States of Jersey Investment Strategies (January 2021)

Information about the publication of Ministerial Decisions

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A decision made on 8 January 2021

Decision Reference: MD-TR-2021-0001
Decision Summary Title:	Amendment to the ‘States Investment Strategies’ document.		Date of Decision Summary:	4th January 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:	4th January 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 and 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”) perform a full review of the States of Jersey Investment Strategy Document annually, in consultation with officers from Treasury and the States Investment Advisor, Aon. After the 2020 review the following changes have been recommended by the Panel. An updated Responsible Investment Policy has been included. The policy focusses on engagement with the corporate bodies in which we hold interests, and recognises Environment, Social and Governance issues as threats to our portfolio which must be incorporated into any risk framework applied on our behalf by our managers. The policy outlines our responsibilities as good corporate citizens and commits TAP to both an increased monitoring regime and a requirement to report to the Minister formally on their activities in this area at least annually. The Investment Strategy includes strategies for new Funds: the Fiscal Stimulus Fund & the Climate Emergency Fund. The Funds currently expect to be drawn in the short term so are invested only in cash (they cannot hold risk assets as cannot incur losses that will have no time to recover). These strategies may be updated once these Funds begin to be called upon or face extended drawdown schedules, although this is not currently anticipated. The Consolidated Fund previously had a ‘long run’ and ‘short run’ strategy. The ‘long run’ strategy has been removed, reflecting the expectation that the Fund will only hold monies planned to be spent in the short term future. The Strategic Reserve Fund has modified its strategic investment aims, increasing its allocation to alternatives and reducing its allocation to equity by 10%. This reflects expected reduced liquidity requirements allowing greater diversification across return seeking asset classes. The Housing Development Fund strategy has been modified reflecting the full drawdown of the £250m housing bond by Andium. The Fund’s strategy has therefore moved from its drawdown phase to its steady state phase. The Fund will now focus on ensuring loan repayments are recycled back into new housing projects, this ensures interest payments exceed coupon payments as the Fund rebuilds its value. The Strategies will continue to be reviewed more frequently to reflect Government’s response to the Covid-19 pandemic and the recently approved Government Plan. It is anticipated that the next review will take place before the end of June.
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 the 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 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: