States Investment Strategies: Amendment

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A decision made 6 August 2021:

Decision Reference: MD-TR-2021-0097
Decision Summary Title:	Amendment to the ‘States Investment Strategies’ document.		Date of Decision Summary:	6th August 2021
Decision Summary Author:	Head of Treasury and Investment Management		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Amendment to the ‘States Investment Strategies’ document		Date of Written Report:	6th August 2021
Written Report Author:	Head of Treasury and Investment Management		Written Report : Public or Exempt?	Public
Subject: The amendment of the ‘States Investment Strategies’ document and presentation to the States.
Decision(s): The Minister approved the amended ‘States Investment Strategies’ document. The Minister decided to present the updated document to the States.
Reason(s) for Decision: Paragraph 25 of the Public Finances (Jersey) Law 2019, (sub paragraph 1) states the Minister may cause any money of the States or money held by the States or a States body to be invested and (sub paragraph 3) the Minister must present to the States an investment strategy in respect of any money to be invested, and must do the same for any amendment to the strategy. The Treasury Advisory Panel (“the Panel”, “TAP”) periodically review the investment strategies of States Fund, recently changes to cash flows associated with the Social Security Funds prompted a review of the Fund strategies. The review was performed in consultation with officers from Treasury, the Social Security Minister and the States Investment Advisor, Aon. The following changes have been recommended by the Panel: The Active Emerging Market Equity pool has been combined with the Active Global Equity Pool, this facilitates more efficient portfolio management and more consistent geographic exposure for CIF participants. The strategy of the Health Insurance Fund has been modified to de-risk the portfolio, this follows decisions to drawdown considerable assets from the Fund over the next few years which has reduced the length of its investment horizon, necessitating greater focus on capital preservation. The strategy of the Social Security Reserve was reviewed, the strategy was deemed to remain appropriate however a 5% increase in the allocation to the Opportunities Pool, taken from the Equity Pool to improve diversification across sources of return. The LT Care Fund was reviewed, although the Fund strategy was deemed to remain appropriate, the increased contribution rate is likely to push out the investment horizon of the Fund, it is recommended therefore to re-review the strategy following completion of the next actuarial valuation. This was added to the strategy. In addition to the above, minor updates were included to improve wording and clarity of the document.
Resource Implications: There are no resource implications from this decision. Any costs stemming from strategy changes will be met from sale proceeds and are expected to be minimal. The changes to strategy will be administered as part of the ongoing responsibilities within the Treasury & Investment Management Team.
Action required: The Head of Financial Governance to advise the Head of Treasury and Investment Management when the decision has been signed. The Greffier of the States is required to arrange for the attached document to be presented to the States. The Treasury and Investment Management Team will ensure changes are implemented.
Signature:		Position: Deputy S J Pinel, Minister for Treasury and Resources
Date Signed:		Date of Decision: