SHETLAND Islands Council (SIC) made £47 million from its investments in the last financial year – but it needed to draw the same amount from its reserves for spending.
This meant that the SIC’s investments both began and ended 2025/26 with a value of £371 million.
However at the end of May the council’s investments had risen to £395 million.
The update on investments was given to a meeting of the full council earlier this month.
But the performance of one of the firms managing a portion of the SIC’s investments is coming under scrutiny.
Although Baillie Gifford returned a gain of 6.3 per cent on its fund portfolio, which was valued at £89 million at the end of 2025/26, this was well under its benchmark of 19.6 per cent.
The company’s fund return for the period between 2021/22 and 2025/26 is 6.7 per cent.
Baillie Gifford, which has managed an active equity investment since 2001, has proposed a 25 per cent discount to its management fee rate as a result of the 2025/26 performance.
“I think the figures speak for themselves,” finance manager Paul Fraser said. “Baillie Gifford are aware we are unhappy with their performance.”
He said the SIC is working through a series of proposals regarding the fund manager that will come back to elected members in the future.
Overall during the 2025/26 financial year the growth on total investments was 12.7 per cent, which Fraser said was significantly above the long-term 20-year average of 7.9 per cent.
He also reiterated that the SIC taking from reserves the same as it gained was “entirely coincidence – there is no deliberate strategy of only spending what comes in”.
The £47 million taken from reserves in 2025/26 – used for both revenue and capital purposes – was described as the largest amount ever withdrawn in a financial year.
Fraser said the SIC would have preferred to have had money leftover following a financial year.
He explains that typically the SIC has used a “7.3 per cent metric” – sustainably spending 5.2 per cent of gains, leaving 2.1 per cent to allow things to grow in line with inflation.
With warnings that the financial markets can fall into volatility, SIC depute leader Gary Robinson said although investments are performing well overall, “we can’t always rely upon that”.
“We have enjoyed a bull market, I guess they would call it, but we don’t know when the bear might come around,” he said.
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