The Kent Pension Fund grew by more than £500 million in the quarter to 30 June 2026, though developed-market equity mandates underperformed their benchmarks and a new investment strategy is due for approval later this year.

The Kent Pension Fund stood at £9.96 billion as of 30 June 2026, up from £9.42 billion at the end of March, according to papers considered by the Pension Board when it met on 3 September 2026. The increase of more than £500 million was driven by strong market conditions, particularly in technology and AI-related stocks and in emerging markets.

Quarterly and longer-term performance

For the quarter to 30 June 2026, the Fund returned 5.9%, marginally below its strategic benchmark of 6.1%. Officers attributed the shortfall partly to relative underperformance within global and UK equity mandates and some alternative assets, and partly to the Fund’s Risk Management Framework, which caps upside gains linked to global indices and caused a drag of -2.8% on global equity performance during the quarter.

Emerging market equities were the standout performer for the quarter, returning 29.8% against a benchmark of 23.3%, supported by strong results from semiconductor and technology companies across Asia.

Over the year to 30 June 2026, the Fund returned 14.5%, slightly ahead of the 14.3% benchmark. However, over three years the Fund returned 8.8%, underperforming its benchmark by 1.1 percentage points. Officers said the three-year shortfall was driven primarily by developed-market equity investments: global equities returned an annualised 13.2% against a benchmark of 18.0%, while UK equities returned 12% against the FTSE All Share’s 15.3%.

Asset allocation and rebalancing

Officers said the current asset allocation remained broadly in line with the Fund’s strategic targets and within approved tolerance bands, with the exception of fixed income. Equities as a whole were overweight at 60.8% against a strategic target of 53%, while fixed income was underweight at 14.6% against a target of 22%, largely because of the performance of the Risk Management Framework and Index Linked Gilts, and the withdrawal of funds from the Risk Management Framework in late 2025. A higher cash balance was also being held pending further commitments to the Fund’s alternative investments in the new pool. Officers did not recommend any rebalancing, citing the ongoing Investment Strategy Review and planned transitions to Border to Coast Pension Partnership.

Investment strategy review and pooling

The Fund is reviewing its strategic asset allocation with support from Mercer following the 2025 actuarial valuation. Two broadly similar strategy options have been developed, differing only in whether a new asset class — private credit — would be introduced. Training on the options was delivered at a July Investment Sub-Group meeting by Mercer, supported by Border to Coast’s private credit portfolio manager.

The draft Investment Strategy Statement is due to be presented to the Pension Fund Committee on 29 September 2026. If agreed, it will be issued for consultation with members and employers from 1 October for four weeks, with a final version to be presented to the Committee in December. The statutory deadline for completing the review is 31 March 2027.

On pooling, officers reported that the Investment Management Agreement with Border to Coast and a revised inter-authority agreement for the ACCESS pool had both now been signed. The revised ACCESS agreement is intended to allow that pool to be wound down in an orderly way once its assets have transferred. The Fund legally joined the Border to Coast pool on 1 April 2026.

Both papers were presented to the Board for information, with officers recommending only that members note them. Decisions on investment strategy rest with the Pension Fund Committee rather than the Board. The council had not published the minutes of the meeting at the time of writing.

Sources

Top image: illustrative, computer-generated. It is not a photograph of any real place, person or asset connected to the Kent Pension Fund.