Note 15 Net Gains and Losses on Financial Instruments

This table summarises net gains and losses on financial instruments classified by type of instrument.

Note 16 Nature and extent of risks arising from Financial Instruments

RISK AND RISK MANAGEMENT

The Fund’s primary long-term risk is that its assets will fall short of its liabilities to the extent that it is unable to meet its obligations to members as they fall due. Therefore, the aim of investment management is to minimise the risk of an overall reduction in the value of the Fund whilst at the same time maximising the opportunity for investment income. The Fund achieves this through:

• engaging multiple investment management firms with different strategies, philosophies and expertise to manage the various assets in the Fund;
• setting each investment manager clear performance benchmarks and incentivising outperformance against those benchmarks once agreed;
• reporting investment performance to the Panel on a quarterly basis so that Panel Members can review performance, question investment managers and seek explanations as necessary; and
• monitoring investment performance against independent benchmarks and actual performance achieved by a peer group of other local authorities.

Responsibility for the Fund's risk-management strategy rests with the Panel. Risk management policies are established as part of the Funding Strategy Statement and the Investment Strategy Statement which aim to identify and analyse the investment risks faced by the Fund. These are regularly reviewed in light of changing market and other conditions.

MARKET RISK

Market risk represents the risk that the fair value of the Fund's investments will fluctuate as a result of changes in market variables such as equity and commodity prices, interest