##VIDEO ID:6lgEehx3FoM## agenda thank you all right uh we'll start with police Tommy Blair here I'm here I'm present Chris qan Dan adovasio here William Stanley present Joseph Smith okay on Fireside AJ present them here I'm here Dean here Sten Lee here all present all right public comment NOP okay no public comment all right any comments on uh the minutes from December 4th no no comments on that no motion to approve right yep motion to approve all in favor say I first and second first second okay all right I I I motion to approve motion second motion second by get but I'm not hearing you know all right uh expenses paid comments um I had a question Debbie the IM IM fee what was that again that's for the independ doctor okay it was abbreviated mhm no further any questions examiner no further questions thank you approve expenses paid second all in favor I motion to approve expenses motion on second second favor hi okay we have uh Miss Carrie with the Mariner quarterly report thank you very much good afternoon and good to see you all um I will just flip right into your respective books starting on page three where our typical Market chart CHS are there um and just say this will probably not surprise anyone but it was a very volatile quarter um So within Equity markets here in the US um you know we started October um kind of in in a place where there was a lot of negative sentiment out there about the upcoming election obviously lots of ugly rhetoric and so markets were actually down in October then come November we had pretty decisive election results to start the month you some Euphoria surrounding lighter regulations and so markets were strongly up in November and then we turned around and gave some of that back in December um I think the overall backdrop of the economy remains strong GDP continues to surprise to the upside the labor market is still pretty healthy you know by most indications the higher interest rates that we felt going back to 2022 and 2023 when the FED started hiking have largely not broken anything I think if anything the economy has been a lot more resilient than what was expected but what you saw through the end of the quarter was interest rates actually picking up over concerns that you know inflation may be a little bit stickier than than maybe we'd like you know things like tariffs could potentially put upward pressure on prices um the labor market again still very healthy if you talk about all else equal you know kind of deporting people and potentially cutting into the labor Supply that could put upward uh prices upward pressure on wages um and so we actually saw yields kind of pick up on the longer end of the yel curve and I'll show you that when we get to our Market chart but kind of putting all that together where we landed at the end of December and I'm looking at our top right chart on page three is equity markets within the US were positive um it was another quarter where our mag 7 really led the way that kind of AI technology trade really led the way so you can see the S&P was up about 2 and 1 12% but as you move down the capitalization Spectrum kind of the mid and small caps just really marginal positive um for a little perspective I put this handout in your packets are actually on the table today and it's a chart of calendar 2024 and it shows you three data points in black is the S&P 500 for the one-year period and you can see it was up just about 25% um which matches up with the bottom chart on page three you can see the S&P did about 25% for calendar 2024 on the blue line we show you just the magnific 7's returns which were about double that just about 50% for the two classes of alphabet Amazon Apple meta Microsoft Nvidia and Tesla and then if you drop kind of to the bottom of that page in orangish yellow that is the S&P 500 taking those seven names out and you can see without those seven names the S&P did about 16% so it just kind of goes to show you again this is just a one-year period this phenomenon has been in place for the last several years but how much much those kind of few names continue to contribute to the the performance of the S&P in the Box on the far right it shows you for the full year bless you for the 25% that the S&P 500 did how much each name contributed to that so of the 25% we got from the S&P about 13 and a half% of that was just from those seven names and Nvidia is really the one that kind of jumps off the page at about 5% of that 25 so the what we call narrow Market leadership which is just a fancy way of saying you know those few stocks have continued to drive performance um was the case at the end of the year as well um it seems like there's room for kind of those other column 493 stocks to to sort of differentiate themselves a little bit um this kind of AI trade has has been very long in the tooth um you know again seems like things might reverse um at some point hard to very very uh accurately say W um but the index is really more concentrated than it's ever been both from an individual holding standpoint um and from a sector standpoint meaning you know technology itself of 11 sectors in the S&P is is over a third of of the S&P um so just kind of giving some additional color to kind of that narrow Market leadership that we've talked a lot about there um within International equities back on page three again and kind of the yellowish orange bars you can see pretty much all of the indices right around 75 or 8% um anytime you start talking about tariffs that's going to be negative for for particularly Western Europe obviously Canada Mexico Etc um and so that General theme really weighed on overseas Equity markets and then in the bottom third there you see um the aggregate down about 3% um and if we flip