Appendix C Asset Strategy Existing Resource Future Benefits Risks Delivery Equities Active management Fund Mgmt.: Experience >4 WTEs & track (est. record Non-compliance with LGPS regulations £2,945m UK & Overseas 5 Already WTEs) set-up MiFID II Broker/Research 80% In-house team Admin.: Provides VFM (lower cost) Resilience & key man risk (Mgmt. & Admin.) when Long term reduce Control retained & needs matched against BCPP allocation (to 70%) investment Shareholder to governance meet ownership Requires investment (staffing & systems) potential Engagement future through LAPFF New Custodian (very complex) to implement & demand project manage (how can we backfill costs to provide near turn-key solution?/effect on trading activity?) Staff retention problems (new competitor in Leeds) are they to be replaced? – Resources restrained MBC Recruitment can we get the right staff & – how long to train them? No staff base to draw from for Legacy Assets / Governance (Mgmt. & Admin.) Pool Compliance with LGPS regulations No track record (at Pool) BCPP proposal shows resilience No guarantee LGPS teams will gel Built on LGPS experience & track Costs estimated (£5.8 to £10.1 m p.a. shared by record 12 Funds) Provides greater investment options? Start date unknown for sub Funds Direct engagement ACS transparency gone – Existing staff to potentially draw from Shareholder governance may be compromised for Legacy Assets / Governance (Mgmt. & Admin.) New Custodian less complicated to implement & project manage Ext. Manager Experience & record Expensive (IMA) Reduced internal staffing required Transition risks and costs (Mgmt. only) Churning? Management resilience? Shareholder governance may be compromised Ext. Funds Experience & track record Very expensive (Active) Reduced internal staffing required In-specie transfer? Management resilience? Shareholder governance compromised
Appendix C Asset Strategy Existing Resource Future Delivery Benefits Risks Equities £2,945m 80% Active management UK & Overseas In-house team Long term reduce allocation (to 70%) Mgmt.: >4 WTEs (est. 5 WTEs) Admin.: & needs investment to meet potential future demand Fund Experience & track record Already set-up Provides VFM (lower cost) Control retained Shareholder governance ownership Engagement through LAPFF Non-compliance with LGPS regulations MiFID II Broker/Research Resilience & key man risk (Mgmt. & Admin.) when matched against BCPP Requires investment (staffing & systems) New Custodian (very complex) to implement & project manage (how can we backfill costs to provide near turn-key solution?/effect on trading activity?) Staff retention problems (new competitor in Leeds) – are they to be replaced? Resources restrained MBC Recruitment – can we get the right staff & how long to train them? No staff base to draw from for Legacy Assets / Governance (Mgmt. & Admin.) Pool Compliance with LGPS regulations BCPP proposal shows resilience Built on LGPS experience & track record Provides greater investment options? Direct engagement Existing staff to potentially draw from for Legacy Assets / Governance (Mgmt. & Admin.) New Custodian less complicated to implement & project manage No track record (at Pool) No guarantee LGPS teams will gel Costs estimated (£5.8 to £10.1 m p.a. shared by 12 Funds) Start date unknown for sub Funds ACS – transparency gone Shareholder governance may be compromised Ext. Manager (IMA) Experience & record Reduced internal staffing required (Mgmt. only) Management resilience? Expensive Transition risks and costs Churning? Shareholder governance may be compromised Ext. Funds (Active) Experience & track record Reduced internal staffing required Management resilience? Very expensive In-specie transfer? Shareholder governance compromised
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