Defined Benefit Pension Scheme

1. Definitions.
2. Introduction.
3. Investment Beliefs.
4. Investment Objectives and Investment Strategy.
5. Investment Manager Arrangements.
6. Selection of a Pooled Fund.
7. Monitoring.
8. Stewardship.
9. Risks.
10. Future Amendments.
11. Appendix: The Trustees’ Investment Strategy

Jockey Club Racecourses Pension Scheme
Statement of Investment Principles
June 2025

1. DEFINITIONS

AVCs	Additional Voluntary Contributions
ESG	Environmental, Social and Governance
Investment Adviser	The Trustees are advised on investment matters by First Actuarial LLP. First Actuarial LLP is regulated by the Institute and Faculty of Actuaries and is qualified to provide the required advice through knowledge and practical experience of financial matters relating to pension schemes.
Legislation	This statement has been drafted to comply with relevant legislation. In particular, consideration has been given to: ·         the Pensions Act 1995; ·         the Occupational Pensions (Investment) Regulations 2005; ·         the Pension Protection Fund (Pensionable Service) and Occupational Pension Schemes (Investment and Disclosure) (Amendment and Modification) Regulations 2018; and ·         the Occupational Pension Schemes (Investment and Disclosure) (Amendment) Regulations 2019.
Scheme	Jockey Club Racecourses Pension Scheme
Trustees	The Trustees of the Scheme

 

2.             Introduction

This statement is made in accordance with the requirements of legislation. The main body of the document sets out the principles and policies that govern investments made by the Trustees whilst details of the specific investment arrangements in place are provided in the Appendix.

Throughout the statement, wording in bold represents actions that will be taken by the Trustees in the implementation and monitoring of the Scheme’s investment arrangements.

Investment advice

The Trustees received and considered written investment advice from the Investment Adviser to help with the preparation of this statement.

The Trustees will obtain and consider written advice from the Investment Adviser when reviewing the Scheme’s investment strategy or when considering the suitability of potential investments. The Trustees expect that such advice will be consistent with any guidance issued by The Pensions Regulator.

Legal advice

The Trustees will seek legal advice relating to investment matters whenever deemed necessary.

Consultation with the sponsoring employer

In preparing this statement, the Trustees consulted with the sponsoring employer.

The Trustees will consult with the sponsoring employer before making any changes to the Scheme’s investment strategy.

Conflicts of interest

The Trustees are satisfied that the Scheme’s investment strategy meets their responsibility to invest the assets in the best interests of the members and beneficiaries and, in the case of a potential conflict of interest, in the sole interest of the members and beneficiaries. 

 

3.              Investment Beliefs

The investment beliefs stated below have been developed by the Trustees and are reflected in the Scheme’s investment strategy.

Basic investment principles

The Trustees believe that the following three basic investment principles should be taken into account in the construction of the Scheme’s investment strategy:

1. Targeting higher levels of investment return requires increased levels of investment risk which increases the volatility of the funding position.
2. Long-term performance of the Scheme’s assets is attributable primarily to the strategic asset allocation rather than the choice of investment managers.

• Asset diversification helps to reduce risk.

Financially material considerations and the appropriate time horizon

The Trustees believe that the potential impact of any financially material considerations that may affect the Scheme’s investments should be assessed over the period during which benefits are expected to be paid from the Scheme. In the terminology used by legislation, the Trustees consider this period of time to be “the appropriate time horizon of the investments”.

ESG

The Trustees believe that the impact of ESG risks and opportunities can be financially material and the Trustees recognise that ESG matters, particularly climate change, should be assessed over the appropriate time horizon.

Use of active management

The Trustees believe that active management has the potential to add value either through offering the prospect of enhanced returns or through the control of volatility.

The Trustees believe that active management may help to mitigate the financial impact of ESG risks.

3. Investment Beliefs (continued)

Stewardship

The Trustees believe that good stewardship can help create, and preserve, value for companies and markets as a whole.

Members’ views (non-financial matters)

Legislation defines non-financial matters as meaning the views of the members and beneficiaries including (but not limited to) ESG matters and the present and future quality of life of the members and beneficiaries of the Scheme.

The Trustees believe that their duty to members and beneficiaries will be best served by ensuring that all benefits can be paid as they fall due and the Trustees’ Investment Objectives are designed to ensure this duty is achieved.

