all all can be true. Good afternoon everyone. Welcome to our quarterly pension board meeting. Chris Hoffman, acting chair. Call this meeting to order. We'll begin with do we need to do Oh, we'll do the
oath of office first. >> Oath of office has been completed. >> The oath of office has been completed. That was quick. Uh, madam clerk, roll call. >> Nick Curry >> here. >> Dan Jansen. >> Christine Hoffman
>> here. >> Brendan Morisma. >> Eddie Vgara >> here. >> David Cohill >> here. >> John Patrick >> here. Matthew Groki, John Gastella >> here, >> Jason Sharp >> here,
>> George Candler >> here, >> Ed Dawson, >> John McDaniel >> here, >> Lance Hish >> here, >> Debbie White. >> We have a quorum for all three boards. Great news. We'll move on to approval of minutes. There was one scrier's error
noted that the start time was indicated as 3 p.m. It was actually 100 p.m. That was a nice long meeting last time. I don't think this one will be quite as long. Um, can I have a motion for approval for >> and a second?
>> Did we do this one by board? Uh, from the firefighters since they already did it. Uh, firefighters, all in favor signify by saying I. >> Any opposed? Please have a motion. Motion made. >> Second. >> All in favor signify by saying I.
>> Any opposed? Motion carries. General board or general employees board. >> Motion made. >> Do we have a second? >> Second. >> All in favor signify by saying I. >> I. >> Any opposed? Motion carries. Uh, no. I'm
sorry I missed courtesy of the Florida visitors. Do we have any visitors that would like to speak? >> Seeing none, >> what would you like to speak? I'm just a nursing student. >> Tell us more. >> So, what can you give us your name? >> My name is Ashlyn.
>> Ashlin. >> I'm in a community health nursing class right now. And so, we've like been on the Jackson Beach zip code to like go around and kind of just like observe the area and then like we were required to come to a meeting too. And of all the meetings, you picked
pension board. >> I'm doing it last minute. >> There it is. Well, Ashlin, welcome. You're Where are you? A student. >> JU. Congratulations. How far into nursing are you? >> May. >> You'll be done in May. >> Oh my gosh. Right around the corner.
Congratulations. Are you Jackson Beach resident? >> I am. >> Okay, great. Well, this is your pension board at work. Yeah. Well, thank you for being here. I hope you find it interesting. Um, okay. So courtesy of floor approval of minutes new business consideration by uh general employees
board of trustees we have an application for retirement Ronald Curtis facilities maintenance manager effective 912025 separation date 831 2025 meets age and service requirements for normal retirement at 15 years and seven months
of services there a motion >> from general >> approve second >> we have a motion and a second mount clerk will call >> Nick Curry Yes. >> Christine Hoffman. >> Yes. >> Eddie Varo. >> Yes. >> Motion carries. Uh, police officers
board. We have approval for the applica or application for retirement from Anthony Bennett, Police Corporal, effective 9125. Separation date 1229 2010. Meets age service requirements for vested retirement 11 years and 11 months of service. Do we
have a motion? >> Motion. >> Second. >> We have a motion and a second. Madam clerk, roll call. David Cohill, >> yes. >> John Patrick, >> yes. >> John Gotella, >> yes. >> Jason Shart, >> yes. >> Uh, retirement approved. Moving on to
item C, consultant reports. Brendan Mariner. >> Good afternoon, everyone. Um, so we've got a lot of materials. I know you said this would be a quick meeting, but maybe not so fast. >> Quick enough. Hopefully we
Um hopefully we'll be able to move through reasonably quickly. So for the the first two items, uh we have the June 30th quarterly book as well as the July 31st flash. You have those as separate hard copies in front of you. We'll go through those first. Um and then the other three items are all kind of tucked
together within your agenda packet. So we'll we'll start to go through those um once we once we get there. Um so first we'll jump into the June 30th book. Um, and page number one, am I doing this right?
We do have a couple of of new pages that you you kind of haven't really seen before. So, this is the the first quarter end that is one year fully removed from our merger with Mariner. So, we have a couple of pages that are that are kind of one-offs that that aren't typically in the book. Um the
first part uh on the top of that page number one um actually this is something you've probably heard of in the past but there's an organization out there called Coalition Greenwich. Um and what they do is they survey um institutional clients and based on the results of those
surveys they they hand out awards and they're obviously meant for institutional consultants and for the fourth consecutive year ano mariner um has has earned the best investment consultant award. Um so we just kind of wanted to place a little bit of an
advertisement uh in there for you on that that part of the uh the notice there. Um the bottom half of page number one gets into to kind of really the proof statement of what we said a little over a year ago when we were merging and co was becoming part of Mariner. We said
it was going to be the same people really the same organization just being relabeled Mariner institutional um and we were going to be serving that the same the same clients. So the kind of the proof statement down in the bottom over 99% client retention over 99% employee retention kind of again exactly
what we had stated the same people doing the same thing for the same types of of organizations. Um the next page um just briefly talks about um kind of the two main service areas. So on the lefth hand side is traditional plan services what what we do for you within kind of the defined
benefit world. Um and then we also have defined contribution services. So there are a lot of defined benefit plans that that don't really understand the defi defined contribution side. So we just kind of put that there. Or vice versa, if we're doing defined contribution work for a system, they might not understand
the defined benefit side. So we just kind of laid th those two things out there. U and then the the last page there or the next page is just sort of a little advertisement. The one that the the change is obviously being part of mariner that the parent or broader mariner is is individual wealth
planning. So we just kind of bullet point a few of those different individualized services but again those do are not applicable to to institutional pension funds. >> This this best investment consultant is that in the US or in Florida or >> uh US? Yes.
>> Thank you. Um so if we turn to page number seven, now is where we kind of get into the the broader market review. Um, I hope everyone's been wearing their seatelt for the last nine months because it has been an incredibly volatile ride.
Uh, but the good news is the last quarter was essentially nothing but up. So, if you look in the upper right hand corner of page number seven, you'll see that the major asset classes were invested. The kind of gray or blue bars at the top represent domestic stocks and
they were all up, you know, call it 10 to 11 percent with the exception of small and midcap was up about eight and a half percent. But very strong numbers. International those kind of yellow bars were up somewhere in the neighborhood of 12%. And what's I found a little surprising
when you look at the red bars or pink fixed income, they were also positive for the quarter. Typically, when you're having double-digit type equity returns, it's usually at the expense of fixed income, right? We're selling fixed to buy equity or vice versa. If equity is
down, usually fixed income is up. We're selling equity to buy fixed. But in this particular quarter, we actually saw all of those major asset classes going higher, which obviously considering that's the vast majority of of your plan, that means everything generally was was moving in a in a positive
direction, which is obviously very good. The only other thing I wanted to draw your attention to on the next page, when you kind of lift up the hood and look at the equity markets, notice the difference between the blue bars, which are value stocks, and the red bars, which represent growth stocks.
For the quarter, growth was up almost 18% just in three months. Value was up about 4%. Now, I'm sure you remember last quarter, growth was negative -10 and value was positive2. So, just an incredible kind of flip-flop and
deviation from one quarter to the next in terms of those relative returns. Um, and obviously we're not we're not trying to take bets or positions. We have both a value manager and a growth manager, but it's just interesting to see that level of of a performance gap between
those two different parts of the market. Um, I'm going to skip the next handful of pages and then just very briefly touch on fixed income, which is on page 14. I'm down in the bottom right hand corner and really what we're focusing on is the
difference between the blue bar and the orange bar which is where we were three months ago. Um what's somewhat unusual if you look in the middle part of that graph from about the one year out to the 10-year is the blue line fell dropped below the yellow line. So interest rates
were falling in what we call the belly of the curve or the middle part of the curve. But on the right hand side, it actually the longer end of the curve, we actually saw rates rise. So there's sort of a little bit of a of a split there happening between long
rates and kind of short and mid rates. But since the majority of the fixed income market is in kind of the middle of the curve and that's where also our portfolio is predominantly, that fall in interest rates is what led to that positive return um that we saw in the
broad fixed income market. Just kind of wanted to to provide a little bit more context there because it's somewhat unusual. Typically, you get kind of that entire line moving higher or lower than the previous quarter. And here we had a little bit of a of a split.
So, with that, now let's jump into the uh the actual plan. Um page 17. I can't skip this one. Um total plan assets as of June 30th up to $134.4 million. Um, again, we compare that to
that theoretical assumed rate of return line, which would have had you at $113.8 million. So, a nice incremental gain over that, you know, assumed rate of return. Um, and then the other thing we we showed down along the bottom is your net cash flow. We always talk about
this. Your net cash flow going all the way back to 1987 now stands at a negative $39.2 million. Um, so in other words, since 1987, you pulled out all 11.8 million that you had in the plan,
plus an additional almost $40 million. Yet, you've still been able to grow your assets up to $134 million. So, what graphically that's showing you is we're growing the assets at a faster rate than you're paying out what we call negative
cash flow. More going out in payments than is coming in in contributions. and we're still able to grow the asset above and beyond that rate that you're paying out. All right, so I'm gonna the next couple pages get into the asset allocation. Um
I'm going to skip to uh page 20 and just look at those uh differences in the allocation relative to our investment policy. And what you'll notice is equity in total when you combine both domestic and international is really spot on target. slightly under in domestic but
slightly over in in uh international. The fixed income is actually spot on target and we're just slightly underweight to real estate and we do have a little bit of a cash position but when you look at each of those numbers less than one and a half% deviation from the target so no need to do any
rebalancing everything looks good. The only thing that I will point out relative to to real estate we are underweight and we're in the process of redeeming that investment. So each quarter we're getting some type of payment. Some quarters it's smaller than others but it is naturally drawing down.
So for the meeting today we are going to begin the conversation about you know looking at the replacement for JP Morgan. It will take some time to get all of that money out but we we don't want to wait and be you know too far underweight. So we want to get that conversation going so that we can kind
of work toward building back toward that target weight. Hey, are we holding that money in cash as it gets redeemed? >> So, yeah, it would be on the on a short-term basis, it would be coming into into cash. Uh, you know, typically
um you know, every so often the city will will say, "Hey, we need 500,000 or something like that for payments." So, you know, as we're as that money is going into cash and then sitting there, if the city were to say, "We need we need to pull money for payments," then it it obviously would come out of there.
In previous times, if we didn't have the cash and the city said, "Hey, we need 500,000, whatever that number was," then we'd have to go to the the equity portfolios or the fixed portfolios and raise the cash so that it could be moved over. Yep. All right. So, with all of that, I'm
going to keep the uh Oh, what did I do? Um, I guess he got kicked out and he was in the waiting room and so now she's just letting him in and presentation back up. >> I'm I'm here everyone. Thank you.
>> All right. So, now I'm going to jump to page 24. And this is really the last page that I was going to draw your attention on the quarterly report. Um because this has all of the universe percentiles and the broader comparisons. Um but so I'm on the top line of of page
24. For the quarter, we were up 6.56% gross of fees behind the policy of 7.29 and we placed in the 57th percentile of the public fund universe. The next column over is the 9-month
number on the fiscal year, 5.78% spot on with the the policy and sitting in the the 32nd percentile. So well within the upper half of the universe. And again, when you consider, you know, back in February, we were in negative territory. It has been a very nice
recovery. Now, we are not at seven and a half percent where we want to be for the, you know, the the actuarial bogey, but again, considering how far we've come in the last few months, it's certainly a positive step. And then we do have some more, we will have some additional updates for you that that has
us continuing to move in a positive direction. The only other things that I wanted to highlight really on this were were a couple of the outstanding or or larger items. So on page 24 you'll notice windslow large cap growth. They replaced Allspring and really had a fantastic
quarter. They were up 20% versus the benchmark of 17.8. U now offsetting that of course is Eden Vance. Um our Smid manager they were up 3.4 but their benchmark was up about 8.6. Um so again contributing kind of to
the underperformance and then the uh just really quickly on the next page our international um did really well. All the the three funds combined were up over 13% for the quarter. Um so very strong returns with each one of them beating their respective benchmarks.
Let me pause there see if anybody has question or comment on the quarterly book. If not I can jump into the July update. Okay. So, we do have that other smaller book
in front of you. >> Do I need to back out? >> While we're queuing that up on the screen, I'll just highlight on page number one, um, this has a lot of market information, but what you'll notice for the month of July, the S&P 500 was up an additional 2.2%. 2%.
Um, and then obviously we have a lot of the the other benchmarks there. I know there are a lot of numbers on this page. Um, but but again just as a general statement, markets continue to move in a positive direction. Um, and if you flip over to page two of the report, you will see um that the fund did continue to go
up, although not near as much as the the benchmark. So, we were up 37 basis points for the month of July, while the policy was up 90 basis points. So we were about a half a percent behind and that brings the fiscal year to date through July um to a little over 6%. So
again closer yet to that assumed rate of return. And then while we're we're kind of focusing on that um I ran the assets as of this morning. So we were we're just talking about the the plan assets at the end of July being 134.68 million. We're
now up to 137.2 million which on a market value now some of that could be contributions. It's not strictly performance. Um but that's an increase of about 1.9%. So again if the majority of that is investment performance and you add let
let's just call it one and a half percent then we could be sitting right at about that seven and a half% level as of today with call it three weeks to go in the fiscal year. So again, it's not over yet, but we're we're continuing to move in the right direction and are are
are getting fairly close to that to that actual bogey. Um but again, getting back to page two again, I won't belabor this, but you can see some of the individual performance. Um eat and vance did continue to struggle for the month. Um also
contributing to the underperformance wins low. We just talked about how great a quarter they had. Um they were up 1.8, 8 but the benchmark was up about 3.8. So that was contributing to the uh to the deficit in terms of the relative performance. Um and then we did also have some some
negative performance in uh international which is on the next page. Um WCM was down about four and a half% um compared to their benchmark of down about 30 basis points. So again, all of those sort of individual components sort of adding up to why we were behind by
approximately a half a percent relative to the policy um over the um the quarter and month. Let me pause there. Any additional questions on anything through July or the the market value uh number that I
mentioned? >> Any questions? So, we'll go ahead and do approval of that report and then we'll move on to your presentation. Um, can I have a motion from the firefighter board to accept the um consultant report from Mariner? >> So, moved.
>> Second. >> We have a motion to second. Roll call. >> George Kler. >> Yes. >> John McDaniel. >> Yes. >> Lance Hughes. >> And please. >> Motion. Second. >> We have a motion to second. Roll call.
>> David Cohill. >> Yes. John Patrick, >> yes. >> John gota >> yes. >> Jason Sharp, >> yes. >> And general employees, >> second roll call. >> Nick Curry, >> yes.
>> Christine Hoffman, >> yes. >> Eddie Vgara, >> yes. >> All boards have approved. Moving on to our presentation. >> Move to the third presentation. Um and for hard copies now everything is inside of your agenda packet if you want
to follow along in hard copy. So the first um item in in order is going to be the core real estate search. So again to to reset the table a number of quarters ago we had recommended terminating JP Morgan strategic property
fund. Um but acknowledging that that you were going to get all of that money all at once. It was going to be paid out. Hopefully the pace of those uh payments will accelerate as as the market continues to to move forward, but so far they've been relatively small payments.
You know, 5% 6% 8% of your balance. Uh so far, um as of June 30th, we still had about $4.9 million in that investment. But as that has is being paid down and as the other parts of the portfolio have been growing, we are getting a little
more and more underweight to real estate. And so, you know, considering that the time that it'll take likely to kind of review, potentially interview and and do those kind of things related to to hiring a new manager, we wanted to get that conversation kind of started.
So, we've got a a review here that includes three um core managers that are be potential replacements for the JP Morgan kind of spot within the asset allocation. Um >> JP Morgan give us a time frame when that be fully liquidated.
>> No, >> you get a you get a it depends, right? I mean, if >> we sell it, we sell it. pie in the sky. You know, the the Fed cuts this month and maybe cuts again next month or or the month after and all of a sudden you
start to get a lot more movement in the real estate markets, then it's potentially, you know, could be inside of 12 months. If all of a sudden things happen quickly, um, but if if things continue at the pace that they have been going the last couple of
years, then it it easily could be 24 plus months to get it again fully redeemed. Each month they are, excuse me, each quarter they are making some kind of payment, right? But it's that they haven't been huge chunks relative to, you know, what what you've asked for.
>> Um so, uh on page number four, we've got the kind of the just the top line, the three firms that we're we're showing you today. Um first is Claren Partners with their Lion Properties Fund. We have Stockbridge Core and Value Advisors with the Stockbridge Smart Markets Fund. and
then TA realy with their core property fund. Um we give some kind of background information on on sort of again what core and the real estate market is. I'm happy to go through that if you'd like me to. Um but otherwise for the sake of time I was going to skip over and just
kind of get into the individual uh portfolios and strategies. Um briefly on page number eight um you can see kind of how big these firms are. And it just so happens that um by alphabetical order they also go kind of go in order of
size. So Clarion Partners is is the largest with over 72 billion um in assets under advisement and about a 193 people within their real estate division. Um Stockbridge um is about half that size with 130 uh folks in
their in their real estate division. And then TA realy is sitting at about $19 billion and about 65 professionals um within the real estate division. Um I was really going to kind of skip over
a couple of the the next few pages. Um I go to page number 11 starts to get into some of the the specifics of the of the portfolios. Um so you can get a sense as to the number of properties that are held. So again
these are already existing portfolios of assets. Clarion is by far the largest with 196 properties. It's 91.4% occupied. So one of the one of the concerns with with real estate is are you buying a bunch of vacant office buildings or or something like that. Um
and certainly you can get a sense that uh across the entire portfolio it's still very heavily occupied so generating a lot of income. Stockbridge is even better than that at 93.4% um with about 150 properties and then TA also in that same kind of range 91%
bless you um and about 94 properties. Again, the the TA property uh fund is a little bit newer and doesn't have the assets. So that that tends to be why you see a smaller number of properties that they're still relatively early on and so
they're still building up um that uh that number of properties. The other thing to highlight on the far right hand side is the amount of leverage or debt that these uh companies are holding within the the portfolios. And you can see each one of them is is really in the mid20s. You know, as compared to, you
know, most folks are are buying a a home mortgage. you're putting down 20% and borrowing 80. Um, in these type of funds, you're typically putting down around 75% and borrowing 25% at least on average across the the portfolio. So, a
lot less debt as compared to to what most folks do uh personally. Um, the next page, page 12, just kind of gets into um the the fund. Now, you will say each one of them has a stated minimum. Um, Clarion says it's 10
million. We've already checked with them and they certainly would accept a a smaller investment than than that. Um, again, the redemption terms, these are going to be very similar from whether it be the JP Morgan fund or others. They tend to be quarterly with some notice
period either 45 90 days, sometimes they're 30 days. Um, but again, these are these are relatively illquid investments. And then we also highlight the management fees. Um, you can see Clarion has a has a tiered schedule, but we'd
stay in that top tier. So, their their fee is 1.1%. Stockbridge is 95 basis points, so a little bit lower. And then TA is kind of in the middle, right at a flat 1%. Um, so again, for each of those, we'd be um in the the top tier. We wouldn't be putting enough in there
obviously to to receive any of those break points. Um, one thing that gets a lot of discussion, um, in particular with with what's happened over the last five years is the types of portfolios or the types of properties these funds are owning. Um, so on page 14, we kind of give a
breakdown of how much of each segment they have within their portfolio. And so the one that that really gets the most attention is that yellow band for office. And you'll see so on the far right the NFI Odyssey has about 16% of
the index is in office. And also maybe I should just take a half a sec second to explain. You know in the equity markets we have the S&P 500 that it's a it's that blend of stocks and then you know managers can overweight and underweight.
The Odyssey index is really just the average of all of the managers that follow the rules that the index, you know, if they're if their leverage is between 20 and 30% and they're diversified across the the main areas, retail, office, industrial, um, then you
qualify to be an Odyssey. So the index is really just the average of that group of funds. Okay. Uh, but what you'll notice is each of these three in particular in office is underweight. Clarion has the largest waiting at 10%. But Stockbridge is at seven, TA is at
five. So a lot of folks are interested, you know, what is their what is their office exposure relative to the benchmark or relative to the market, what is their industrial exposure and so on. And so you can see some of those nuance differences um in terms of of how they're allocating their portfolio and
where they presumably see the most opportunity going forward. Uh we do have additional you know kind of breakdown information on 15 and 16 where 15 gets into the geographic allocation. Um obviously you can see the
the smallest portion of these portfolios is the Midwest. These core portfolios tend to be in the the what we call gateway markets. they tend to be on the coasts, uh, you know, whether it be New York or Los Angeles, San Francisco, but certainly, you know,
Dallas, Atlanta, the the other major metropolitan centers are are where you're going to find the vast majority of these type of properties, just like you did with JP Morgan. Um, and then on the next page, again, similar to that, it just sort of breaks down particularly like gateway markets versus secondary
and other markets, but again, the these three different portfolios are are substantially similar uh to each other. there's no there's no huge deviation. Um one of the uh on page 17 now we call it property life cycle. So now again
these are core funds which means the vast majority of their assets have to be wellestablished class A property that's leased for the long term. Right? You're not buying vacant empty properties. You're not you
don't have significant development projects. Now you each of these funds will allow some of that and so what you'll see you know that and that would fall into either the value ad or the development categories. So each of these funds have you know up to 10 to 12% in
those noncore strategies but the vast majority of the assets are again stabilized long leased income generating properties. It's not speculative. we're we're not trying to make, you know, an outsized rate of return on a development that we're, you know, won't see any money for five years. But just wanted to
give you a sense that that each of these portfolios does have a little bit of that, but the vast majority is is the stabilized income, um, generating assets. Um, and then on page 18, um, we've got the kind of the size of the the the
portfolios that they're buying or that the buildings that they're buying. Um, Clarion by far has the largest in the the large in the 100 plus. That also stands to reason they're a much larger firm with more assets to manage. If you're buying, you know, 30 and $40
million properties, you have to buy a lot more of them to to deploy all that capital. Um, so you will tend to see that as funds get larger and larger, they tend to buy larger properties. um 19 and 20. Uh 19 gets into just the age of the properties. So if you are
curious about how you know how much um of the of the the portfolio is is less than 20 years old or excuse over 20 years old or newer, you can kind of see those those breakdowns, but they're not dramatically different um from one portfolio to the next. Um and then one
of the other questions we get um page number 20 gets into lease expiration. So if you have a core property today, but you know 50% of your tenants are the leases rolling next year, there's a lot of risk, right? What if what if you
can't get the same type of of rents or what if they decide to leave? And so what you we we show out is the next five years worth of of kind of those lease roles. Um and you can see uh none of them, you know, this year less than 10%. You've got Stockbridge, which gets to
13% of their portfolio next year, but it's all relatively, you know, moderate. You don't have all of a sudden 50 or 60% in a given year, which would obviously present um some timing risk because you you never know exactly what the market is going to bear in any given year. So,
if you have an unusually large amount of lease expiration at one time, that that could be a concern. All right. So, that's it for the kind of the portfolio comparison information. Um, I'm going to turn to page 22 very briefly and just highlight the
differences in the income return. Again, these are just like JP Morgan kind of stabilized portfolios primarily income generation plus a little bit of capital appreciation. So, you can see each of these portfolios is ranging in the kind of the upper 3% to low to mid 4% in
income. So again, when you think about interest rates where they are, our bonds are paying somewhere in the four four and a half% range. So the real estate portfolios are right in that same range. So you're kind of getting a comparable level of income with of course the
appreciation potential if you get underlying increases in value. And then um I'll jump to page 24 and you can get some of the the trailing. We we have a calendar year on page 23. I'll skip to page 24. You can see the
trailing performance. Now, again, for the la the last three years, each of these portfolios is negative. So, none of them escaped, you know, some of of of what happened to real estate when when interest rates really went higher. Um, but but on a on a go forward basis, you
know, certainly expecting um better returns um especially if if we do get some interest rate cuts and that leads to some additional kind of real estate activity. Let me pause there. I know I threw a lot at you.
Anybody have questions? Anybody have comments? >> Brandon, I'm just curious if you look at that page 14 where it says property type allocation. What is other? So Clarion is 14% is in other. Well, oftentimes that will include
senior and self storage and some of those other things, but we have those broken out separately, so it's not including those. Um, life sciences sometimes gets broken out as other, which is it's kind of a type of office, but it it tends to be like medical office. >> Okay.
>> Um, that won't get included in in the what we call traditional office. So, that can be a big part. Um, and that actually has been a growing area for a lot of the the managers. Um, where it's more kind of missionritical office. It's not just a general office building, but one that's tied to like laboratory work,
hospitals, research facilities, things like that. Um, that's a bigger part. But in terms of what else is included, I'd have to to to look that up and get back to you. >> Thank you. We went through >> it it certainly can be a risk but it
also can be a plus. It has been an area that's sort of underperformed. In addition to that, you have to get into the specifics of what type of retail. You know what, you know, could that be more traditional enclosed shopping malls? Is that all grocery anchored? You know, kind of strip
centers, which tends to be where the majority of of that ownership is, but some of them do have a little bit of mall exposure. Um, or could some of that be sort of, you know, dual use? Sometimes you see, you know, like a apartments on the on the top four or five levels and then retail along the
bottom. Um, sometimes they include some things like that. Um, so you'd need to to look at that, you know, even in more detail or or if you'd be interviewing any of them, sort of asking some of those kind of questions. And, you know, I don't have the I don't have that
information, but is that a an area that's growing or shrinking? You know, it's one thing to see 20% in retail, but if it was 30 and then they say we're on our way to 15, that tells you something. Or it's no,
yeah, three years ago we were at 10 and we're we're right now we're trying to get to 25 because we see a ton a ton of opportunity and this is what we're doing. We're looking at, you know, grocery or whatever it might be. That can be very helpful as a part of that process. I don't I don't have that
information in my in on the top of my head, but that is that's helpful to look at as we're as we're having some of those conversations. >> Sure. >> Yes, >> they do. Yeah. um you you you know 10 years ago that there was
really very little of that within kind of the core odyssey market but you're starting to see a little bit more now. Again, many of them don't necessarily fall in in the what I call traditional kind of core bucket. they may fall more
into the value ad or or or other areas because you tend to have depending on the structure of it sort of like lower lease terms or shorter lease terms things like that >> right >> right um but you know self storage is
another one that that a lot of Odyssey funds didn't own 15 years ago um but have they've started to to try to diversify their income streams a little bit. Again, you're not in order to be an Odyssey qualified fund, you can't be in 50%, you know, self storage and senior
housing, but they're they're trying to kind of diversify somewhat into into those other areas. >> I I see it I see the possibility of that ticking up slightly, continuing to increase, but you know, you're not going to wake up five years from now and see it 25%. But it wouldn't surprise me at
all to see it at, you know, four or five. Any additional questions? So again, just to kind of go back that this is meant to to kind of grease the wheels, get us starting to think about about looking at at picking a replacement for JP Morgan. We do have
some time. So, it's not like you have to make a decision today. Um, but if you felt so inclined, we potentially could, you know, set a time, whether that be three, four months from now. Um, whether it's your next meeting or you do a special meeting if you're interested in hearing some presentations and kind of
taking that next step to to learn a little bit more about the portfolios. Um, or certainly we could we could kind of continue to hold off. Again, there's nothing. We're not all of a sudden finding ourselves at 1% allocation, way underweight. We're only under by a little over a percent. But I just
thought it'd be good to kind of start thinking about that and begin begin that process of looking for that replacement. >> I think it's a good idea to present I think it's a good idea to present it or have them present to us if that's possible, whether it's by Zoom or whoever it is. But at the next meeting,
like you said, I don't think it's a rush, but it'd be good, like you said, get it moving. Do all three of these allow us to buy in over time as we get the money from JP Morgan or do we have to do it in one lump sum? >> You'd have to
we'd have to massage it a little bit. We'll put it that way. Uh so now each of these investments just like JP Morgan, you make a commitment, right? $2 million, $5 million, $10 million, whatever it is. So you sign for that, but you don't send them the check.
you sign the commitment and then when they're ready for the money, they will ask for it. Sometimes it's all of the money that you've committed and sometimes it's a percentage. So, it's it's hard to to know. So, like if I'll just use a nice round number,
we're talking about $5 million. Let's say by the time we're really making a decision three four months from now, potentially we're sitting at a one and a half to$2 million gap. Then maybe we allocate two and a half million or commit two and a half million, right?
