Government of Jersey

Strategic Reserve (FOI)

Produced by the Freedom of Information office
Authored by States of Jersey and published on 29 March 2016.

Request

Can you please tell me:

Exactly how much is in the Strategic Reserve Fund?

How and where is that money invested and on what terms including interest rates receivable?

Any breakage clauses applicable should investment(s) be broken.

Response

As of 31 December 2015, the value of the Strategic Reserve was £771.535 million.

Of this value, the vast majority of value is attributable to the fund’s investments, which are valued at £771.526 million.

These values are currently unpublished and remain subject to audit.

The Strategic Reserve is invested in line with its Investment Strategy.

The document can be found on the States Greffe website and is presented to the States at least annually.

The Strategic Reserve pursues its strategy via investment through the Common Investment Fund (CIF), the States Investment Pooling Arrangement.

The Fund participates in a number of CIF pools. The value of its investment in each is detailed below. Investments are managed at a pool level.

The Strategic Reserve holds ‘units’ in the various pools entitling it to a proportion of the underlying assets and performance of those assets. Under this arrangement, the Strategic Reserve does not directly hold any cash at any specific interest rate or terms. It is entitled to a proportion of the pool’s holdings.

A high level summary of the mandate of each pool is included in the table below.

Some mandates are segregated portfolios. The pool directly holds the underlying assets which are controlled and traded by the manager in accordance with an Investment Management Agreement. Other pools contain units in ‘collective investment vehicles’. The underlying assets are not held by the States of Jersey, only units in a greater investment vehicle alongside multiple external investors. This has been detailed in the table below.

Further details of the contents of the pools of the Common Investment Fund can be found in the notes to the States Accounts.

These include average interest rates, maturities of instruments and currencies held.

See note 9.35 in the attached link to the 2014 accounts (2015 accounts are not yet published).

Download States of Jersey Report and Accounts 2014 (size 690kb)

	£,000	%	High level mandate summary	Segregted (S) Pooled (P)	Managers appointed
UK Equities II Pool	51,699		Active management seeking to earn long term returns through investment in UK equities which are constituents of the FTSE All Share Index.	S	Majedie Asset Management
Global Equities I Pool	74,862		Active management seeking to earn long term returns through investment in global equities which are constituents of the MSCI All Country World Index.	S	Longview Partners
Global Equities II Pool	77,466			S	Walter Scott
Global Equities III Pool	38,757			P	Bailie Gifford
Pooled Global Equities Pool	36,381				Schroders QEP Global Active Fund
Passive Global Equities Pool	46,058		Passive management seeking to mimic the returns of the FTSE World Index.		Legal and General
Emerging Market Equities Pool	34,126		Active management seeking to earn long term returns through investment in companies operating within Emerging Markets as defined by the MSCI Emerging Market Index.	P P	AQR Emerging Equities UCITS Fund Uni-Global Equities Emerging Markets
Total Equity Holdings	359,349	46.6%
Short term Government Bonds Pool	133,583				Legal and General
Absolute Return Bond Pool	116,004		2.1.3 Active management of a debt focused pool which invests in a wide fixed income universe but with greater discretion than the corporate and government bond pools. The managers pursue absolute return strategies and seek to consistently achieve positive returns in all market conditions.	P P P	Insight Libor plus 400 Fund Goldman Sachs Global Strategic Income Bond Portfolio Global Total Return II Portfolio
UK Corporate Bond Pool	51,320		Active management seeking to earn long term returns through investment in sterling denominated corporate investment grade debt.	P P	PIMCO Funds: Global Investors Series plc.: – UK Corporate Bond Fund. Insight Investments Discretionary Funds ICVC: UK Corporate Bond All Maturities Bond Fund
Total Fixed Income Holdings	300,907	39%
Long term cash and cash equivalents Pool	15,791		Active management seeking to earn a return through investment in high quality (Standard & Poor’s AA or Moody’s Aa3) cash and cash equivalent type instruments.	S	Royal London Asset Management
Total Cash Holdings	15,791	2%
Pooled Property II Pool	34,141		Active management seeking to generate a long term return through investment in UK based commercial property. Focusing principally but not exclusively in the retail, office and industrial/warehouse sectors.	P P P	Blackrock UK Property Pool Threadneedle Property Unit Trust Lothbury Property Fund
Absolute Return Pool	61,338		Active management structured as a portfolio of single strategy hedge funds. 11 hedge funds appointed directly to the Pool (6 appointed by 31/12/15). The combination of managers is designed to provide a target return of LIBOR + 4-6% while providing protection in downturns and non-correlation with equity class assets.	P P P P P	Adelphi Capital Highline Capital Management Maverick Capital Anchorage Capital Group Davidson Kempner Capital Management
Total Alternatives	95,479	12.4%

Investments are controlled at the pool level in the CIF and not at the level of the Strategic Reserve, which does not directly hold any instruments.

The Strategic Reserve holds only units in the CIF. There are no breakage clauses for these units. They can be liquidated with one month’s notice.