In reaching this conclusion, the Trustees considered whether to take members’ views into account when determining a suitable investment strategy and in the selection, retention and realisation of investments. However, the Trustees have determined that it would not be practical to do so. In particular, the Trustees concluded that it is likely that members and beneficiaries would hold a broad range of views, which would be difficult to accommodate.

At least every three years, the Trustees will:

• Review the suitability of their investment beliefs.
• Review their policy on whether to take account of members’ views within the Scheme’s investment strategy and in the selection, retention and realisation of investments.

 

 

4.              Investment Objectives and Investment Strategy

The Trustees’ primary investment objectives are:

• To ensure that the assets are sufficient and available to pay members’ benefits as and when they fall due.
• To generate an appropriate level of investment returns – to improve the funding position and thereby improve security for members.
• To protect the funding position – limiting the scope for adverse investment experience reducing security for members.

The Trustees’ investment approach is designed to strike a balance between the above primary objectives but also considers:

• The nature and timing of benefit payments.
• Expected levels of investment return on different asset classes.
• Expected levels of investment return variability and, specifically, the expected level of short-term volatility of the funding position. This takes into account any financially material considerations.
• The sponsoring employer’s ability to withstand additional contribution requirements that may arise from volatility in the funding position.
• The full range of available investments (within the bounds of practicality).

The Trustees have taken advice from the Investment Adviser to construct a portfolio of investments consistent with these objectives. In doing so, consideration is given to all matters which are believed to be financially material.

Details of the current investment strategy are provided in the Appendix.

The Trustees will review their investment objectives and the Scheme’s strategic asset allocation at least every three years.

 

4. Investment Objectives and Investment Strategy (continued)

Types of investments to be held

The Trustees are permitted to invest across a wide range of asset classes, including, but not limited to, the following:

• Equities
• Bonds
• Property
• Commodities
• Multi-asset funds
• Liability driven investment
• Derivatives
• Cash

 

 

5.              Investment Manager Arrangements

Use of pooled funds

Day-to-day management of the Scheme’s assets, including the selection, retention and realisation of investments, is delegated to one or more investment managers. When the Trustees require funds to meet cashflows, one or more of their investment managers will be instructed to make a disinvestment.

Taking into account the size of the Scheme’s assets, the Trustees have concluded that pooled funds represent the most pragmatic way of implementing the Scheme’s investment strategy rather than establishing segregated mandates with investment managers.

To ensure safekeeping of the assets, ownership and day-to-day control of the assets is undertaken by custodian organisations which are independent of the sponsoring employer and the investment managers. Where a pooled fund is held, the custodian will typically be appointed by the investment manager.

The assets held by the Scheme are invested predominantly on regulated markets, as so defined in legislation. Any investments that do not trade on regulated markets are kept to a prudent level.

The Trustees will primarily hold pooled funds and will ensure the Scheme’s assets are predominantly invested on regulated markets.

Use of derivatives

The Trustees may select pooled funds which are permitted to use derivative instruments to reduce risk or for efficient portfolio management. Risk reduction would include mitigating the impact of a potential fall in markets or the implementation of currency hedging whilst efficient portfolio management would include using derivatives as a cost-effective way of gaining access to a market or as a method for generating capital and/or income with an acceptable level of risk.

Leverage

Investments held to match the sensitivity of the Scheme’s liabilities to changes in interest rates and inflation may be leveraged. The use of such assets can reduce the volatility of the Scheme’s funding position.

 

5. Investment Manager Arrangements (continued)

Alignment with the Trustees’ investment principles

As the Scheme’s assets are held in pooled funds, the Trustees have limited influence over the investment managers’ investment decisions. In practice, investment managers cannot fully align their strategy and decisions to the (potentially conflicting) policies of all their pooled fund investors in relation to strategy, long-term performance of debt/equity issuers, engagement and portfolio turnover.

It is therefore the Trustees’ responsibility to ensure that the approaches adopted by investment managers are consistent with the Trustees’ policies before any new appointment, and to monitor and to consider terminating any existing arrangements that appear to be investing contrary to those policies.

The investment managers are incentivised to maintain an approach consistent with that when they were appointed by the Trustees by the payment of the investment management fee (and in the knowledge that a change of approach may cause investors to reconsider the investment).

The Trustees expect investment managers, where appropriate, to make decisions based on assessments of the longer term financial and non-financial performance of debt/equity issuers, and to engage with issuers to improve their performance. The Trustees assess this when selecting and monitoring managers.