to our old familiar yield curve chart you can see the visual on that on the bottom of page 10 just kind of giving some visuals to what I spoke about kind of interest rates picking up there um we did get some cuts from the FED um in 2024 which brought the front end of the yield curve down and I'm looking at the bottom of page 10 that blue line you can see where it kind of drops down on the left hand side as compared to the orangish yellow line but then you see really across the longer term maturities it really starts to pick up and that's that steepening I was talking about you know markets pricing in concerns um you know that growth might be more than expected which is a good thing but again that inflation piece playing in there too um so I talked a little bit about volatility within Equity markets but really interest rates were very volatile through the quarter too to give you a little bit of a perspective the 10year treasury which is kind of three in from the right side on that graph moved 84 basis points through the quarter it started kind of 370s is range um and ended the quarter around a 450 so the 10-year um treasury moved almost a full percent just over the course of 3 months which is really pretty significant one good thing to note though is as we look at that blue line we've talked for several quarters about this inverted yield curve phenomenon which means um there was a period of time where you could earn more on a 2-year treasury than you could on a 10-year treasury historically that's been a pretty accurate predictor of a recession to come um that is no longer inverted if you look at the 2-year and the 10e now you can see there's kind of a slightly upward curve there um so no longer seeing that kind of flashing recession indicator there that two and 10 year yield curve inversion has corrected itself the very short end of the curve kind of 1 month 3 month remains a bit elevated um but if we do get a cut or two in 2025 which is possible but not guaranteed you know that may fix some of that we may start to get kind of a more normally shape yeld curve there um one other thing I'll mention um is separate real estate you'll see as we get into the results this was the second quarter in a row that we did have a marginally positive return from that index I don't want to get anybody too excited but marginally on the order of about 1% positive um within that real estate index um I think if rates kind of stay where they are or if they do settle down a little bit that's going to be you know better kind of a more productive environment for Real Estate obviously if they go up from here that's going to be a challenge um don't want to fully call the recovery yet but just saying we are seeing some some green shoots there so kind of cautiously optimistic about uh what 2025 May hold for that space any questions on the economics piece before I move into the pensions themselves okay I think hearing none I'll move to 13 in your books or kind of 10-year look back um in growth of your funds um and just starting with police you'll follow that blue line to the right hand side you can see you all were were a shade over1 million to end the quarter it was about um 19 million call it 57,000 in market value um fire you all were about 19.4 million specifically 19 million about 388,000 um both of you in kind of that 7.1 is% return range for the for the 10-year period um if you'll recall when we saw Doug last quarter um 7.2 was used in your assumption so on a 10-year basis pretty much right on top of that um obviously um real estate has definitely been a challenge over the last couple years but very happy to say those longer term numbers again still pretty much right in line with the assumptions that were making um flipping ahead just to kind of the highlevel view of your assets um in each respective pension fund starting with police um you were just at about 50 and a half half% in US Equity you were just over 14% in international Equity um a shade over 177% in domestic fixed income um rounding up a bit north of 4% in global fixed income um just shy of 11% in real estate and then a little bit of cash as well about 3% in cash for you on the police side um on the fire side very similarly you were just a shade over 50% um in domestic Equity 14 A5 in international Equity about 172 in US fixed income just over 4% in global fixed about 10 a half in real estate um and again about 3% in cash for your plan as well um so that's kind of the high level snapshot and then if we move from there a few pages up um to page 19 it's kind of a better view on a relative basis where your asset allocation is um suffice it to say each plan is within your investment policy targets both funds pretty much right on the nose from a domestic Equity standpoint same thing for international slightly overweight domestic fixed income offset slightly underweight and Global um both underweight within real estate um and again you know well within range there for cash um and I will stop there and say you know again with with one plan at just shy of 11% in real estate and the other at about 10 and a half% we've got that Target of 15 we're getting close to the ability to have a convers ation about what that space looks like going forward um typically with managers in this space the uh minimum commitment size that we see is about a million so we're kind of getting close to being underweight that in each of your funds um one of the things I would like to host a discussion for at your next meeting is um actually real estate debt strategies so right now what you all have with ASV is more of a real estate Equity strategy so buying properties predominantly with cash using a little bit of debt there are managers out there now that are making loans against commercial real estate um Holdings that tend to be very highly collateralized and the yields right now are kind of in the 10 to 13% range so that space looks pretty attractive right now and there's not a lot of players in it so those that are kind of making those loans are able to dictate pretty attractive terms um so again as we approach the ability to consider about a million dollar commitment to something different within real estate um I would like to host that conversation with with you all we'll kind of do some education and also show you some managers uh that we follow in that space for discussion um in May uh but really in summary leaving page 19 just want to leave you with the knowledge that you know very comfortable with where you are um at this point in time so not making any recommendations there for you all to rebalance um moving ahead and putting some numbers on that volatile quarter that we spoke of I'm on page 22 for each of the funds um and each of you kind of marginally down for the quarter right around 20 basis points for each plan slightly better than your benchmark overall which was down closer to 40 um as we mentioned you know the strength really coming from your domestic Equity segments particularly within kind of the growth side and you'll see that as we get into the manager performance but on the US side positive just shy of kind of Two and a half% the index was up about 2.6 um again the growth side really responsible for for kind of the absolute numbers that were put up for the quarter um winds low you can see was up a little shy of about 5% the growth index actually did seven um so not holding Tesla and necessarily kind of Market waiting the other um mag s's a little bit of a drag also one of their pharmaceutical names Eli Lily little bit of a drag there again we're definitely waiting to see kind of some some broadening and participation especially in that growth space Touchstone in the midcap growth segment pretty well in line up about 7 and a half the index was up a little bit more than eight um so little weakness in in consumer discretionary and health care there for the quarter but again pretty well in line those growth pieces doing well was a nice offset for the value piece which was slightly negative um within value Vanguard Equity income did hold up a little better for you they were negative less than a percent the index was down about two um some of their selection and and utilities and consumer discretionary actually help helped them and then on the other side Brandy Wine slightly down more than 2% um they will do a select amount of of kind of energy and Industrials marathon in particular was down a bit locked uh some of the others down a bit still like them longterm just kind of they just had sort of challenging quarters um and then of course you have the extended market index as well which was up about 4.7 there for the quarter um on the next page just looking internationally again that segment largely negative um I will say you did about a percent better kind of in total there um your segments respectively were down about 6 and a half% but the index was down about 7 and a half um that kind of more defensive um DFA International value very kind of low PE more kind of traditional um you know financials Industrials focus on those uh value oriented sectors holding up a little bit better um then europacific on the growth side but again both of them doing better than their indices for you um together um within fixed income overall we were down just about 2 and a half% a little bit north of that most of that coming from your domestic segment um dodging dodging Cox down a little over three the index was down about three so good quarter for corporate credit where they tend to overweight but they have been a little bit long rates and so that did hurt them um but that was actually offset somewhat by the global piece Pimco Global bond has actually been short so they were overweight um to the short end of the yield curve which definitely helped them they were only marginally negative there for the quarter and then within real estate as I mentioned very small numbers but kind of marginally positive there um as it relates to ASB you continue to get distributions they're still kind of trickling in we got about 16,000 last quarter um it was a little bit higher uh this quarter um you know I think they're seeing transactions pick up and they've said they've got about onethird of the portfolio you know ready to Market so I do think we'll continue to see some liquidity from them you know barring some sort of unexpected you know kind of Market event or interest rate uh event I do think that will start to speed up here in 2025 the good news is they did pull off about 500 million in dispositions in 2024 um they've used some of that to pay down some of their debt um but again I do think you know the positioning right now looks much better they're about 10% office um less than 8% retail very heavy industrial and multif family those two sectors are about two-thirds of the portfolio right now so I do think that will help them as they continue to reposition and you know Cash Out investors like you all um so that is 1231 which was again kind of volatile and slightly negative interestingly enough um we had a positive January pretty positive actually and there are market value updates for each fund sitting in front of you um so police you ended January um with slightly over 19.5 million about1 19,54 45,000 um and fire you were really kind of on the heels of 20 million about 19895 as of the end of January um you know I think we probably expect to see some of the volatility continue um the the Tariff conversation obviously markets did not like that early yesterday and then when it was decided that we were going to kind of come back to the table and maybe make some concessions we sort of pulled back in some areas um so I think you know the volatility will continue but that said you know your position very well I think we have a good road map going forward um and likely as of the end of January you are positive a couple of percent the S&P was up about three um the growth index was up about two even fixed income was marginally positive about a half of a percent so let me take a breath there and see what questions you all might have Dan Terry um we had talked about we had I thought some of our real estate up for sale and we had to wait until they found a buyer yes is that all done or are we still it's still in process they've done some so for about a 66.2 billion fund they sold about 500 million in properties last year and they've got about 1.4 billion going online they expect this year so we've gotten a little bit of cash back what happened was you know typically funds use a certain amount of Leverage in this space it's usually about 20% as the property values come down so some though that leverage level comes up so they went from about 20% leverage to about about 30 so they've taken some of the cash from those dispositions to pay off some of that debt um but that said you know I do think that that process of selling properties and returning money back will speed up in 2025 based on what they've got lined up for sale and the fact that they actually were able to sell quite a bit of office properties over the last couple of years so they were at about 22% office at the end of 2022 they're at about 11% now so they have been able to make kind of some significant moves in that area um but you're not seeing it as much as I wish you would because they did pay some debt down because the leverage has popped up some well I guess my next question follows up on that uh is there maybe a time we shouldn't be selling the real estate now cuz that was two or three years ago when interest rates were taking off yeah it's great question so I think I think I still like the space I don't have as much faith in ASB so I think what we do is looking at managers on a go forward basis so I I would say let's have the debt manager your conversation at the next meeting you'll still be in ASB and it will incrementally wind down but over time I'd like to look at a replacement for them so we can take that money and put it in a different that's exactly right I'm not giving up on real estate we just changed our opinion on ASB seem to stop the increase yeah I still like this space Dan to just circle back I still like this space I just think we may look at other managers instead okay not the Bel no that's okay um I'm I'm kind of a do any of our funds that we have are they have a position in Bitcoin no that's not considered publicly traded Equity so no or an ATF which is considered right yeah we we do not have any positions in in Bitcoin at all black rock has talked about a 2% of interest in in an ET in black and of course they're ETFs I guess that's what they're trying to sell is there a time we should be talking about that so plans are talking about it obviously the returns that it's experienced kind of going back to its in Inception are very eye popping um in Florida I don't think there's very many plans that have done it there might be a Miami plan that has done it because there there are concerns because there's not a real good handle on kind of what is underneath that you know there's no guarantee it's not really associated with any Sovereign entity um it has and and really there's obsolescence risk as well there's the chance that it goes to zero I think a lot of funds have have not done it yet but that may change with the Bitcoin ETF that you're seeing you know now the SEC is involved in regulating some of the bigger financial institutions are now holding it that may change so I think we're let me put it this way we're starting to have conversations I don't see a lot of plans kind of adopting but I would be willing to host that discussion as well kind of a more in-depth conversation be DF it wouldn't be to actual very likely because then it becomes the storage and the wallets and all that and I think you one of the big considerations with that is it can be so volatile we meet quarterly you know what happens if it does kind of Spike and we want to rebalance we're not super Nimble and and kind of able to do that um so those are just kind of the things that we think through I think when considering something like that but the conversations are starting to be had for sure so just end this thing if if we could we do a I guess a projection or go back in other words next time we talk if we went back to this quarter and had 2% in in an ATF can we see how it would have affected the funds can you do that that kind of projection of past without us actually having it there yeah it would be very short term but I think everybody probably understands that but yes I could I have to make assumptions so what I would have to assume is just to model this that we're right on top of our Target for every asset cost for example um so it wouldn't be perfect but it would still be a tool that you could use I'd be happy to do that now what we have to vote on that for you to do that or is that party no it's just kind of a request I think obviously we're not voting to make any changes so for you to just make the request from numbers if we did do it or the you know a quarter from now what it would have done over this quarter yeah and maybe I'll assume a couple different mixes like if we took it out of fixed income or if we took it out of real estate or maybe I'll kind