Skip to Main Content
Nilgosc


Investment Strategy

Objectives and Targets

NILGOSC aims to invest the assets of the Scheme prudently to ensure that the benefits promised to members are provided, and to provide reasonable stability in contribution rates for the employers.  To meet this aim NILGOSC's overall investment objective is to exceed price inflation and general salary growth over long term periods.

The latest actuarial valuation assumes a prudent investment return of CPI +2.9%.  In order to reduce the funding deficit, the aim of the Fund will be to achieve investment returns above this level.

The overall investment target is to exceed the CPI by 5% per annum, to be measured over a three and five year period. 

Each fund manager has been set an individual performance target using indices applicable to the asset type and geographic market. The Committee monitors the performance of its investment managers by availing of Northern Trust’s performance measurement and reporting facility.  

Investment Strategy

NILGOSC sets its long-term investment strategy by taking into account the nature and timing of the Fund’s liabilities identified through the triennial actuarial valuation and its investment aims and objectives. In setting the Fund’s investment strategy, NILGOSC first considers the lowest risk strategy that it could adopt in relation to the Scheme's liabilities. The investment strategy is designed to achieve a higher return than the lowest risk strategy while maintaining a prudent approach to meeting the Scheme’s liabilities.

These considerations drive decisions over asset allocation.  NILGOSC reviews the Fund’s asset allocation on an annual basis. In determining its asset allocation, NILGOSC considers:

  •  A full range of asset classes
  •  The risks and rewards of a range of asset allocation strategies
  •  The suitability of each asset class
  •  The need for appropriate diversifcation

The Fund's investments are diversified across various asset classes in order to increase the overall expected returns while reducing the overall level of risk.  A mixture of passive and active mandates are also used to capture the returns required to meet the Fund's objectives. 

The benchmark and performance target for each asset class of the fund as at 31st March 2016 is shown in the following table:

Asset Class

Target / Benchmark Indices
(outperformance shown per annum)

UK Equities

FTSE All Share Index
FTSE All Share Index + 2%
FTSE All Share Index + 4%
FTSE All World UK + 2%
FTSE All World UK + 3%
MSCI All Countries World UK + 3%            

Overseas Equities

FTSE All World Developed Index (ex UK) + 2%
FTSE All World Index (ex UK) + 3%
MSCI All Countries World Index (ex UK) + 3%
FTSE All World North America Index
FTSE All World Developed Europe ex UK
FTSE All World Japan
FTSE All World Developed Asia Pacific ex Japan
FTSE All World All Emerging

Bonds

Fixed Bonds            

               

Index-linked Gilts


Barclays Capital Global Aggregate Bond Index + 0.75%
iBoxx £ non-Gilt ex BBB    
               
FTA Index Linked > 5 Years

Index-linked Property

Retail Price Index (RPI)

Traditional Property

IPD Quarterly Universe+ 1%

Infrastructure

CPI + 5%