Duration of Investment Manager Arrangements

Although the Trustees review the ongoing suitability of the pooled funds held regularly, the expectation is that pooled funds will normally be held for several years.

AVCs

AVCs are held separately from the Scheme’s other investments and the AVCs are used to secure benefits on a money purchase basis for members at retirement. From time to time the Trustees review the ongoing suitability of the AVC arrangements.

 

6.              Selection of a Pooled Fund

In assessing the suitability of a pooled fund, the Trustees consider, in conjunction with the Investment Adviser, how the fund would fit within the Scheme’s investment strategy and how the fund is expected to help the Trustees meet their investment objectives. As part of this consideration, all matters which are deemed to be financially material are taken into account including:

• Whether the investment manager has appropriate knowledge and experience.
• The pooled fund’s objective and whether that objective is consistent with the performance that the Trustees expect from that fund.
• The risks associated with the pooled fund.
• Whether the pooled fund’s return is expected to exceed inflation over the long-term.
• Past performance – with the emphasis being on assessing long-term performance.
• The assets that will be held within the pooled fund, including whether the asset allocation is expected to change over time, and the extent of any exposure to overseas currencies.
• The pooled fund’s fee structure - to ensure that this is reasonable and that it does not provide an incentive for the investment manager to manage the pooled fund in a way that differs from the expectations of the Trustees.
• Where appropriate, whether the higher fees associated with active management are justified.
• How frequently underlying investments within the pooled fund are expected to be traded by the investment manager.
• Portfolio turnover costs.
• The investment manager’s approach to ESG matters.

 

6. Selection of a Pooled Fund (continued)

• The investment manager’s policy in relation to the exercise of the rights (including voting rights) attaching to the investments held within the pooled fund.
• The investment manager’s policy in relation to undertaking engagement activities in respect of the investments held within the pooled fund*.

*This includes engaging with an issuer of debt or equity regarding matters including (but not limited to) performance, strategy, capital structure, management of actual or potential conflicts of interest, risks, and ESG considerations. It also includes engaging on these matters with other investment managers, other holders of debt or equity and persons or groups of persons who have an interest in the issuer of debt or equity.

At least every three years, the Trustees will review whether the ongoing use of each fund remains consistent with their investment strategy.

The Trustees will ensure any new pooled funds introduced into the investment strategy are appropriate to the circumstances of the Scheme.

 

7.              Monitoring

The Trustees review the Scheme’s investments for all matters considered to be financially material (including ESG matters) regularly. This includes reviewing that each fund continues to operate in a manner that is consistent with the factors used by the Trustees to select the fund and that the choice of funds remains appropriate.

When assessing the performance of a fund, the Trustees do not usually place too much emphasis on short-term performance although they will seek to ensure that reasons for short-term performance (whether favourable or unfavourable) are understood.

To assist with the monitoring of the investment managers, the Trustees receive regular information from the Investment Adviser providing details of investment manager performance and asset allocation decisions. This analysis includes comparisons with benchmarks and relevant peer-group data. The analysis also assesses whether performance has been in line with expectations given market conditions and whether the level of risk has been as expected.

The Investment Adviser also provides regular updates on the investment managers’ actions regarding ESG matters and shareholder engagement.

The Investment Adviser regularly meets with the managers of pooled funds on its approved list.

In monitoring portfolio turnover costs for a pooled fund, the Trustees expect investment managers to provide cost data under the framework developed by the Cost Transparency Initiative.

Action when a pooled fund is causing concern

Where concerns about a fund are identified, the Trustees may look to reduce exposure to that fund or disinvest from it entirely. However, such action is expected to be infrequent, and, in the first instance, the Trustees would normally expect the Investment Adviser to raise the concerns with the investment manager. Thereafter, the Trustees, in conjunction with the Investment Adviser, would monitor the position to assess whether the situation improves.

The Trustees will regularly assess the ongoing suitability of each pooled fund held for all matters deemed to be financially material (including ESG matters and portfolio turnover costs).

 

8.              Stewardship

The Trustees’ policy in relation to the exercise of rights attaching to investments and undertaking engagement activities in respect of investments is that they wish to encourage best practice in terms of stewardship.