Because they they might call that within the first three months. It might take six months or nine months. We don't we don't exactly know. But if they call it quickly, then we're we're okay because we haven't overcommitted. And then if all of a sudden JP Morgan sends us a nice large
chunk and really goes down, then we would just have to go back and and add to the commitment. So maybe add another $2 and a half million dollars or or whatever it would get us back to that target. So so it there is a little bit of a massaging that would need to to
happen. Um but but that's another thing that we would ask them, you know, when they're here. What is your your your call schedule look like? At least I mean as of today, obviously three months from now, six months from now, they don't exactly know what it'll be, but they have a general sense as to what their
activity level looks like. Um and then how much flexibility do they have you know to just add to the commitment or there are some of them you know again this is not a unique circumstance where they're being hired to replace a manager who has not fully redeemed and some of
them have said we'll give flexibility. So, if you commit $5 million and we and we're ready for it, but you only have two and a half, just tell us, send us the two and a half and we'll kind of rewrite the and and just call for the the remainder later. But that's a
conversation to have with each one of them, you know, and see how they would handle it. >> Are we required to take this real estate money and invest it back in real estate? No, I mean the investment policy currently has an allocation to real
estate, so it's sort of designated, but there is nothing within the ordinance or or state law that requires us to have real estate. So certainly an option could be to decide that instead of reinvesting in
real estate, we'd rather just put this money in fixed income. >> Okay. >> Yeah. with our, you know, just to but to take that back sort of full circle within our ordinance, we're sort of capped with equity and we're reasonably
close to that cap and we have real estate that's allowed. So, if we don't invest in real estate, you you kind of it's difficult. You can't really add that to the equity bucket. So, in a way, it either has to go to alternatives, nonequity or fixed
income. So again, it doesn't necessarily have to be direct, but it but just by the way the the ordinance is structured with the equity cap, it kind of if you don't put it in real estate, it would kind of force you to keep it in either alternatives or fixed income because we don't really have the room to add to
equity. >> Brendon, how are the uh fees basically calculated right now Wells Fargo? And then also if we say we do commit so much to one of these companies, are we we is the money are the fees going based on the committed
money or the money we actually given? >> No, it's money that that's not actually given. >> So what about Wells Fargo we're trying to get out of it? How are the fees calculated? >> Uh JP Morgan. >> Oh yeah, I'm sorry. JP Morgan. >> Uh it's it's on your asset value on the balance. So as they're paying you out,
you know, it's the percentage against the balance. So as as the balance shrinks, the amount you're paying them shrinks, but it's it's still the same kind of percentage. Okay, >> that that is a good point. You know, we are going to have a little bit of a discussion related to private equity
later. A lot of those other alternative assets in many instances, they will charge on the commitment, not on the investment that's actually put to work so far. So there that that is kind of a good point that doesn't relate specifically to real estate. Um but but
it is important to understand that there are investments that will charge fees based on what you commit whether you've sent them any money or not. >> So in terms of you know heard a few comments about liking the idea of of of having some some presentations. Do you
like the idea of hearing from all three? You want to narrow it to two of them? What do what do we think? And then I guess the follow-up question at the the regular quarterly meeting which remind me what the date is. >> November 18th
>> November 18th. Um or would you rather have this on a you know a separate meeting >> regular person >> typically our November meeting is not a a one heavy meeting so be a good
>> everybody good with all three >> u really quick uh clearing doesn't look like have a strong track record. I was trying to find JP Morgan's track
to see if they were even any better. >> I had the same reaction, John, as I was going through the three. It seemed like was always on the bottom of the deep and >> the two better. >> Where did I put the 230?
>> Yeah. And and part of it too can be what what what what's not in here necessarily um obviously past performance is part of it but like one of the issues we were having with with JP Morgan was about like lack of execution on the strategy.
So, one of the things that that JP Morgan had said three, four years ago, they were pretty heavy in office as many managers were um and had indicated they said, "Well, we really want to reduce our office exposure. We see a lot of risk there."
And as we continue to watch them over the subsequent two and three years, the portfolio didn't really change. They stayed in office while other managers who said, "Hey, we're at 30 or 35% office and we really want to reduce it. we want to get to 15 or 20 and they did
execute on the strategy. So one of the things we're seeing is sort of a disconnect this between what they were saying they were going to do and what they actually did which kind of in our mind sort of forecast some issues or problems moving forward where other
strategies so so you might have had a a clarion and again I don't have the exact detail they could have been heavier in office a few years ago and suffered plenty of like the downdraft but now they've really reduced office and so they've gone through the pain and don't
have to still deal with 30 plus percent office and can kind of move forward and it's a better it's a more positive picture moving forward if that makes sense. Well, they their stated minimum is is $10 million, but but they know, you
know, we talked to them about your targeted allocation size, which again, your targeted allocation puts you at about six half million would be a 5% commitment. So if if you were, you know, initially talking about trying to to stage in at
say a two two and a half, we'd have to have that conversation. We we didn't talk about that level specifically. So we are we kind of good with with all three. Did we hear any objections there or do we want to shorten it? >> I personally don't like Clarium. They've
underperformed JP Morgan and they have the highest fee structure. >> Okay. >> Consensus to skip Clarion. Anybody feel strongly? Okay. >> Is there another one to add besides Clarion that's that's out there? That's
I mean maybe not Stockbridge or TA. >> I mean, yeah, there there's certainly plenty of of other strategies. Um, you've got off the top of my head, you've got intercontinental, you've got principal. Um,
let's see. I mean, I think what you brought us with Stockbridge and TA are pretty close when you look at the the metrics. if you could find one that >> sizewise. >> Yeah, just size-wise is kind of
a little bit closer because I I mean there are differences between Stockbridge and TA, but they're not so disparit like they are with with Clarion. for something with a drastically different property type allocation or
anything particular like that? >> No, I mean again I think um I mean if if you held a knife to my throat, it would probably be a choice between Stockbridge and TA and then I would just have to drill down in some of the minutia of their their differences.
But I think their returns, their makeup, um, you know, a lot of the other their expiration of their leases, I mean, that's a little bit of difference there. But just kind of something >> closer to that. >> And I, you know, just just for everybody's understanding, too, like to to get these I did engage our real estate analyst to kind of put these
names together. But what I can do if if you're okay with it, I can go back to him and say, you know, they'd like to hear from from Stockbridge and TA and a third that isn't Clarion. So give can you know give me another name. Are you comfortable with that? I mean obviously you would you won't know what that name
is. I can I can send it to you. Um but if you'd like to hear three or we could just hear from two. But if it sounds like you you might want to hear from three. So you comfortable with that idea of me going back to the analyst and getting getting a replacement for them? >> Yeah. >> I like surprises.
>> Okay. >> Okay. That shouldn't take very long. At a minimum, I can, you know, pass that information along to Dustin and so at least you know what that firm is and and obviously we'll have similar information um as we as we head into any potential
presentation. Okay, any further questions on real estate? All right, then let's go ahead and jump a few more pages within the book. So one of the other items that we had talked about
last time was um Europacific growth the American funds in the international portfolio they have been struggling in particular um for the past you know 12 or 18 months especially through March 31. Um so we we brought an additional
review um sorry I'm catching up on the electronic board. Um, so page number two of that next book. Just want to highlight first. So on up on the top we've got American Funds, Europe Pacific Growth. That fee is 47
basis points for that particular fund. I also included our other growth fund with WCM for kind of comparison purposes. So if if you're looking at, you know, potentially replacing them, you'd want to see how they kind of fit in with the the other portfolios. Then the three new
strategies that I brought to you to compare, MFS International, Goldman Sachs, the GQG partners, um, and Harding Loverner. You can see each of those portfolios is more expensive than American Funds and less than WCM. Okay.
