Ocean Kinetics - The Engineering Experts

Council / SIC sitting on £1.4m of investments in ‘Russian entities’

The council is speaking to fund managers about the options for exiting the investments

SHETLAND Islands Council is looking at its options with fund managers after it was revealed it oversees more than £1.4 million of investments in Russian “entities”.

It comes after Russia’s invasion of Ukraine at the end of last month, which sparked global condemnation and saw economic sanctions levelled at Vladimir Putin’s government.

Last week the council said it was looking at whether any of its investments were linked to Russia.

Now finance manager Jamie Manson has confirmed to Shetland News that the fund managers which look after the council’s investments have identified a total of £1,430,466 of investments in Russian entities.

This covers both the investment portfolios of the council and its pension fund.

The pension fund is administered by the council for the purposes of providing pensions, with SIC employees members as well as workers from other bodies like Lerwick Port Authority, Shetland Arts and the recreational trust.

Employers pay regular monthly contributions to the pension fund, based on the salaries of active members, and this money put into investments.

Manson said the investments in Russian entities amounts to only 0.14 per cent of the overall combined current value of council investments and the pension fund, which sits at just over £1bn.

“The council holds investments [in Russian entities] worth £1,062,699 (0.26 per cent) while the pension fund holds investments worth £367,766 (0.06 per cent),” he added.

“As both investment portfolios are invested in pooled funds or unit trusts, we are working with our investment fund managers to identify the options available to us, as an institutional investor, to exit from these investments in Russian entities.”

The fund managers of the main council reserves are Baillie Gifford, BlackRock and Partners.

The pension fund investments are managed by BlackRock, Schroders, M & G Investments, KBI Global Investors Limited and Newton Investment Management Limited.

Council chief executive Maggie Sandison added: “We are working with the fund managers to reduce holdings in Russian companies. We invested in an investment product which is like a pooled fund with a multitude of different stocks.

“If we want to divest of one part of that we essentially have to leave the entire product. What we are doing is asking the fund managers to actively change their stock management to cease the exposure to Russian markets.”

However, under the sanctions imposed by the UK Government it is currently illegal to trade in Russian stocks, which means stocks cannot be traded and will have to be ‘frozen’ and eventually written down.

Meanwhile Shetland Chartable Trust, which has investments valued at nearly £500 million, said it was requesting information from its fund managers regarding the Russian situation.

While there have been a range of economic sanctions imposed by countries on the Russian government, a host of large companies have stopped sales there.

Recent firms to stop business in Russia include McDonald’s Coca-Cola and Starbucks, with all three confirming they would continue to pay staff despite temporarily closing their stores.