However, because the Scheme’s assets are invested in pooled funds, the Trustees accept that ongoing engagement with the underlying companies (including the exercise of voting rights) will be determined by the investment managers’ own policies on such matters. The Trustees consider policies on engagement and voting in making decisions about retaining and appointing investment managers.

As a result of the use of pooled funds, the Trustees recognise that their ability to directly influence the action of companies is limited. Where the Trustees are unhappy with a manager’s engagement and / or voting, then in the first instance they would discuss this with the manager. Should this not resolve the Trustees’ concerns, then ultimately the Trustees may choose to disinvest.

The Trustees recognise that members might wish the Trustees to engage with the underlying companies in which the Scheme invests with the objective of improving corporate behaviour to benefit the environment and society. However, the Trustees’ priority is to select investment managers which are best suited to help meet the Trustees’ investment objectives, and ultimately to ensure that members’ benefits can be paid as and when they fall due. In making this assessment, the Trustees will receive advice from the Investment Adviser.

The Trustees recognise that investment managers’ engagement policies are likely to be focussed on environmental or societal benefits largely to the extent that these are consistent with maximising financial returns and minimising financial risks.

Nevertheless, the Trustees expect that each investment manager should discharge its responsibilities in respect of investee companies in accordance with that investment manager’s own corporate governance policies and current best practice, such as the UK Stewardship Code and the UN Principles for Responsible Investment.

The Trustees expect that, where appropriate, each investment manager should take ESG considerations into account when exercising the rights attaching to investments and in taking decisions relating to the selection, retention and realisation of investments.

 

8. Stewardship (continued)

The Trustees expect that the investment managers selected to manage the Scheme’s assets should invest for the medium to long term and should engage with issuers of debt or equity with a view to improving performance over this time frame.

The Trustees will review the stewardship policies of the investment managers on an annual basis.

 

9.              Risks

The principal investment risks identified by the Trustees are listed below together with an explanation of how they are mitigated.

Indirect credit risk

The risk that an investment held within a pooled fund will suffer a financial loss because of a third party failing to pay monies that it owes.

Currency risk

The risk that the value of an investment will fall because of adverse movements in currency markets.

Real return risk

The risk that the Scheme’s assets do not deliver a long-term return in excess of inflation.

ESG risk

The risk that ESG factors will adversely impact the value of the Scheme’s investments.

Investment manager risk

The risk that an investment manager does not deliver returns in line with expectations.

Mitigation of the above risks

The risks listed above are mitigated by the Trustees monitoring the suitability of the pooled funds used by the Scheme. This monitoring is carried out in conjunction with the Investment Adviser.

 

9. Risks (continued)

Solvency and employer covenant risk

The risk that the Scheme’s assets fall short of the amount required to pay all benefits and expenses as they fall due and that insufficient assets could be recoverable from the sponsoring employer to meet the shortfall.

Mitigation

The Trustees’ funding approach is designed to be prudent and, in determining the funding and investment strategy, the Trustees consider the strength of the covenant of the sponsoring employer.

Self-Investment risk

The risk that the Scheme’s assets are linked to the sponsoring employer which could mean a reduction in the covenant of the sponsoring employer would simultaneously decrease the value of the Scheme’s assets.

Mitigation

The Trustees will ensure exposure to employer-related assets does not exceed limits prescribed in legislation.

Direct credit risk

The risk that disruption with an investment manager (such as fraud or insolvency) could adversely impact the value of the Scheme’s investments.

Mitigation

Any pooled funds held are structured such that the Scheme’s assets are ringfenced from the assets of the investment manager and other investors.

There are a number of mitigants in relation to fraud, including the investment managers’ internal controls.

 

9. Risks (continued)

Interest rate risk and inflation risk

The risk that movements in interest rates/expectations for future inflation will adversely impact the value of the Scheme’s investments.

Mitigation

Any assets held which have significant interest rate/inflation exposure will be selected to offset the sensitivity of the Scheme’s liabilities to interest rate/inflation movements. This approach mitigates interest rate risk and inflation risk.

Market Risk

The risk that the Scheme’s assets do not deliver a sufficient return, because of falls in investment markets.

Mitigation

The Trustees have an investment approach which is diversified across different asset classes.

Liquidity Risk

The risk that assets cannot be realised for cash when required.

Mitigation

The Trustees will invest the majority of the Scheme’s investments in funds which can be realised for cash at relatively short notice without incurring high costs. However, the Trustees recognise that the Scheme’s liabilities are long-term in nature and that a modest allocation to less-liquid investments may be appropriate.

