Newham Pension Fund has maintained a healthy surplus of £60 million, demonstrating financial resilience despite significant market volatility. The fund's funding level stands at a robust 103% as of March 2026, an improvement from the 102% funding level and £39 million surplus recorded in March 2025.
The fund's investment performance and funding position as at March 31, 2026, were presented by investment advisors Barnett Waddingham LLP. The report highlighted that the fund's total invested assets experienced a negative return of 2.2% over the quarter. This dip was primarily attributed to a decline in the LCIV Global Equities Focus fund, which saw a negative return of 13.6% over the same period. This underperformance was driven by a shift in market sentiment away from traditional software and technology stocks, as investors anticipated cheaper AI-driven alternatives to disrupt these businesses, particularly Software as a Service (SaaS) stocks. The report does not provide an expected timeframe for the fund's recovery.
Despite the quarterly dip, the fund's income portfolio managed to return a positive 1.4% over the same period, which may have helped to offset some of the negative returns from other asset classes. The report indicates that key influences on the funding level include longevity risk and financial risks such as inflation and investment risk. While specific strategies to achieve the surplus despite the negative return are not detailed, the fund's overall resilience is noted.
Market volatility was significantly influenced by geopolitical events, including airstrikes in Iran and the subsequent closure of the Strait of Hormuz. These events led to a surge in oil prices and increased inflation expectations, prompting central banks to consider interest rate rises. The report noted that these factors have impacted market expectations and contributed to the fund's overall performance. The increase in interest rates is expected to cause some market uncertainty. While the direct projected impacts on the Newham Pension Fund's future returns and funding level are not explicitly quantified, the market outlook suggests a cautious approach to risky assets due to geopolitical risks and potential interest rate rises. The report also mentions that inflation going up in the short term is not in itself a huge issue from the pension fund point of view; it is the long-term change in inflation that impacts liabilities.
The Newham Pension Fund's Strategic Asset Allocation (SAA) is currently under review. The reported asset classes include equities, private equity, infrastructure, property, and private credit. The fund's long-term outlook remains positive.
Further details on the fund's performance and asset allocation can be found in the Public reports pack 16th Jul 2026.
