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Council / One third of pension fund investments benefiting from rise of AI, meeting hears

AROUND one third of investments in Shetland’s council-run pension fund directly benefits from the AI (artificial intelligence) industry, elected members have been told.

Tim Gooding from Baillie Gifford said the fund manager has been investing in companies which support the AI industry, such as manufacturers of computer chips and those that run data centres.

Meanwhile councillors on Shetland Islands Council’s pension board were told on Monday that Baillie Gifford’s investment in home fitness brand Peloton was one recent mistake in terms of stock selection.

Gooding said they “over extrapolated” unnatural levels of demand for the company’s product during the Covid lockdown, which dropped once restrictions lifted.

“We did not cover ourselves in glory with Peloton,” he said.

Shetland Islands Council’s (SIC) pension fund is part of the national Local Government Pension Scheme Scotland (LGPS).

Pension scheme members include people who work for the SIC, the Orkney and Shetland Valuation Joint Board and other employers who have applied to join.

Among the other employers are Lerwick Port Authority, Shetland Recreational Trust, Shetland Amenity Trust, Shetland Arts and UHI Shetland.

A portion of employees’ salary is put into the pension fund, and this money is invested into the global markets by a handful of fund managers. The pension then can be recovered on retirement, or if an employee opts out.

The returns from investments can help employers reduce their costs.

Unlike some schemes an employee’s pension is not affected by share prices and stock market fluctuations.

The pension fund’s investments increased in value by £13 million over the first six months of the 2023/24 financial year, and now have an overall value at the end of September of £665 million.

During the Monday’s update from Baillie Gifford, Gooding pointed to rise of AI system ChatGPT to open up artificial intelligence opportunities to the masses.

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He also suggested the best way of investing in AI was in businesses which facilitate its development.

Gooding referenced how people sold shovels and picks to those searching for gold many decades ago.

Councillors were also told that the performance of Meta – the company which owns Facebook, Instagram and WhatsApp – was on the up after a “dismal” 2022.

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