Operational Risk in relation to LDI

The risk that sufficient cash cannot be passed across sufficiently quickly to recapitalise the Scheme’s LDI investments.

 

9. Risks (continued)

Mitigation

The Trustees have an automatic rebalancing arrangement in place and the platform provider is instructed to pass across the required cash automatically without the need for further Trustee intervention. The Trustees monitor the amount in the funds that are used in the automatic rebalancing arrangement.

The Trustees will:

• Review the investment risks faced by the Scheme at least every three years.
• Ensure the Scheme does not hold any direct employer-related assets and that any indirect exposure is expected to be less than 5% of total assets.
• Ensure that the majority of the Scheme’s investments can be realised for cash at relatively short notice without incurring high costs.

 

10.         Future Amendments

The Trustees will review this statement at least every three years and without delay after any significant change in circumstances or investment strategy.

The Trustees will consult with the sponsoring employer before amending this statement.

The Trustees will obtain and consider written advice from the Investment Adviser before amending this statement.

The principles set out in this Statement have been agreed by the Trustees:

 

Signed:……………………………………………………                       Date: ………………………

For and on behalf of the Trustees of the Jockey Club Racecourses Pension Scheme.

 

Appendix: The Trustees’ Investment Strategy

Strategic Asset Allocation

In determining the strategic asset allocation, the Trustees view the investments as falling into two broad categories:

1. Growth Assets – Assets that are expected to deliver long-term returns in excess of liability growth. The use of Growth Assets is expected to deliver a level of investment returns deemed appropriate by the Trustees given the risk involved.
2. Liability Matching Assets – Assets that are expected to react to changes in market conditions in a similar way to the liabilities. The use of Liability Matching Assets is expected to protect the funding position of the Scheme.

At the time of agreeing the investment strategy, the strategic split of the Scheme’s assets between Growth and Liability Matching Assets was 68% Growth and 32% Liability Matching. This split is not regularly rebalanced and will fluctuate over time as market conditions change.

The strategic allocation for the Growth Assets is as follows:

Asset Class	Current  (as % of growth assets)	Current (as % of total assets)
Alternatives	16%	11%
Equities	32%	22%
Diversified Credit Funds	52%	36%
Total Growth Assets	100%	68%

 

The strategic allocation for the Liability Matching Assets is as follows:

Asset Class	Current (as % of matching assets)	Current (as % of total assets)
LDI	90%	29%
Corporate Bonds	10%	3%
Total Liability Matching Assets	100%	32%

The Liability Matching Portfolio is currently designed to match approximately 89% of the sensitivity of the Statutory Funding Objective liabilities to changes in gilt yields and inflation, but this may be reviewed in light of changes to market conditions and/or the Scheme's funding level.

In addition, the Trustees may hold cash in the Trustees’ bank account – particularly if it is to be used to make payments due in the short-term.

The allocation of the Growth Assets is not automatically rebalanced but will be monitored and rebalanced at the discretion of the Trustees. The strategic split by fund is in the Scheme’s Investment Implementation Policy.

Jockey Club Racecourses Pension Scheme
Implementation Statement
Year Ending 31 July 2024

Glossary

ESG	Environmental, Social and Governance
Investment Adviser	First Actuarial LLP
BlackRock	BlackRock Investment Management (UK) Limited
Partners	Partners Group AG
Scheme	Jockey Club Racecourses Pension Scheme
Scheme Year	1 August 2023 to 31 July 2024
SIP	Statement of Investment Principles
UNPRI	United Nations Principles for Responsible Investment

Introduction

This Implementation Statement reports on the extent to which, over the Scheme Year, the Trustees have followed their policy relating to the exercise of rights (including voting rights) attaching to the Scheme’s investments. In addition, the Implementation Statement summarises the voting behaviour of the Scheme’s investment managers and includes details of the most significant votes cast and the use of the services of proxy voting advisers.

In preparing this statement, the Trustees have considered guidance from the Department for Work & Pensions which was updated on 17 June 2022.

Relevant investments

The Scheme’s assets are invested in pooled funds and some of those funds include an allocation to equities. Where equities are held, the investment manager has the entitlement to vote.