Um, on the next page, I apologize there's a lot of numbers, but I'm really going to try to highlight just a couple of them. really the very top row on page number three, the number of holdings. So you see American funds is about 350 different stock positions. WCM which you
currently have was at 41. So far more concentrated. Interestingly, each MFS, Goldman Sachs, and the Harding Levenner funds all relatively similar, ranging from 67 up to about 88 positions. So more diversified compared to WCM but but more
concentrated certainly than the existing Euro uh Europac fund. Um and then just to contrast it the the MSEI index has roughly 1100 stocks within the the the benchmark. Um I'm going to skip ahead to page
number five. So I apologize. There's a lot going on in these pages, but I really like the chart up on the top um either on the left hand or right hand side. Sorry. It's the kind of has a bubble chart and a grid. And so what we're looking at here is
sort of the the value versus growth attribution and then also the the small, mid, and large cap. and and both the left and right hand side aim to to show the same information. The the left hand side I kind of consider the average and on the right
hand side it shows where the fund has been over the last you know 12 or 18 months. So you can see if it moves around. Um, so just as an example, um, I'm up in the upper right hand side, you'll see that the the red triangles, which is the
Goldman Sachs fund, has really moved a lot from left to right. So although they're they're kind of always on the right half, they're not always way up in that upper right hand corner. So they're not as kind of true
growth as say WCM is. So you see your WCM manager. There's a little bit of movement, but they're firmly planted over on the right hand side of that page. MFS is similarly very kind of consistent
with their plots, but it's a it's just slightly to the left. Again, still well within the growth spectrum, but not as growthy as a WCM. and then Harding Loer again sort of similar slightly more toward the core
space and so on. So you can just see some some little bit of of variance um there and then of course American Fund Euro Pacific is again also over there to the right but of late has been moving a little bit to the left moving a little bit more toward the the core space. Uh
then down on page six you get into the individual kind of trailing returns. This is what we're we're used to seeing, you know, how they done on an annualized basis for the last 135 and so on. Um you can see strictly from the a returns perspective. Um WCM really stands out
and obviously they're they're your second growth manager. They have done very very well. Um over the long term 10 years over 11% where the next best manager is eight and change and that is MFS. Again over the longer period American Funds has performed well. have
outperformed the index but but again these last um you know number of quarters 15 months or so they they definitely have fallen behind. >> These are net fees >> correct? Yep. And then on on the next page, page
seven, it's sort of the same information, but we just look at the individual calendar years. Again, I'm not going to walk walk you through that, but if if by chance you were curious, you can see yeartoyear how they've done in those individual kind of 12-month periods. The other thing that I want to draw your
attention to is on page number 11. And I'll say on the upper half of page number 11, which is the last seven years. I would prefer to look at the last 10 years, which is the bottom, but a couple of the uh excuse me, just one of them, Goldman Sachs, it doesn't have 10 years. Um, so that's not as helpful.
But I want to draw your attention to a couple things on the upper uh part of that page. The first one is the third line down standard deviation. So again, this is the height of the the peaks and valleys in the roller coaster, at least historically. How much is that
portfolio going up and down? And so you see American Funds is at about 17.5%. Which again, we're going to compare that to the number way on the far right, which is the index, at about 16.5%. So slightly more volatile up and down as compared to to the benchmark.
Goldman Sachs is dramatically lower at 13.86%. So, a lot less volatile. Now, WCM, our other manager, is at 18.8, the the the most volatile. Right now, they've done
that. They've been very volatile, but they've also been very strong with their performance. And then MFS is lower at 15.7 and Harding and Lovner stands a little bit higher at at 17.1. So again, all within a a relative range, but certainly
Goldman Sachs stands out as sort of the lowrisk strategy as part of the group. And then again, WCM is sort of that higher octane, more volatility type manager. And then the other numbers that I like
to look at are the up and down capture ratios. Those are the bottom two numbers. Um I I describe this as the offense and the defense. So the up capture ratio when the market is going up, how much of that up move, at least historically do they do they capture?
And think of that as a percentage. So we'll use American funds. 104.6%. So when the market is up, they're getting 104% of that. they're going up a little bit more. But on the downside, when the market is negative, they're
getting 104.6% of the down market. Okay? Now, the market is up more than it's down. So, so having, you know, an up- down capture ratio that's fairly even is not necessarily a bad thing. But again, when
you contrast it with WCM at 116 and 98, so that is a fantastic spread. Now again, that's looking backwards, but generally speaking, we like to think that that hopefully they can continue to do that moving forward. MFS has a similar positive spread, but it's
more on the defensive side. So, it's 102 on the up and 91% on the down. And then the one that really stands out again, Goldman Sachs, is only 88% on the way up and 64% on the way down. So, when the market's going up, they're historically speaking, they're lagging. They're
falling behind. But where they really do well is when the market is negative. That's where they tend to outperform. But I always like to show this because, you know, if you pick a manager, well, I just I'll use WCM. You already have them, but let's say you
just you you look at the 10-year number and you're like, I really like how they've outperformed by 200 basis points. Let's go with that strategy. And then you hire them. and then in the next 12 months the market's down five percent and they're down seven and you go, "Oh my gosh, I can't take it."
They're down more than the market. Well, then we didn't really make the right decision that matched our expectation because, you know, they they tend to be a more volatile manager, right? So, if we're worried about that kind of outcome, then it may point us toward a say a Goldman Sachs with a with a low
downside capture. But conversely, if we want a manager that can keep up, we probably shouldn't go Goldman Sachs because when the market's up, they're likely to disappoint us, right? They're not going to keep up. So, I always like to to make sure we kind of frame that sort of decision
process around what our expectations are. So, we within again, and I'm stepping back here from this particular book, within international, we have the three strategies. We have Europacific growth and WCM. Those are kind of our two growth side managers.
And then we've got the DFA value. So we kind of have both sides covered. So it's just sort of a question of do we kind of like the have a little bit more octane and get a little bit more out of that. If we want to make a change, one option is just to stick with the
existing strategy that we have with WCM. Or conversely, if we like the diversification of having a third strategy, then obviously we could pick one of the other three. Let me pause there. See if anybody has question or comment. All right. Well, hearing nothing, what
what I I mean, what I would suggest, you know, Europeacific has been a a strong manager for a good while. They've gone through a little bit of a patch, but but we're not I don't I don't see this as sort of a long-term, you know, decline. We could just give them a little bit more time and review, you
know, revisit this if necessary. I'm I'm looking at the uh track record that you put in here, you know, year over year. And uh even like Goldman Sachs who who's got great long-term numbers, they've had some really crappy
years in here where they, you know, um they were 72 81, you know, they're uh it seems like they all go through hot and cold cold stuff. So, uh yeah, I'm I'm with you. I don't I don't see a drastic
difference. Yeah, any manager that that is really making an active kind of bet at taking active positions, if they stick to their guns, they're going to go through periods where they where where their style is out of favor. You just you can't avoid
that. So, you w you will see that. The question is, you know, are those relatively limited compared to the number of years that they are generally kind of better than average? And then when you blend them all together, do they outperform? Europacific growth has done that very nicely over an extended
period of time. They just again have been struggling as of late. Now this quarter they actually did better. You know they and they were 13 plus% I believe it was. So you know kind of performed well but still on a trailing one year or so they're they're they're
behind. Um but again I don't >> that was just for the quarter. Um That's right. >> Yeah. 12.3. Yeah. Versus 13.2. Yep. >> But on a one year it was 13.8 versus 18.
So So certainly have struggled. But again longer term have done very well. Um but again wanted to revisit this look at some other options. Um so we we at least could be in a you know, have a better frame of reference.
One of the one of the challenges when you just look at our quarterly book, you see an index and you see a benchmark or sorry, you see universe and you see the benchmark, but that's really it. You don't here. You get a little bit more of a kind of look on the standard deviations, the betas, the up down capture. So you get a little better feel
as to kind of the the types of managers and what other managers are doing you know in order to outperform underperform because sometimes you know just getting better performance you you may not be worth the risk right so you want to make sure we understand all of that because because that isn't as well captured in
the comparison of our regular kind of quarterly book. So, is everybody comfortable kind of holding for now? And and obviously we can continue to to revisit this as needed and potentially make an adjustment if necessary. >> Okay.
All right. Then the the last item um on the agenda is is a quick review of the asset allocation. If you recall a few meetings ago, um we did make a slight adjust actually, I'm sorry, there are two items left. Um but the last kind of
book related item that's in your your packet is an asset allocation um that looks at um private equity. So, um, we did put in sort of a potential allocation to both private credit and
private equity, although they're targeted at zero currently in the current iteration of the policy, but there is kind of sort of a placeholder for a little bit of alternative exposure. And one of the questions came up last meeting, you know, what what could that potentially look like? And so, um, I put together an asset
allocation. And again, everything is really on page number five. There's some supporting information before that, but page five has has really all the detail. So, our current target waitings are in that first column on the left hand side. And I know there's a lot of numbers, but
those are all the percentages to, you know, aggregate bonds to large cap to small cap to midcap to fixed income and so on or uh real estate. Then down at the bottom that allocation using the 2025 capital market assumptions
project out a return and again these are 10 to 15ear projections. So I always have to to to mention that our policy targets are currently with these assumptions are targeting or projecting a 7.08%
mean return with a volatility of 10.85%. Okay. So now each of the next few columns that we look at, what we want to do is compare it back to the current portfolio. So the the first column over which is
labeled 2.5% PE. What that does is it actually takes 2 and a.5% from fixed income and puts it into private equity. Right? And what would that do? Is that me? Um,
so if you if you took two and a half% of the portfolio from fixed income, put it into private equity, it changes the expected return up to 7.25%. And the risk or the volatility goes up to 11.19%.
