to normal’ next year boosted sentiment. While concerned about no agreement being reached yet on a UK-EU trade deal, shorter-term Covid-19 spikes in the US and rising geopolitical risks in the Middle East, we have increased our overweight in global equities and in global high yield bonds, funded by reducing gilts, bonds and cash. We remain overweight in commodities and underweight in commercial property.

Governed Portfolios

Number of Governed Portfolios outperforming benchmark 1 year 1/9
3 years 9/9
Since launch  8/9
Number of Governed Portfolios within target volatility ranges 9/9
  • All the Governed Portfolios were within their target volatility ranges.

Governed Retirement Income Portfolios

Number of GRIPs outperforming benchmark 1 year 0/5
3 years 5/5
Since launch 5/5
Number of GRIPs within target range – Income Risk Metric 5/5
Number of GRIPs within target range – Fund Risk Metric 5/5

 

All portfolios remain within their target ranges for the income risk metric. Sustainability scores have marginally declined from last quarter as annuity rates remain at historically low levels, yet the expected future returns across most asset classes have increased, which should improve future performance.
The fund risk metrics for GRIPs 4 and 5 are within tolerance, however GRIPs 1 and 3 are now flagging amber and GRIP 2 is flagging red. As a result GRIP2 has now been flagging red for 2 consecutive quarters. Please see the IAC minutes for the committee’s comments on the GRIPs risk metrics.

 

Tactical Strategy:

 OverweightNeutralUnderweight
Equities up arrow    
Property     down arrow 
Commodities no change    
High Yield up arrow    
Gilts     down arrow
Index Linked     down arrow
Corporate Bonds down arrow    
Absolute Return Strategies (including cash)     down arrow


Global equities rose strongly in November following the US elections and positive Covid-19 vaccine trial data. Investors were reassured by the absence of US political unrest. Likewise, the possibility of a successful vaccine rollout and ‘return to normal’ next year boosted sentiment. While concerned about no agreement being reached yet on a UK-EU trade deal, shorter-term Covid-19 spikes in the US and rising geopolitical risks in the Middle East, we have increased our overweight in global equities and in global high yield bonds, funded by reducing gilts, bonds and cash. We remain overweight in commodities and underweight in commercial property.

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