At the end of the Scheme Year, the Scheme invested in the following funds which included an allocation to equities:

• BlackRock ACS World ESG Equity Tracker Fund
• BlackRock Dynamic Diversified Growth Fund
• Partners Fund (Guernsey)

The Partners Fund (Guernsey) typically has an allocation of only 20% to equities and accounted for only 10% of the Scheme portfolio as at 31 July 2024. This equity allocation therefore accounts for approximately 2% of portfolio. This is not considered to be significant by the Trustees and the Partners Fund (Guernsey) has not been included in the following analysis.

The Trustees’ policy relating to the exercise of rights

Summary of the policy

The Trustees’ policy in relation to the exercise of rights (including voting rights) attaching to the investments is set out in the SIP. The SIP was updated during the Scheme year to reflect changes made to the Scheme’s investment strategy, but wording relating to the exercise of rights was not revised. A summary of this wording is as follows:

• The Trustees believe that good stewardship can help create, and preserve, value for companies and markets as a whole.
• The Trustees invest in pooled investment vehicles and therefore accept that ongoing engagement with the underlying companies (including the exercise of voting rights) will be determined by an investment manager’s own policies on such matters.
• When selecting a fund, the Trustees consider amongst other things, the investment manager’s policy in relation to the exercise of the rights (including voting rights) attaching to the investments held within the fund. The Trustees consider the ESG characteristics of funds as part of these considerations.
• When considering the ongoing suitability of an investment manager, the Trustees (in conjunction with their Investment Adviser) will take account of any particular characteristics of that manager’s engagement policy that are deemed to be financially material.
• The Trustees will normally select investment managers who are signatories to the UN Principles for Responsible Investment (UNPRI).
• If it is identified that a fund’s investment manager is not engaging with companies the Trustees may look to replace that fund. However, in the first instance, the Trustees would normally expect their Investment Adviser to raise the Trustees’ concerns with the investment manager.

Has the policy been followed during the Scheme Year?

The Trustees’ opinion is that their policy relating to the exercise of rights (including voting rights) attaching to the investments has been followed during the Scheme Year. In reaching this conclusion, the following points were taken into consideration:

• There has been no change to the Trustees’ belief regarding the importance of good stewardship.
• The Scheme’s invested assets remained invested in pooled funds over the period.
• During the Scheme Year, the Trustees introduced an allocation to the following funds:
• M&G Total Return Credit Investment Fund
• Insight LDI Partially Funded Gilt Funds
• Schroder Buy & Maintain Credit Over 2037 Fund
  
  

The Trustees considered the ESG characteristics of these new funds before selecting them. It was noted that funds do not include an allocation to equities, so consideration of the exercise of voting rights was not relevant.

• In the case of the new M&G Total Return Credit Investment Fund, the Trustees considered adopting an ESG variant of this fund, but ultimately decided to stick with the traditional core approach at this stage (due to the similarity of the strategies and the greater liquidity offered by the core offering). The Trustees will keep this decision under review
• During the Scheme Year, the Trustees considered the voting records of the investment manager over the period ending 30 June 2023.
• Since the end of the Scheme Year, an updated analysis of the voting records of the investment manager based on the period ending 30 June 2024* has been undertaken as part of the work required to prepare this Implementation Statement. A summary of the key findings from that analysis is provided below.
• The investment managers used by the Scheme are signatories to the UNPRI.

*Note the voting analysis was over the year ending 30 June 2024 because this was the most recent data available at the time of preparing this statement. The Trustees are satisfied that the analysis provides a fair representation of the investment manager’s voting approach over the Scheme Year.

 

The investment manager’s voting record

A summary of the investment manager’s voting record is shown in the table below.

Notes

These voting statistics are based on the manager’s full voting record over the 12 months to 30 June 2024 rather than votes related solely to the funds held by the Scheme.

 

Use of proxy voting advisers

The investment manager’s voting behaviour

The Trustees have reviewed the voting behaviour of the investment manager by considering the following:

• broad statistics of its voting record such as the percentage of votes cast for and against the recommendations of boards of directors (i.e. “with management” or “against management”);
• the votes it cast in the year to 30 June 2024 on the most contested proposals in nine categories across the UK, the US and Europe;
• the investment manager’s policies and statements on the subjects of stewardship, corporate governance and voting.

 

The Trustees have also compared the voting behaviour of the investment manager with its peers over the same period.

Further details of the approach adopted by the Trustees for assessing voting behaviour are provided in the Appendix.