of show you a few different ways but yeah no that's that's just kind of an exhibit that I could prepare um yeah I'd be happy to do that AJ Carri you mentioned uh there may be a Miami plan that's considering Bitcoin do you know what plan that is I don't I can tell you I don't believe it's ours um I know that it wouldn't be Miami Beach I don't know of any Mariner institutional funds that have done it at this point I can tell you that on the retail on the wealth side which we don't see by the way but I hear about on the wealth side they have access to Ether and Bitcoin because some of their wealth Clans do want that um but on the on the Mariner institutional side to the best of my knowledge there have not been any fundings of any of any sort of crypto um coin let's say some man managers in the private Equity space particularly in Venture Capital are doing like the blockchain technology you know they may invest in people that are iterating block we call it like picks and shuffles if you think back to the gold rush you know you're not necessarily going after gold but you're making picks and shovels for those that are there are some Venture funds in the private Equity space that may do some blockchain stuff because they see other use cases for it like settling real estate transactions faster or closing a home on a weekend or they see other use cases for the blockchain so I see sort of crypto related stuff on the private Equity side but that's really the extent of of it thank you yeah my pleasure what was the quarter return for the fund you both were negative slightly about 20 basis points so about a fifth of a percent you were down okay yeah like slightly negative quarter it was C toward the end of December it was like we going nuts yeah four quarter was a wild ride yeah looking for the 31st and I was like where where did it land you didn't even know it's just OD yeah that day I mean that day's Equity performance could have thrown the whole quarter positive or negative because the S&P was up 2 and a half% so it was it was definitely a wild ride I think a few of us were sort of holding our breath to see where we were we were where we were going to end the year you know um yeah but but of the end of January I would have you slightly positive probably a percent and a half or two because of the results that that we got in January so that basically is page 22 Upper upper left right yes F I'm going from memory but I believe so and I'm going to get there right now I believe that should be our right page cool okay yes it is up it's that First Column quarter and obviously this is the first one in our fiscal year so they're exactly the same that just marginally negative about 20 basis points cool Tommy when I look at this report and I look at fixed income for 5 years we've made 1.18% M we can make more money than that in a money market fund why do we have $4 million in bonds that never make any money so looking forward the yield on the a right now is 5% your kind of 5year going forward return is 95% correlated to the yield on the aggregate so those numbers Look Backwards right and they include 2022 when bonds were negative 18% looking forward the yield on the EG is is about 5% um and that is largely responsible for where your performance will come from in the future so looking back yes the numbers look terrible looking well even 10 years it shows 2.27% yeah we're coming out of a historically low interest rate environment but looking forward looks much better I I don't understand how if if we haven't made any money with a $4 million investment in 10 years how how we can feel good about looking forward interest rate levels have changed quite a bit I'm saying it they changed every year up or down but over a 10-year period they're going to go up some they're going to go down some not by the magnitude that we saw in 2022 and 2023 that fed hike cycle was at the fastest and most dramatic essentially that we've seen I'm going back to the vulker administration when I look at at at this fixed income for all these different years it it never goes over a couple percent on any year going forward I think you will see that will be comparable with real estate if not for the next two years slightly better well how much are we required to have in bonds I mean or fixed income so by your policy the minimum Target um your Target is 15% the the minimum bracket is 10 but my question to you would be where would you put it like in in in a market like this where Equity valuations are so stretched um domestic equity for 10 years has made 11.4% the S&P did 20% last year and the year before historically speaking were due for a reversion to the mean well you can go back to five years it made 11.4 I mean that's just I think that's just my observation we're going to enter very different Market cycle going forward than what we've come from the last time we are but nobody knows what it is but likely the further away we are from the mean the more likely I think all else equal that we come back you think we need $4 million in bond I'm I actually think that segment has only gotten more attractive I really it's one of the segments I actually feel better about because we've had two years in a row now and I'm talking 2023 and 2024 where the S&P did 20% or better the last time that happened was late '90s and then we had the Lost decade I mean the numbers are are not sustainable I'm happy because they make our pensions look great and you know they help funding statuses Etc but I realistically they're really looking expensive especially that top seven now and I just don't believe that's sustainable um and I don't know when I'm not calling anything but I'm saying so it's your firm's opinion that the Magnificent 7 is not