Decision details

(Time: 3.08pm to 3.15pm)

(CouncillorRichard Farrell declared a personal interest in this item and in accordance with Standing Order 34, he remained in the meeting during its consideration.)

The Executive received and considered report 32/07 of the Strategic Director and Chief Finance Officer, which reported on Treasury Management performance for 2006/07.  The report detailed the Council’s cash investment performance. 

In-house investment showed a return of 4.9% for the year, while the external fund managers, Investec, showed a 4.15% return (3.97% after fees).  However, it was noted that Investec was better placed for a satisfactory performance in 2007/08 following recent rises in interest rates. 

Members expressed disappointment in Investec’s performance but were not minded to change external fund managers at this stage.  However, it was suggested that a meeting was held between Butlers (the Council's investment advisors), Investec and Members of the Council to seek an explanation of the poor performance.  It was suggested that the invitation should extend to all Members of the Council, but would be of particular interest to Executive and Scrutiny Committee Members. 

Members also requested that 'league table' performance statistics were provided so that Investec's 2006/07 performance could be compared against other investment companies and for Investec’s five-year performance too.  Members also asked for equivalent comparative data from another Council to give broader perspective. 

The actual investment income achieved in 2006/07 had fallen short of the revised budget forecast by £63,822.  This represented 4.9% of the budget and was largely due to an over-optimistic view of the returns that would be made, both in-house and by the fund manager, in the final quarter of the year.  However, rising interest rates meant that the return in 2007/08 should be better than previously expected. 

RESOLVED

(a)              that the return on cash invested during 2006/07 and the balances of the funds at 31 March 2007 be noted;

(b)              that the prospects for the return on cash investments in 2007/08 be noted;

(c)               that a meeting be held between Butlers, Investec and Members of the Council to seek an explanation of Investec’s poor investment performance; and

(d)       that 'league table' performance statistics be provided so that Investec's 2006/07 performance can be compared against other investment companies and that Investec’s five-year performance be provided also, as well as equivalent comparative data from another Council.