Introduction to the Investment Review
by John Hattersley, Fund Director
Much to many observers’ surprise most stockmarkets around the world went up during 2012/13 although the year was very much one of contrasts with the first part suffering volatile conditions whilst the second part enjoyed a rally. There was undoubtedly a change in sentiment for the better over the year but so much of that was based upon the assumption that the central banks would continue their support of financial markets. It remains unclear what will happen when that support is withdrawn or tempered. The Fund adopted a cautious approach throughout the period whilst acknowledging that investors were becoming less nervous. The Fund produced a return of 14.5 % (13.6% net of currency) which was ahead of the benchmark by 0.7%. The three and ten year annualised returns are in line with the benchmark return. Two of the Fund’s three independent investment advisors retired during the year whilst the third resigned due to ill-health. Two new advisors joined in July and a third was appointed in April 2013. Members initiated a review of the Fund’s responsible investment policy during the year and approved a realignment of the bond portfolios away from government securities to more high yielding instruments. As the Fund enters a period of considerable change for the LGPS the investment environment remains very challenging. Investors are aware that markets are propped up by symptomatic treatment rather than cures but are relieved that the patient is no longer in intensive care. Until such time as the patient can be discharged the Fund will remain vigilant and cautious.