going to continue to go up it you know trees don't grow to the sky is one of the things that we say there's going to be a limit I think the current pricing with viia assumes they will double their revenue every year that's a tall order maybe for a couple years they can ongoing 10 15 20 years that's that's a pretty signific they're all overpriced yeah but it doesn't seem like the market thinks so yeah the market can stay irrational it's speculation yeah for a very long time but I I just don't think the fundamentals support a whole lot more um kind of appreciation there do we what kind of investment do we have in the Magnificent seven so you've got um some of your managers will hold some of them like Winslow is going to hold some they'll do some Microsoft they'll do some alphabet probably Amazon most managers are underweight Apple so you're going to have some probably not any Tesla just because um the Val the market capitalization of Tesla is bigger than all the other automakers essentially combined and that's very hard to justify based on production of cars um so you're going to have some Pro probably at least 50% of those you're man managers like Winslow are going to hold some of likely they don't have Market weights to those names um and or they're selling as as the prices continue to go up okay yeah they're not going to hold all of them though I can guarantee you that almost you know most of the managers we follow have not held Tesla they've underweighted Apple just thinking it's been a long time since Apple's come out with the next best thing um obviously they're facing a lot of competition in China so they're really picking and choosing kind of based on that list but in large in large order what we're seeing is on under weights there because of the again the valuations and the assumptions that are going into those Sky High numbers thank you so Carri we could on our own if we wanted to punch in the uh identifier the yes quote into Yahoo finance for example yes it will tell you what the top 10 Holdings of absolutely and the one if you want to you want to look at mag seven it's going to be that New York Life windflow mlrsx um that's your only manager I would expect to see those um on the value side your Brandy Wine um your Vanguard Equity income you know they're looking for high dividends that's not going to be your kind of mag7 um so if you wanted to see it would be that um the New York Life winds low large cap growth particularly that potentially could hold some of those any questions comments concerns well fire fire side any questions we appreciate it car yeah thank you appreciate the time very much thank you just so I can wrap it up if you want yeah Microsoft 9.51 in that fund Nvidia 8.81% uh Amazon 7.17 Apple 5 .93 so pretty heavily weighted in the mag some some kind of under and some over I think Apple's over 10% of the index so they're they're under there they may be over on some of the others um and then kind of alphabet I don't know if you see kind of the alphabet or meta there or not they're going to pick some and they're going to not pick others Tesla yeah they're not they're not uh top 10's not alphabet but it is Meta Meta and Tesla and Spotify which was big today M Carrie for our next meeting we um just kind of go over the investment policy fors just as is your recommendation as being our our expert and advisor what is best practices sure for um percentage of equities versus bonds versus cash yeah absolutely I think that would be a good summary for us to review as we have discussed good education as well yes yep I will be happy to host that Andrew's going Andrew's going to that call two bikes bices there's a call around the corner just yeah two ebikes hey Pedro yes sir how are you sir good good good I think we're ready for you okay well my my report is pretty short I I don't really have anything to report on um I think it's uh unless you guys have any questions or anything from from my end but good talking to you it's it's always it's no news from your attorney is always good news right uh Debbie's got a question how's our summary plan description coming I'm sorry Debbie I could I couldn't hear you how's our summary plan description coming um oh god um I apologize we if we I thought we had gotten it over to you guys but but we'll I'll get it over to you guys um and then you guys can have it on your on your agenda for the next meeting I apologize okay thank you yeah absolutely all right I think that's it all right guys uh thanks thank you yeah get a move to adjourn oh Bill's got a question no no not for Pedro just for okay Poli guys all right um I don't I don't know if Joe's able to make it Friday I don't know if that's the a proper discussion about that now or uh probably not in front a fire right you're not I think I think any any discussion with respect to the disability application we should wait until the till the special meeting okay yes sir I think the only question was yeah the only question I had I'm happy at I'm happy I apologize let mean to cut you off I'm happy if you if you want to give me a call uh and we can talk offline happy to do it um I would just prefer that way and and avoid kind of the public discourse just because we haven't put it on the agenda we we we didn't really advise him that we're going to be discussing it so just just in in in in the utmost caution uh I think it's just best of that we would hold off today communally having the discussion but I'm happy that you know whatever you need give me a call and I'm happy to happy to talk through it okay we appreciate the guidance and we we're going to give you a call yeah perfect all right all right motion all right guys oh sorry favor all right we're good Pedro sorry about that yes