Okay. Now, the next column does the same two and a half% to private equity, but this time we're taking it from our public equity like our large cap and and midcap, right? So that gives us an still an increase in return but less of one which stands to
reason right if we're expecting eight or nine plus percent out of equity and 4% out of fixed income then you know if we're funding it from an 8% we're going to get less of an increase than we would taking a 4% asset. So you can see that expected return does go up but only to
7.17%. But you'll notice the risk actually goes down a couple of basis points. So smaller increase in return but actually a decrease albeit slight in volatility.
Then the uh the next two columns are just meant to illustrate you know sometimes what happens when you continue to add an asset class is any potential benefit you see at a lower level begins to go away you know with additional risk. um because that that some the way
correlations work sometimes you can get kind of a diminishing benefit. Um so I just wanted to take another two and a half percent to make that illustration. The first one is taking all of it from public market equity. So if you took 5% of public market equity and took it into
put it into private you get up to 7.25 and the volatility again continues to go down to 10.78. Then the last column is what if we did 5% but we took two and a half from equity and two and a half from fixed which is essentially a combination of
the the second and third columns and you get a 7.34 with a volatility of 11.17. Um so again just kind of giving you a few different variations on that but but you can see in each of the scenarios
you're getting an increase in return and depending where you're funding it from you get a potential either decrease albeit slight in in volatility or a a pickup in volatility if it were to come from fixed income. The challenge again, if we were to fund it something like
this from fixed income, when you combine private and public equity, you get closer to that cap that's within our ordinance because it doesn't define public market equity. It's just equity. So private equity and public equity would be combined, I think, to to apply
toward that cap. Um, so with that, any questions on what's what's shown here? Um I mean when you're just looking at these numbers it seems
pretty good right from 7.08 from 5% into public equity. You're going 7.08 to 7.25 and you're reducing risk on the standard deviation. It seems like a no-brainer. What are the downsides of public equity
that's not shown here >> for for private equity? >> Um yes. So, good question. One one thing is is the money is locked up. Most of these investments are 10-year vehicles. So, you make a commitment and you know,
for the first three or four years, they're calling that money in slowly and you, you know, you can't raise your hand and say, "I'd like my money back." Um, you you pretty much wait for them to to send it back. Um, and you know, they're making distributions as you go. Years five, six, seven is tends to be
when you get a lot of your money back. hopefully plus a lot extra, you know, income. Um, and then by year 10, maybe year 11, you're you're you're kind of at the tail and and and that fund is is kind of wrapping up and closing. Um, one of the other challenges they present is
um the valuations for these portfolios are much slower. Um, you know, with your traditional equity portfolio, you've got a custody at Salem Trust. By the 15th of the next month, we have the statement, right? You know what the value is. uh doing your audit is is relatively easy.
We have that information. Um a lot of these funds can be, you know, 60 if not 90 plus days later for for getting your your statements. And so, you know, that's September 30th, the end of the fiscal year. If you're not getting that
value or that statement until the 1 of January, maybe even into to January, that can present challenges for for the audit and some other things. Um, so you know, that doesn't show up in an asset allocation. Um, but those are are often
kind of some complaints that that you know, administrators, cities will have is that it can cause some difficulties with things like audits and and that sort of thing. Hey, bring it uh to your first point um the subscription the the uh um the
defined length of those funds. >> Um I was at an industry conference uh in June and um I ran into a couple doing my own research and um there were two that have evergreen funds now. Um it's it's
becoming more popular as they reach down more to the retail market, >> right? Um, the two that I got introduced to was KKR and TPG, two of the largest private equity firms in the US. I'm sure you guys are
familiar with them. Um, but they look fantastic to me. >> I'm I'm curious. Do you know what the minimum investment was for either of them? >> They were available to retail uh clients. Um I believe
um KKR was an accredited investor. Um TPG might have been QP, but I mean that means >> that's relative relatively small. >> Yeah. a million to five million in most um what what you tend to find kind of in
the private equity private credit world is that the really large companies the KKKRS the Apollos those kind of things oftent times you you have to make a commitment of 2025 $50 million so for most plans of of anywhere near your size
they're not really haven't been a viable option um but we are seeing the industry change um one of the things you just mentioned evergreen funds. So the the the traditional structure is kind of this 10-year sort of lock up fund. About
three four years ago within the private credit side, we started to see more of the evergreen funds. So the private credits traditionally are the same type of structure. They might be an eight-year fund versus a 10-year fund, but the same general idea. We call them closedend vehicles, but evergreens are
are open-ended vehicles, not too dissimilar from the way the real estate funds operate. So, the idea is you make a commitment, you get called in, and you can let your money just stay in there, continue to roll over, and then after two years or 10 years or 30 years, you
raise your hand and you say, "I'd like to be out now." And then they pay you out over some period of time. But it's a way uh one of the challenges for plans that use closed end vehicles. You make a commitment $5 million.
They call it in. At some point it goes up to six or seven million of value, but it's only there for about six months. Then they start paying you distributions and you find yourself in a couple years you only have $3 million in there, but you want it to be at five or six. So then you kind of have to make another
commitment and you work up and then it gets paid out and you work up and you get paid out. So, one of the advantages of Evergreen, if you continue to like the firm and like the process, you can get into a vehicle where you ramp up and then it tends to stay there and you don't have to go through the process of
hiring a new manager and the like. Um, to your point, we are starting we for the last three, four years, we've seen that more in private credit, but we're now starting to see it on the private equity side. Um and I imagine five years from now it'll be a significantly larger
number than it is today. It you know it's a relatively slow process but yes we are seeing that and that's one of the potential benefits to to those type of structures. So again this is just meant to be sort of a high level what potentially this
kind of introducing this asset class could do in terms of of a return. Um, we haven't even gotten into sort of the asset class kind of information. We could do some education more specifically on it. There's there's obviously a lot more that we potentially could discuss, but but at this point, we
just wanted to to kind of look at what what kind of the potential we're talking about, you know, could be in terms of of impact. I mean, obviously, you know, you'd love to to add an asset class and then have the return go from seven to 10%. You know, overall obviously that's
we're not seeing any that type of of impact, but it certainly is a a positive impact on expected return with again varying varying impact to risk. >> Yeah, I I see the positive impact reducing risk, increasing return. Um the
details we need to work out, but I' I'd like to see some um like we did with the real estate funds. Let's start exploring this space. Everybody kind of comfortable with that? Taking some additional getting some
additional information and and taking a look. >> Okay. >> I think we definitely have uh involved some administration on this. It just given what you said about the audit and things like that as well. I mean much
rather have plan sponsor buy in on the front end of something like this. >> I think that would be helpful >> because it is a it is a different type of of animal. You know with real estate now that is certainly slower in
valuation than than the traditional equity and fixed income portfolios. But it's really only about 30 or 40 days versus 15. So it doesn't really get into any sort of issues with audits and everything else. But but when you get into the privacy that that can be 90
plus days, it it's a little bit of a different ballpark. So >> vehicle all falls within the IPS that it's currently written. Correct. >> Yes. >> Okay. Well, and I guess what in a way what's more important is sort of the the
ordinance. The ordinance allows, you know, there is no not not a um a prohibitation against, you know, investments. And again, in the current IPS, we're targeted at zero, but we did sort of carve out a potential up to two
and a half is is sort of what it had um the last time we changed it. What did that look like? And and to be honest, we can re-review that because we do have the IPS on the agenda, not for for alternatives, but for another reason, but we can kind of take a half a second to look at that as we as we go down. I
just wanted to make sure and I know this had been looked at quite a time ago especially with with Pedro this fell under the scope of the IPS wouldn't be really correct. Okay. >> And that that when we made the last change it was to kind of
>> sort of begin that process to sort of incorporate it but again without without targeting and making any decisions obviously you're not going to just find yourself in private equity just because it's written in the IBS. It's obviously an active decision, but we did we did kind of break out that that little piece.
I guess what I mean to be helpful, why don't we just go ahead and jump a couple more pages and go to page two of the IPS if that's all right. Oh, is it that on a separate? >> Okay. Okay, sorry. We we don't have it up on this screen, but if you just turn a couple more pages from the asset
allocation, you see page two of 11. >> You do see up in the in the upper category. >> Yes, sort of. >> Did you have a comment, Pedro? I don't know what happened is >> the router about 100 yards offshore or
something and probably >> yesterday. Well, >> right. >> While he's trying to get set back up, I'll just again draw your attention to page number two. So, you can see within
um that the upper part of that table, we have alternative equity at two and a half%. So, there there is sort of that potential there. um in in the current policy, but we do the way we wrote it is if you don't make an active decision, it
sort of just defaults back to the 60%. So that that two and a excuse me, 50%. So that two and a half really resides up at domestic equity because we've taken no action, but we do kind of have that two and a half percent. Similarly down we have alternative fixed income. Same kind of two and a half percent. But the
the the little bit of the the footnote underneath it says it just reverts back to fixed income when it's when it's not funded. So So we do have sort of you know that that allocation kind of carved out if you will within the IPS.
