The Pensions Fund Committee - Investment Sub-Committee of West Northamptonshire Council was scheduled to discuss a range of investment-related matters. Key topics included a review of the fund's stewardship and engagement activities, an update on current investment topics, and a performance report for the period ending 31 December 2025.

Stewardship and Engagement Report

The committee was scheduled to receive an update on stewardship and engagement activities concerning the fund's investments. This report was intended to provide information on the fund's voting activity within the ACCESS pool for the three months leading up to 30 September 2025, as well as a summary of engagement activities undertaken by ACCESS sub-fund managers between July and September 2025. Additionally, the report was to cover engagements with investment managers directly by the fund from October to December 2025, and the engagement and voting activity of the Local Authority Pension Fund Forum (LAPFF) for the period of October to December 2025. The report also noted that the results of a responsible investment member engagement survey would be provided as a verbal update. A proxy voting report from Border to Coast for the AGM season of April to July 2025 was also to be presented.

The report highlighted that the Northamptonshire Pension Fund recognises the importance of promoting good governance and management in the companies it invests in. It expects investment managers to exercise voting rights and engage with companies to ensure good stewardship of the fund's assets. The fund's Investment Strategy Statement includes a policy on the exercise of rights attached to investments, with a specific expectation that investment managers will vote on pool-aligned assets in accordance with ACCESS voting guidelines on a comply or explain basis and report on their voting activity. The fund also believes that collective action with other investors, such as through the ACCESS pool or LAPFF, is an effective way to engage with companies.

The report detailed voting activity, noting that for the three months ending 30 September 2025, there were 132 resolutions to vote on across the ACCESS sub-funds. Of these, 109 votes were cast in favour and 22 against meeting proposals, with one instance of abstention. All votes were classified under Governance (G), with no specific Environmental (E) or Social (S) themed votes recorded in this period. The report also identified instances where investment managers voted contrary to ACCESS voting guidelines, with Baillie Gifford having 11 such instances. Reasons provided for these deviations included differing views on remuneration arrangements, auditor tenure, director elections, and differential voting rights.

Engagement activities within the ACCESS pool involved 162 assets and 106 confirmed engagements with companies during the reporting period. These engagements were categorised as 12 on environmental topics, 31 on social topics, and 63 relating to governance. The report also outlined direct engagement with investment managers through regular meetings, the Investment User Group (IUG), and committee meetings, with discussions covering fund performance and stewardship activities.

The report included information on Border to Coast Pensions Partnership's (BCPP) proxy voting during the AGM season from April to July 2025, detailing their investment beliefs, voting summaries, and reviews of the AGM season. It also provided case studies on how voting can impact companies, such as the BP case study where voting against management on several agenda items led to the Chair of the Board announcing his stepping down. The report noted an improvement in the quality of company climate transition plans, with increased support for 'Say on Climate' resolutions.

The Local Authority Pension Fund Forum (LAPFF) activity between October and December 2025 was also summarised, detailing engagements with companies on topics such as Climate Change, Human Rights, and Environmental Risk. LAPFF issued one voting alert during this period, with Longview and Dodge and Cox confirming their voting plans in response.

Current Investment Topics - Update

The committee was scheduled to receive an update on current investment topics. This update was expected to cover market conditions, including significant rises in gilt yields due to global sell-offs in government bonds, concerns about the UK's fiscal position, and structural changes in the demand for long-dated UK bonds. Mercer, the presented advisor, was not anticipating a looming debt crisis, viewing the deficit as manageable and noting the government had not undertaken fiscal tightening. Gilt markets were presented as a strategic, rather than tactical, investment opportunity. The update was also to address market views on potential tax increases in the forthcoming budget and their impact on the Pension Fund, as well as the possibility of hedging against the reversal of reductions in employer contributions. Mercer's response indicated that a rise in income tax was seen positively by the market as it could allow for interest rate reductions and stimulate growth, with no particular impact anticipated for the Fund. The possibility of parking excess assets in a risk buffer to act as a shock absorber was also mentioned.

The update also touched upon US current issues, including trade and geopolitical developments, such as threatened tariffs on European countries and strategic interests in Greenland. It also covered actions in Venezuela, including the capture of President Nicolas Maduro and the subsequent sale of Venezuelan oil. A Sell America agenda was discussed, reflecting growing investor concerns about exposure to US assets due to rising policy uncertainty and more confrontational US policies. This was noted to have led to volatility in US Treasury yields, a weakening of the US dollar, and a rise in the price of gold and silver. The report indicated that US equity markets were lagging relative to other developed markets at the start of 2026 but remained leading over a longer period.

Furthermore, the update addressed US policy retrenchment and ESG pushback, noting the US withdrawal from the Paris Climate Agreement, a renewed commitment to fossil fuels through executive orders, and a crackdown by the Securities and Exchange Commission (SEC) on ESG disclosures. The Protecting Prudent Investment of Retirement Savings Act, which mandates that fiduciaries base investment decisions solely on economic factors, was also highlighted. These developments were seen as a rollback in US policy concerning ESG considerations.

Mercer's Capital Market Assumptions were also to be presented, offering insights into asset class considerations, including valuations, broad direction of travel, and specific considerations for global equities, corporate bonds, multi-asset credit, gilts, cash, and private markets.

Quarterly Performance Report for the period ending 31 December 2025 (Public)

The committee was scheduled to review the quarterly performance report for the period ending 31 December 2025. This report was expected to detail the performance of the fund's investments, with Mercer presenting the findings. The report indicated that market index performance had been positive for equity markets, driven by optimism around AI and the technology sector, which had also influenced other growth assets. Private markets, property, and private equity had experienced a slower period, with negative returns for gilts.

In terms of asset allocation, a transition from equities to alternatives was noted, with an overweight position persisting despite trimming. The report highlighted that it had taken time to invest in real estate and infrastructure markets, and they had not performed as well as anticipated, indicating a need for further action to reach targets. Equity markets were identified as the primary driver of performance, with fixed income being flat and the alternatives portfolio lagging behind the benchmark.

The equity portfolio was reported to have performed ahead of the benchmark in the recent period but was behind over five years. Specific manager returns were detailed, with Baillie Gifford, having a high exposure to technology sectors, performing well over the last year, while Longview, with a quality approach and limited exposure to semi-conductor industries, had underperformed. Dodge & Cox was also noted to have underperformed. Passive equity managers UBS and Osmosis were reported to be in line with the index. Fixed income had shown negative gilt returns, while Multi-Asset Credit had positive returns.

In the alternatives portfolio, real estate had shown small positive returns driven by income rather than capital growth. Private equity returns were flat and had trailed the benchmark, although they had delivered over five years. The infrastructure portfolio showed flat returns for AMP and Allianz, but IFM and JPM had reported over 4%, contributing to growth.

The report also addressed the transition of assets to Border to Coast, with Mercer advising that assets would initially remain the same, but a transition exercise over several years would determine which assets would move to Border to Coast products and which would be run down. The Funding and Investment Manager and Head of Pensions noted that discussions with Border to Coast were ongoing, with economies of scale expected to lead to reduced costs.

The report also included a review of the action log from the previous meeting on 10 November 2025, noting the completion of actions related to stewardship and engagement.

The meeting was also scheduled to include a CBRE Presentation, the details of which were not publicly available. The agenda also indicated that certain reports, including a private quarterly performance report, private minutes of the previous meeting, and the CBRE presentation, would be considered with the exclusion of the press and public due to the likely disclosure of exempt information.