Here is a summary of the agenda for the Pensions Fund Committee - Investment Sub-Committee meeting. The meeting included discussion of the stewardship and engagement report, an update on current investment topics, and a quarterly performance report. Some of the meeting was scheduled to be held in private because it was expected that exempt information would be disclosed.

Quarterly Performance

The committee was scheduled to review the quarterly performance report for the period ending 30 June 2025. According to the report, the present value of the fund's liabilities remained the same over the quarter at £2.3 billion. The fund's assets increased over the quarter by £107 million to £3.8 billion as at 30 June 2025, and have increased by £193 million over the last twelve months.

The estimated funding level was:

• 30 June 2025: 165%
• 31 March 2025: 160%
• 31 March 2022: 113%

The report noted that additional capital was called from two of the fund's managers: Stafford International (Timberland) called $1.3 million of additional capital and Legal & General (Affordable Housing) called £1.6 million of additional capital.

The report also included a summary of the fund's asset allocation. As of 30 June 2025, the fund's asset allocation was:

• Equities: 45.3%
• Fixed Income: 30.3%
• Alternatives: 24.4%

The fund underperformed the benchmark over the quarter, returning 3.1% versus 3.6%. According to the report, Private Equity (-0.7%), Longview Partners (-0.5%), and M&G Investments MAC (-0.2%) were key contributors to relative underperformance during the quarter, while Baillie Gifford (+0.8%) contributed to relative outperformance.

The report also included a detailed attribution analysis, which provided a visual representation of the contribution of each portfolio to the relative performance of the total scheme against the total benchmark.

Stewardship and Engagement

The Investment Sub Committee was scheduled to receive an update on stewardship and engagement matters relating to the fund's investments. The report recognised the importance of promoting good governance and management in the companies in which the fund invests, and stated that the fund expects its investment managers to exercise voting rights and engage with companies with the aim of good stewardship of the fund's assets.

The report updated the Investment Sub-Committee on:

• The fund's voting activity during the three months to 31 March 2025 for assets held within the ACCESS pool¹.
• A summary of engagement activity undertaken on behalf of the fund by ACCESS sub-fund managers covering the period between January and March 2025.
• A summary of engagements with investment managers directly by the fund covering the period between April and June 2025.
• A summary of the Local Authority Pension Fund Forum (LAPFF) engagement and voting activity for the period between April and June 2025.

According to the report, officers have continued to share the LAPFF voting alerts with managers to understand their voting plans regarding each alert.

The report included a summary of the voting activity for the three months ending 31 March 2025, including votes for and against management, for each of the ACCESS sub-funds in which the fund invests. During the three months ending 31 March there were 14 company Annual General Meetings and 1 extraordinary meeting. Of the ACCESS sub-funds in which the Northamptonshire Pension Fund invests, there were 266 occasions to vote by the investment managers. There were 24 instances where votes were not cast, or managers chose to abstain from voting. Of the votes cast, 196 were for and 46 against management proposals.

The report stated that Baillie Gifford voted contrary to the ACCESS voting policy on 6 occasions for assets within ACCESS sub-funds.

They supported motions on Articles of Association where ACCESS recommend they oppose bundled resolutions, they supported the motions as they didn't deem them controversial. They also supported the election of a Chair when ACCESS recommends opposing a joint Chair/CEO, they stated they are comfortable with the Chair and therefore supported. ACCESS guidelines recommend voting against the audit committee chair when there are concerns with the company's accounting, Baillie Gifford stated that although there was a restatement, they are comfortable with the company's remediation. Finally, they voted for remuneration when ACCESS recommends opposing remuneration where the performance period is less than five years, they advised they are comfortable with the company's arrangement.

The report stated that officers will engage with Baillie Gifford in due course to discuss the matter as they are the only manager to do this on a regular basis.

Current Investment Topics

Jonathan Crowther from Mercer was scheduled to give a presentation on current investment topics. The presentation included a market update for 2025 year to date, and a discussion of diversification.

The presentation stated that the outlook for equities looks more bearish given market pricing of earnings remains above historical average levels. It also stated that long gilt yields are attractive from a valuation perspective as offering yields not seen since the 1990s, and that US dollar weakness is likely to continue given slowdown in US growth.

The presentation also included a discussion of why diversification is valuable, stating that diversified portfolios are more efficient at converting risk into return, and that they are less exposed to any one element of the portfolio underperforming.

Over the long term, equities and bonds have been positively correlated more often than not. Particularly when inflation is higher. This means portfolios need to include strategies other than equities and bonds to gain diversification.

The presentation noted that for non-USD investors, the risk reduction and diversification from leaving FX exposure unhedged is largely a product of the negative (short-term) correlation between equity market and USD performance, but that over the last year, the negative correlation has faded.