Um but then if if I can I'm going to take you had a couple pages to page number six. This is this is actually why we have the IPS in front of you. Um so and if Pedro could join in, I'm sure he'd have a comment or two. Um but but
recently a law was passed um relating to securities that engage in a boycott of Israel. And the short version is um we are not allowed to own companies that engage in any kind of boycott related to
Israel. Um, back in 2010, a very similar law was enacted regarding scrutinized companies. These were primarily companies that were doing business with Sudan and Iran. And so that the process, and this has been in place now for 15 years, the state publishes a list of
companies that were not allowed to own. So kind of in the background when that list gets updated, we take this the list of securities. We go to each of the managers, confirm that they don't own it, or if they do, that they own it in a way that's legally compliant. I can walk
through that if we want, but but ultimately there's a process in place that we have to go through um to either make sure we're okay to continue to own it or that they sell, right? Um, this new law that just recently became effective essentially adds a subgroup to
that scrutinized list involving companies that engage in a boycott of Israel. And so this couple of sentences on the bottom of page six just really references that new statute, the new law that we need to be in compliance with.
Um, but practically speaking, nothing is going to change. We're going to continue to follow the process. we're just going to have a new subset of that list. But just to give you an idea of what that looks like, Unilver, um they're kind of the Proctor and Gamble of Europe. Um
they own Ben and Jerry's Ice Cream. Ben and Jerry's Ice Cream has engaged in a boycott related to Israel. So at least in the first sort of iteration, they're on this list. Um so we'll have to see, you know, how that plays out. 15 years ago when we did this with the
scrutinized companies, things like Royal Dutch Shell, Shell Gasoline was on the list. Then a year later, they took they made some changes and and got removed from the list. So So we'll see how this all plays out. But as a public entity in Florida, we have to comply with the law.
So we we want to add this new provision to the IPS to to just essentially if anybody were to ask the state would challenge it. we say no, we we actually legally, you know, codified that in the investment policy. Um so happy to to take questions um related to that
addition. Um but otherwise um we would need to approve the IPS um by motion to for it to become effective. >> Any questions? Anybody? >> So do we need to approve IPS as amended? Is that what we need to state it? What
does the motion need to be? >> I would love to ask. >> Yeah, I mean I I think that's sufficient because it's amended in front of you. So, or you know to approve the IPS as presented or can you call and put on speaker?
>> Tell him to type it in the chat. Is there a number I can call in? That's Yeah, he just I got him right here. >> Can you hear us, Pedro? >> Nope. >> I guess not. >> He's got the down ignoring them.
>> We're like cavesmen here trying to >> Hey, um we had a quick question about the investment policy and what the actual motion should be. It should be approve the investment policy as
amended. because in the actual I provided a a clean copy and um you know an edited version that's showing the highlighted changes. So what should the actual motion on that be?
>> So the Can you guys hear me or do you want me to talk through the mic on the team? >> Well, that's not working. I don't think so. Uh it's it's coming through very glitchy. So I'm just kind of holding your >> you up to the microphone in here so it's on the record.
>> No, no worries. Uh so so that I would say that the motion would be uh to approve the investment policy statement as revised uh and discussed by the board. >> Okay. >> Would that uh would that work for
everybody? So >> the recommended motion is to approve the investment policy statement as revised and presented to the board. >> Did I hear that correctly? >> Yep. >> Yes. >> Uh please board. >> Would you like to make that motion? >> Motion.
>> Second. >> Motion a second. Madam clerk, roll call. >> David Cohill. >> Yes. >> John Patrick. >> Yes. >> John Gutilla. >> Yes. >> Jason Sharp. >> Yes. >> General, please. Motion. >> Second.
>> Roll call. >> Nick Curry. >> Yes. >> Christine Hoffman. >> Yes. >> Eddie Vara. >> Yes. >> Firefighters. >> Motion to approve the investment policy statement as we've just discussed. >> Second.
>> Roll call. >> George Canler. >> Yes. >> John McDaniel. >> Yes. >> Lance Huish. >> Yes. >> Motion passes all three boards. And then we have the placeholder item D. Anything or sorry did you have anything else?
>> Nope. That was just gonna say that is everything that I had for you unless you have any other questions. >> Any other questions or comments for Brandon? >> Thank you. >> You really carried this meeting. Well done. Uh Dustin, your turn. >> All right. On to securities litigation
portfolio monitoring. I performed a a review and evaluation of the three um recommended firms by uh Sugarland Suskind. And um we'll just
kind of go through my memo here um the different categories I looked at and what the differences in the firms are. Um on the core services offered, all three firms, you know, they use different terminology. They really do the same thing of securities,
litigation, monitoring, um providing us with reporting and evaluations of ongoing cases. Um and experience and track record. Wolf Hopper um obviously founded and been
around the longest, but as I understand it is probably the smallest of the three firms. um technology. All uh all firms are um have proprietary software that they
use um for their monitoring systems and um they have all the necessary uh cyber security compliance that we would recommend. um fee structure. We kind of talked
about that before that um there's really no fee associated uh directly that we would be paying. They would be getting a portion of um any claims that they won through court and those uh fee
structures would most likely be set by a judge. So really it's not up to us or them. um conflicts of interest and independence. I'll just kind of read through some of this. All all three firms um exclusively represent
plaintiffs ensuring no conflicts of interest from corporate uh defense clients. Each firm is independently owned with no investments firm affiliations. And then also had the uh at the mayor's request had the city man
or city attorney do a review. And I'll just read his statement. He said there's no legal conflicts of interest were identified. That would preclude engagement with any of the three firms. The city attorney also confirmed that
none of the firms currently represent the city in any other matters and no active litigation exists between the city and these vendors. This clears the way for uh any of the three to be considered impartially. So uh no no
stops there, no no issues there. Um, all three firms have a good reputation and like I said before, they uh comply with all their uh security requirements. So, up to this point, they've all they're all three pretty much the same.
Um, so to find some differences, um, Wolf Popper, like I said, it's probably um what what they call boutique scale. So, they're a little bit smaller, but the good thing about them is they have
existing Florida clients that are our size and they have a good relationship with the FPPTA and especially our uh current custodian, Salem Trust. they actually have a
very close relationship with them and have um Salem Trust allows them to access their system without going through us. So whereas with some of these other providers, we may have to get a statement from Salem Trust and then it comes to me and then I have to
send it to um these whatever the other clients um so that they know what uh funds we purchased and what we own. The Wolfpuffer can actually go straight into Salem Trust and with our permission
see exactly what we purchased and when. So it was a little bit quicker of a turnaround, less bureaucratic kind of stuff, just just uh simpler process for them. Um so that's definitely a plus for them, I would say. Uh Saxa White is
headquartered here in Florida, so that's obviously um something that's a positive and we kind of look for. We like to do business with other Florida um businesses and they also serve many
um other clients that are municipal and around our size investments. So um that leads me to really is like a 1A and 1B kind of situation for uh these two Wolf Hopper
and Saxent White. um Grant and Eisenhoffer, they're really focused on international funds in which we don't have a significant portion of our funds in international. Um so
that was definitely a clear third for me and they are we would definitely be at the lower end of their portfolio size that they're used to dealing with. Um they're not really someone who's going to do come and do many presentations.
Not that that's something we ask of people very often, but um yeah, so I I definitely recommend it here at the end. Wolf popper um as number one mainly because of the close
ties with the custodian and Saxon White as as number two. Um as we discussed before, this is not something where you have to choose any of them. It's not something where you have to choose one. You can have multiple. We could choose to do all
three, but up to you guys. >> Discussion. >> You got your >> I mean, I like um Wolf Potter and Saxina mostly because of the uh focus in either
Florida and domestic as well as I think that um their firms handle more funds our size. Um I do think agree with you that Grant and Eisenhoffer is just we would be very very small fish in their
big pond whereas the other two >> got your light on. That's why I'm >> Yeah, they've uh kind of echo some of the stuff that David just talked about. They were probably the two biggest as far as getting us into the information we needed for this. um they teach a lot of the same classes at the U at the PTA.
So, it's it's been good for us knowledgewise getting to know each one of them and they're they're always around. And I like I said, I'm not sure I see the international presence, but I'm not sure as far as this goes. We truly need that. >> Anybody else? Go ahead. You Oh, you've got your light
on. Are you trying to make a motion? >> No, I just like green over red. Sorry. Fire. If there's a motion to be made, I think Pedro uh has some, I guess, specific language uh for a motion if if we're going to proceed with one whenever
we're ready for that. >> Does everybody feel like we're ready for a motion? >> All right, let's go. >> Go ahead, Pedro. Okay. So, I I think if the board's uh if the board's comfortable, uh the motion would be to
authorize the engagement of um and insert name uh or names uh plural um authorize the engagement of name uh law firm um for portfolio monitoring
services subject to uh final legal approval uh of the engagement letter. Did anybody get that well enough to make the motion? Then and then assuming that one of those mo that motion does pass then um I think we can just if by
consensus I think you need a second motion but it would just be you know authorizing each respective chair to execute the agreement once once we we provide the uh the go-ahad uh and then authorizing Dustin to work with uh each of the firms um and the custodial bank
and just you know putting them together and providing access to the uh to the portfolio. Thanks for keeping it simple for us, Pedro. Um, >> did you get that enough? >> Okay, I'm going to throw it to uh Cohill to make a motion or give it a go.
