Agenda item

Report of the City Treasurer.

7.1       The Board had before them representatives of the London Collective Investment Vehicle (CIV) to provide an update on the CIV’s progress.

            Chloe Crouch (Client Relations Executive, London CIV) initially addressed the Board and advised that the London CIV now held 10 funds, of which 5 were global equities, whilst a new Epoch Global Equity fund had been launched on 30 September, which had increased the total value of the CIV’s funds from £.5.5bn to £6.1bn. Chloe Crouch stated that the London CIV was in the process of opting up its London borough members to professional client status in respect of MiFID 2014/65 and 26 of 32 members had already been completed. Work was also being undertaken in respect of an infrastructure mandate.

7.2       Kevin Cullen (Client Relations Director, London CIV) drew Members’ attention to the CIV’s structure chart circulated at the meeting and stated that he had started his position in the last week. He advised that Hugh Grover had stepped down as Chief Executive Officer and Mark Hyde Harrison now fulfilled this role. The London CIV had made a lot of progress since its inception in 2014, however there was still much work to do.

7.3       Larissa Benbow (Head of Fixed Income, London CIV) then addressed the Board and stated that the London CIV currently had no fixed income platform. This was partly attributable to London boroughs retaining their own fixed income funds. Larissa Benbow explained that her role was to develop fixed income funds for the CIV and she had been discussing fixed income options with all London borough members of the CIV. This would involve launching 5 funding strategies and Larissa Benbow advised that 6 preferred fund managers had been identified, of which 2 of these would be selected. Work on setting up the first fixed income fund for the CIV was due to commence in the week commencing 4 December, with a view to the fund coming into existence in March 2018. Similarly, work would also start on setting up liquid loan funding in the week commencing 4 December, with a view to a fund being created in May 2018. Members noted that work would also take place on a multi-asset credit strategy. The emphasis would be on looking at good value and 2 fund managers would be selected. Larissa Benbow added that training would be made available for any London boroughs interested.

7.4       During Members’ discussions, the Chairman asked what governance arrangements were in place for Pension Fund Committees to monitor the London CIV. In respect of the CIV itself, he sought further details of its own governance arrangements and emphasised that the Board was particularly interested in its processes. Members asked whether a Board Member could attend one of the London CIV governance meetings, for example one of the scrutiny meetings.

7.5       In reply to issues raised by the Board, Larissa Benbow advised that the Investment Oversight Committee oversaw governance arrangements for the CIV. The CIV was in a continual process of evolution since it had been created and it now had staff with both public and investment experience. Governance arrangements and the appropriate documentation were in place, however Larissa Benbow advised that a governance review was currently underway and the first set of recommendations from this review were expected on 17 November. Full diligence would also be undertaken in respect of the fixed income mandate. Larissa Benbow advised there was a process for the CIV to feedback to Pension Fund Committees, and officers were invited to meetings. There were also Working Groups in the CIV whose memberships were quite open.

7.6       Chloe Crouch added that the CIV held quarterly meetings with Baillie Gifford who were monitoring its activities. She also stated that consideration could be given as to whether a Board Member could attend London CIV meetings.

7.7       The Chairman thanked London CIV representatives for their informative presentation.

7.8       RESOLVED:

            That the update from the London CIV be noted.