rates, and foreign exchange rates. The Fund is exposed to market risk across all of its investment activities. Market risk is managed primarily through portfolio diversification by asset class, geographic region, and sector, together with limits on exposure to individual securities. In addition, equity managers operate under active mandates, which seek to manage risk by focusing on the selection and performance of individual investments rather than overall market or sector movements.
To manage this risk, the Panel, together with its investment advisers, undertakes regular monitoring of market conditions and performance against benchmarks.
Price risk represents the risk that the value of a financial instrument will fluctuate as a result of changes in market prices other than those arising from interest rate risk or foreign exchange risk, whether those changes are caused by factors specific to the individual instrument or its issuer or by factors affecting all similar instruments in the market.
The Fund is exposed to direct share price risk because its investments, excluding cash holdings, are traded on open markets where the future price is uncertain. The Fund is also exposed to direct price risk arising from unquoted equities held as part of its equity pooled holdings. All securities represent a potential risk of loss of capital, with the maximum risk determined by the fair value of each financial instrument. The Fund's investment managers aim to mitigate this price risk through diversification in the selection of securities and other financial instruments.
Based on the analysis of historical data and expected movements in investment returns during the financial year, and the following consultation with the Fund's performance management advisers, the Fund has determined that the following movements in market price risk are reasonable for 2025/26. The analysis excludes debtors, creditors, and non-equity investment balances as these financial instruments are not subject to price risk. It also assumes that all other variables, in particular foreign currency exchange and interest rates, remain the same:
| Asset class | Asset Value 31 March 2026 £'000s | 1 year expected volatility (%) | Value on price increase £'000s | Value on price decrease £'000s |
|---|---|---|---|---|
| Global Equity | 1,010,250 | 18.6 | 1,198,157 | 822,344 |
| Property | 123,235 | 15.9 | 142,830 | 103,641 |
| Corporate Bonds | 271,172 | 6.3 | 288,255 | 254,088 |
| Index linked gilts | 177,968 | 6.7 | 189,891 | 166,044 |
| Cash Instruments | 101,962 | 0.3 | 102,268 | 101,656 |
| Infrastructure | 76,989 | 14.6 | 88,229 | 65,748 |
| Diversified credit | 72,564 | 6.1 | 76,990 | 68,138 |
| Private Debt | 61,401 | 7.4 | 65,943 | 56,856 |
| Private Equity | 4,037 | 27.0 | 5,127 | 2,947 |