The Trustees’ key observations are set out below.

Voting in significant votes

Based on information provided by the Trustees’ Investment Adviser, the Trustees have identified significant votes in nine separate categories. The Trustees consider votes to be more significant if they are closely contested. i.e. close to a 50:50 split for and against. A closely contested vote indicates that shareholders considered the matter to be significant enough that it should not be simply “waved through”. In addition, in such a situation, the vote of an individual investment manager is likely to be more important in the context of the overall result.

The five most significant votes in each of the nine categories based on shares held by the Scheme’s investment manager are listed in the Appendix. In addition, the Trustees considered the investment manager’s overall voting record in significant votes (i.e. votes across all stocks not just the stocks held within the funds used by the Scheme).

Analysis of voting behaviour

BlackRock

The Trustees recognise that analysis of BlackRock’s latest voting data has once again identified the manager to be supportive of company directors and generally opposing of shareholder proposals aimed at addressing ESG issues.

The Trustees therefore have some concerns regarding BlackRock’s voting record and plan to keep this under review, including consideration of potential options which could help mitigate any concerns.

Partners

The Partners Fund typically has an allocation of about 20% to listed strategies but the Trustees have excluded this fund from their analysis.

The Scheme's allocation to the Partners Fund represents about 10% of total assets meaning exposure to listed strategies via the fund equates to approximately 2% of total Scheme assets. The Trustees do not consider this to be significant.

Partners do operate stewardship guidelines which set out principles that they will apply in all the areas we would expect them to consider. They are not signatories to the UK Corporate Governance Code, but they have been assessed as A+ by UNPRI (for Strategy & Governance).

Conclusion

Based on the analysis undertaken, the Trustees have no material concerns regarding the voting records of BlackRock.

However, the Trustees will keep the voting actions of the BlackRock under review, noting that there are areas that could still be improved relative to some other managers.

 

 

Signed: …………………………………………………………..   Date: …………………….

For and on behalf of the Trustees of the Jockey Club Racecourses Pension Scheme

 

Significant votes

The table below records how the Scheme’s investment manager voted in the most significant votes identified by the Trustees.

Note

Where an investment manager’s voting record has not been provided for each fund, reliance is placed on periodic stock holding information to identify votes relevant to the fund. This means it is possible that some of the votes listed above may relate to companies that were not held within a pooled fund at the date of the vote. Equally, it is possible that there are votes not included above which relate to companies that were held within a fund at the date of the vote.

Methodology for determining significant votes

The methodology used to identify significant votes for this statement uses an objective measure of significance: the extent to which a vote was contested - with the most Significant Votes being those which were most closely contested.

The Trustees believe that this is a good measure of significance because, firstly, a vote is likely to be contentious if it is finely balanced, and secondly, in voting on the Trustees’ behalf in a finely balanced vote, an investment manager’s action will have more bearing on the outcome.

If the analysis was to rely solely on identifying closely contested votes, there is a chance many votes would be on similar topics which would not help to assess an investment manager’s entire voting record. Therefore, the assessment incorporates a thematic approach; splitting votes into nine separate categories and then identifying the most closely contested votes in each of those categories.

A consequence of this approach is that the total number of Significant Votes is large. This is helpful for assessing an investment manager’s voting record in detail but it presents a challenge when summarising the Significant Votes in this statement. Therefore, for practical purposes, the table on the previous page only includes summary information on each of the Significant Votes.

The Trustees have not provided the following information which DWP’s guidance suggests could be included in an Implementation Statement:

• Approximate size of the Scheme’s holding in the company as at the date of the vote.
• If the vote was against management, whether this intention was communicated by the investment manager to the company ahead of the vote.
• An explanation of the rationale for the voting decision, particularly where: there was a vote against the board; there were votes against shareholder proposals; a vote was withheld; or the vote was not in line with voting policy.
• Next steps, including whether the investment manager intends to escalate stewardship efforts.

The Trustees are satisfied that the approach used ensures that the analysis covers a broad range of themes and that this increases the likelihood of identifying concerns about an investment manager’s voting behaviour. The Trustees have concluded that this approach provides a more informative assessment of an investment manager’s overall voting approach than would be achieved by analysing a smaller number of votes in greater detail.

BlackRock’s voting policies

For more information concerning BlackRock’s voting policies and rationale, please visit the below links:

BlackRock