Council’s oil reserves recover as shares rise after dire six months

The council’s oil reserves have staged a slight recovery after taking a multi-million pound hiding on the money markets in the first half of the current financial year.

A report going before members of the SIC’s executive committee next Monday shows that the reserves plummeted by some £38 million in the first six months of 2011/12. Of that, £20 million was drawn down by the council to plug its sizeable funding gap and a further £18 million was lost through “poor investment returns” on the stock market.

That had left the investments valued at £185 million at the end of September, but as of Friday they had bounced back to £195.6 million. Concern over the fragile Euro zone has eased slightly of late, while better economic news from the US has also contributed to a recovery in share prices.

Head of finance Hazel Sutherland’s report stated that the council’s return on its investments was only 0.1 per cent below the market “benchmark” performance. Of the three firms entrusted with responsibility for the community’s nest egg, Baillie Gifford outperformed the market average by half a per cent, GMO were 0.1 per cent above the average and Insight were half a per cent below the benchmark.

Council staff’s pension fund lost £24 million in the first six months of the year, offset partially by £4 million in employee contributions. That saw the fund slip from £251 million to £231 million, 0.4 per cent behind the benchmark, though the fund has been restored to significantly better health since September and now stands at £252.8 million.


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