>> I make a motion to authorize the engagement of Wolf Pa and Saxina White for the portfolio monitoring service subject to final legal approval. >> Look at that. Perfect.
>> Hold on. We have a motion and a second. Can we have a roll call for police board? >> David Cohill, >> yes. >> John Patrick, >> yes. >> John Gutsella, >> yes. >> Jason Short, >> yes. Second
>> motion to second. Roll call. >> George Candler. >> Yes. >> John McDaniel. >> Yes. >> Lance Huish. >> Yes. >> General employees. >> Motion. Second. >> Roll call. >> Nick Curry. >> Yes. >> Christine Hoffman.
>> Yes. >> Eddie Margara. >> Yes. >> And then I think there was a second part of authorizing. >> Can you say that part again? The second motion. >> Yeah. just so so again I don't if if you want to make a motion that's fine but I think just the the the direction would
be to um authorize each chair to execute the engagement letter once once we give the blessing once legal approves um and you Dustin or or whomever as the administrator to put each of the firms um in contact and and direct the custodial bank to provide access to each
of the firms. >> I don't know that we need a motion. I mean, the chairs don't execute an engagement letter, do they? >> That's I think what the motion would be authorizing the chairs to execute the
letter. Um, otherwise, I would have to bring it back at the next meeting for the boards to approve. >> Okay, you got that? >> Sure. I make a motion to allow the police board or the board of chairs to
engage sign the letter once it receives final legal approval. >> That sound good. Pedro. >> Yes, ma'am. >> All right. Do we have a second from the police board? >> Motion a second. Roll call. >> David Cohill. >> Yes. >> John Patrick?
>> Yes. >> John Gutella? >> Yes. >> Jason Sharp? >> Yes. Firefighters move. >> Second. >> Roll call. >> George Canler. >> Yes. >> John McDaniel. >> Yes. >> Lance Hugh.
>> Yes. >> General Blaze. >> Motion. >> Second. >> Roll call. >> Nick Curry. >> Yes. >> Christine Hoffman. >> Yes. >> Eddie Vara. >> Yes. >> Motion carries. All three boards.
Pension administrators report. Thank you. Um, I just wanted to let you guys know of some upcoming pension ordinance changes that are possible. Obviously, everything has to go through city council for a pension ordinance
change, but it's just through some things that were agreed upon with the FOP and then plus some things that administration has notified me that they're going to be taking to council, I believe, next week. um that that we see and I just wanted to let you guys know
what potential changes are coming. Um the general plan will be bring before city council proposal to add language the pension ordinance allowing the purchase of up to three years of credited service for prior public employment or military service. This is
very similar to an existing um purchase um possibility that's exist in the police plan. Um there are several benefits to this um fiscal and um
it's mainly retention benefits and um you know giving some sort of reward to for military and prior um um municipal service and things. But it's it's um a recruitment tool and it
allows us to um reward employees that and and kind of tie them to the city a little closer by allowing them to purchase that extra time without costing the plans really anything because the employee would be responsible for this
purchase of prior service. um the actuaries will come up with um a dollar figure based on um how much that employee makes and how much time they're actually looking to purchase and um again there is a limit of up to three
years and it does have to be for prior service that someone's not currently receiving a pension for. So if you've got a military person that did their 20 years is getting a pension or something that does not qualify for this. they have to not be currently receiving a
pension for that time that they worked. Um there could be some one-time costs. There will be some one-time costs with this. And that's just what I just mentioned about the um actuaries um
having to perform these calculations. Um they're it's probably I talked with uh Kevin Nolki. It's going to be about $575 per calculation. So, that could be a fairly significant number based on, you
know, how many people might get these calculations. Um, but again, that's a onetime fee in relative to the actual plant assets and stuff. It's not um a huge cost. Um
uh there are a couple other changes that could be coming. Uh drop uh backdrop interest rates moving from uh 3 to 3.5% and also um increasing the maximum
pension benefits from 100,000 to 110. that that's actually there' be a step program going from 110 to 111 on 12. That's what's being proposed anyways. Um that again is um focused at retention of
key employees. Um it's, you know, we already running into situations where, you know, maybe potentially, honestly, um Evans comes to mind. You know, he's a commander that was here and
could have potentially ran for chief or something, but he was topped out in his pension at 33 years. And it's like, you know, he's losing money to stay because he's required to put in 7.95% and he's topped out. So, um, these kinds of changes allow us to keep, you know,
those valued employees at the end of their career that could potentially be a benefit to the city. >> Dustin, is that for police and fire or is that just police? >> That so everything that's being talked about is um just general and police, not
fire. fire >> because um we're no longer the plan sponsor for the fire plan as far as for changes like that. You know, any changes would need to come through the city of
Jacksonville. I mean, I would um recommend maybe any taking them whatever happens here. >> Yeah, if you could if you could get me the information. But I know they're looking at changing a cap because we're there's a lot of us that are going to be
capped out if not already, >> right? >> And so I know that's a discussion, but now that we have to deal with Jacksonville Yeah. >> to do stuff, too. It's a little weird to >> I I we're definitely going to have to engage with the city attorney and other people on that of who it needs to go
through because it is our ordinance, but it's financially impacts the city of Jacksonville. So, we can't just change an ordinance impacting them, I think. So, we're both cities are going to have to get together. I think both attorneys are going to have to get together and figure out what needs to be done as as
well as probably the union and other people. So, I mean, a lot of things need to happen. >> Um, moving on, the uh continuing education, we got several people that are signed up for the FPTA conference that's going to be right here in um
Pontabitra this year. Um, it's always bad time of year for me fiscal year end. So, I would not be there. Um, but if anyone's interested in going, it's a um it's a good good time to go with it being right here. Um, we don't provide
the hotel obviously for for that one since it's it's right here, but it's October. It says 5th through the 8th. It it really starts on Monday the 6th. If you're interested, let me know. We've already got a few people signed up. Um upcoming elections, we got some employee
elections coming up for police and fire. We offset the police plans. So, I think uh David's positions coming up um for election here for a four-year term. And then we got the two employee elected positions
uh coming up for two-year term for fire. Um Ed Dawson has uh said he would not like to be considered for the next um run. So the uh city clerk's office is going to be
sending out a nomination email very soon um and running those elections. Again, we don't have our next meeting till November, but the term does end uh here at the end of September. So they're looking to get that move in. Hopefully we can get another employee and and Mr.
McDaniel uh thankfully is going to stay on with us. So keep that position filled. Um proof of life, we still have a few outliers. Did you have something, Pedro?
>> No, no, no. Sorry. >> Okay. um proof of life. We we still have a few outliers here uh that we're trying to collect from. I've got a couple of just stragglers who don't want to do the paperwork and then a couple that I can't get in touch with. One in particular
that was not in the country and I don't have a good address for. So, that's one I'm thinking I'm just going to have to eventually cut off and then they'll contact me when they're not getting there. But um
we're still working toward it. And I did get some clarification from Pedro on a few of the disability members that were in the police plan that we should technically be considering as retirees and not disability retirees.
Even though they originally went out as disability, they went through that five-year term and then it converted to retirees. So on October 1st, we'll be switching them over um to retirees coincide with the fiscal year end and stuff. So you'll see on my next report,
you know, show three less retiree or three less disability recipients for police one. Um, next quarterly meeting is uh November 18th. Um,
3 p.m. Uh, one other thing we're How does the books work for you guys? the idea came up about getting tablets for um the boards and having like 15
tablets, you know, iPads or something like that. I don't whatever the it deemed necessary. Is that something I I got to work with administration on that if it's something they want to do for all the boards to share jointly throughout the city or if this would be
something that the boards themselves would just purchase or or what? But is that something you guys are interested in or do you just prefer the paper method? >> I mean, I know for us, I I have to bring information back when they ask about it
or whatever. What happened at the meeting type stuff and I just reference this and I don't have an iPad to, you know, if it's just here for the meeting, I wouldn't be able to give them any specifics. They usually don't ask too much, but when every once in a while they do, and you're so
have strong opinions either way on this. >> Okay. >> All right. That's cheaper. >> Well, >> if I could just We just talked about the next meeting being at 3:00, which is the normal with the three real estate presentations. Are you still comfortable
keeping it at three or do you potentially want to make an adjustment earlier just to allow time? Totally fine either way, but just want to throw that out there. Yeah. I mean, realistic, if you give them each 20 minutes or so, that that's that's one hour for that portion and then the regular meeting after that. I I
just I just wanted to throw it out there. I didn't want to However you want to do it. I just wanted to mention it. I um I'm not sure what the Robert's rules on this are like if we would need a motion to I mean I've changed the obviously this meeting
changed without needing a motion but >> well you could um just do it as a special meeting. >> Oh >> like have this as keep 3:00 as our regular meeting but then add on to the front of it as a special meeting. >> Okay. >> Instead of having to change since this
one's already been posted. Mhm. >> And then we'll just allocate how much time we need for that. Any other questions, comments, concerns? Motion to adjurnn. >> Do we do that in this one? Go ahead.
We'll do it for good measure. Motion to adjurnn. >> Sure. >> Is there a second? >> All in favor signify by saying I. >> Any opposed? Meeting adjourned. What' you think?
[Laughter]