As at 31 March 2025
Fund values and investment return
| Sector | Fund value as at 31 March 2025 (£m) | Fund return 1 April 2024 to 31 March 2025 (%) | Fund return three years to 31 March 2025 (annualised %) |
|---|---|---|---|
| Sterling Corporate Bonds | 450.4 | +4.2 | +0.4 |
| Multi-Asset Credit | 768.8 | +8.4 | +5.4 |
| Cash | 176.0 | +4.3 | +3.6 |
| Passive Equities | 1,534.5 | +4.7 | +7.9 |
| Global High Alpha Equities | 360.8 | +0.8 | +6.9 |
| Global Smaller Companies Equities | 293.3 | -4.9 | +0.5 |
| Emerging Market Equities | 298.9 | +6.4 | +1.6 |
| Sustainable Equities | 598.6 | -2.7 | +2.8 |
| Diversifying Returns Funds | 143.8 | +3.2 | +3.6 |
| UK Property | 415.4 | +5.3 | -2.9 |
| International Property | 94.6 | +3.8 | +1.4 |
| Infrastructure | 550.1 | +3.5 | +5.6 |
| Private Equity | 135.7 | +8.0 | +3.7 |
| Private Debt | 224.9 | +7.7 | +9.1 |
| Local Impact Portfolio | 83.7 | +4.9 | – |
| Total fund | 6,129.5 | +3.7 | +4.4 |
Key Points about investment performance
- The Fund value as at 31 March 2025 stood at £6,129.5 million, a reduction of £136 million over the last quarter, but an increase of £214 million over the financial year.
- Credit markets started the quarter well but experienced some late turbulence as investors anticipated the impact of US tariffs. Both the Sterling Corporate Bonds and Multi-Asset Credit portfolios delivered positive performance over the quarter and year to 31st March. Sterling Corporate Bonds out-performed the benchmark over the year and while the Multi-Asset Credit portfolio was behind its cash plus benchmark it was ahead of a composite of high yield and leveraged loan indices.
- Equity markets fell, as investors worried about the impact of President Trump’s tariff policies on the global economy. As a result, the Sustainable Equities and Smaller Companies portfolios which had been positive up to the end of December delivered a negative return for the year to 31st March. The other equity portfolios remained positive for the year, despite the negative return over the quarter.
- All active equity portfolios, with the exception of Emerging Markets under-performed their benchmark over the year. While the earlier part of the year was dominated by the big technology companies (Apple, Microsoft, Alphabet, Meta, Nvidia, Amazon, Tesla), the last quarter’s best performers were value companies. The Global High Alpha and Sustainable Equity portfolios are orientated to the growth sector, but underweight the big tech names.
- The Diversified Returns Fund performed well over the last quarter, as the risk management component helped it to avoid the losses experience by the equity markets.
- The private market portfolios all showed positive performance, although performance relative to benchmark was mixed. Three of the five infrastructure investments made prior to Brunel have continued to struggle with problem assets.
Overall Asset Allocation
The current asset allocation, compared to the target asset allocation, is shown in the table below:
| Asset | Target allocation (%) | Actual allocation (%) |
|---|---|---|
| Fixed interest and cash | 20.0 | 22.7 |
| Equities | 50.0 | 50.4 |
| Alternatives/Other | 30.0 | 26.9 |
Key points to note about Asset Allocation
- The target allocations in the table are those set for 2024/25. Revised target allocations for 2025/26 have been set out in the Investment Strategy statement that is subject to a separate report to this meeting of the Committee. These will be reflected in the end of June Investment Management Report to the September committee.
- Sterling Corporate Bonds and Multi-Asset Credit are both slightly above the target asset allocation. As agreed by the Committee in June 2023, the level of cash being held is currently above the 1% target.
- The Equity allocation is marginally above the target weight. £20 million was redeemed from passive equities during March to fund private market calls. Together with equity market falls in March, this brought the allocation down to be closer to the target.
- The main underweight allocation continues to be that to Alternatives/Other. However, this will be impacted by the changes to asset allocation agreed for 2025/26.
- As at 31st March a balance remained in Diversifying Returns Funds, despite the long term target being zero, pending private markets calls. During May this allocation was fully liquidated in order to part-fund the new allocation to Index Linked Gilts agreed at the last meeting of the Committee.
- The Property allocation is to be reduced from 10% to 8% (6.5% UK, 1.5% International) for 2025/26, so the current allocation will be broadly in line with the revised target.
- Significant commitments have been made to Private Equity which will take that allocation up towards the target, but it is taking longer than anticipated for the commitments to be drawn.
- The Local Impact Portfolio will also take some time to build up. Investments have now been made in all of the 5 funds agreed by the Committee, with initial calls being made by the Octopus and Foresight funds.