Council funds underperform

SHETLAND Islands Council’s reserves have grown by just £9 million in 2015/16 to £287 million.

This was achieved not by successful investment on the international money markets, but through the sale of the two Sullom Voe harbour tugs and the final payment from government to settle the council’s housing debt.

Councillors will meet on Wednesday morning to hear from fund managers Baillie Gifford, Insight and BlackRock why the return on investment was -0.8 per cent, representing a fall in value of £1 million.

A report by finance manger Jonathan Belford noted that during 2015/16 both Baillie Gifford and Insight underperformed their benchmarks and targets, and councillors are expected to express their dissatisfaction with the performance.

However, Belford continued saying that over the long term an investment return of 7.3 per cent per annum was still likely to be achieved, and as such the council would be able to continue to draw down £12 million per annum to fund council expenditure.