Good afternoon. Retirement Systems Investment Committee meeting number 74 is now in session. When I call your name, please state your present. Salary. President. Jonathan. Aaron, President Anthony is now virtually
present Joe nickel buried in virtually.
Investment president
before I seek approval the minutes is there any discussion or commentary on the minutes that were submitted?
resolution that we did that look like a couple of paragraphs were out of the water?
So, that was a fifth. Maybe I didn't get the latest one. I didn't get the latest one. Yeah, it's been corrected. Sorry about that. Okay.
Any other discussion on the minutes before we seek approval?
I'll move approval, support.
All in favor? Aye. In addition to seeking approval of the agenda, towards the end of the meeting, we've done a refresher on add some evaluation and discussion commentary. Kevin is our chief investment officer. And it's going to be added to the agenda towards the end of the meeting. Other than that, seek approval of the agenda for today's meeting, please. On favor? All right. Why don't we go right to the consultant report from any PC. Thank you.
Thank you. Great. Good afternoon, everyone. And before Margaret, I jump in, we have one of our colleagues on the line. So Colton, if you can share your camera, I assume you're on camera, because Laven Colton is one of the senior research consultants on our private debt team. And obviously a big part of today's discussion is recommendations for implementation of your commitments for 2024. So we'll get into some of the underlying cutting manager discussion. Tom, did
you have a question? Because you're certain there?
Yes. Okay. And we also see Kim kazars. I'm
Kim for I just assumed need a slide?
Great. So we're gonna
we're gonna start with the presentation titled opportunistic credit private debt implementation. I'll
do it indicated on the private debt correct.
When we get into the manager discussions about the recommendations, we are subject to confidentiality agreements with some of these managers. So it'd be our request that we go into executive session to discuss some of the details of these features. Very
pleased, please, please continue to let
us know when we get to that partial.
Couple of callers that aren't on mute there. We call it three.
Probation should move over now. Right that listen.
All right, well, let's start on page three of the deck here. So at the April IC meeting, we had presented to your private debt pacing plan. And we targeted two targets. We targeted a 10% allocation of private debt, which is really your current allocation to private debt. And then we also targeted a 50% of private debt. And we showed you the different commitments and I'll show you some slides to remind you of what those commitments and pieces. But your current policy today does have its 15% target to what's called opportunistic credit slash private debt. And that 15% is allocated as 10% private debt and 5% into convertible convertible bonds. So those convertible, excusing convertible bonds that are very liquid. And so they have been sort of grandfathered into this opportunistic credit. But the idea is if you choose 15% Target's private debt, that 5% allocation to the convertible convertible bonds, I can't say the name, gets liquidated and terminated and will be rolled up into that new target of five 15%. So I'll walk through this again slowly. So you could you could follow through
the question, how does this 5% allocation to convertibles differ from the allocation that we already have with advent? And? Yes, yes. Yeah. So.
So the idea would be an add on an SSI would be liquidated in order to fulfill your new target to private debt.
Okay, so they would be liquidated to fill the 5% allocation to compare and correct
if we take a step back and get away from like the liquidation concepts that you have as far as a 10% private debt, and then you had higher the convertible managers as a way to it was an income play into the portfolio. That was also before you really reopened your alternative Credit Allocation when we were really focused on looking at income generation, but not allocations. Applause. It illiquid strategies, You've now made the decision. As you know, you've closed private equity and closed private real assets, but you made the decision to keep your private credit portfolio open. And so this would just be replacing convertibles, that 5% target to convertibles would then go into a 15% part into what we would call that opportunistic credit private debt, which ultimately if you approve that, and we have to talk about the implementation of like to be terminated immediately, or we use some of those managers for future funding some of these off credit. But yes, that would ultimately mean that both IBM and SSI would become come out of the portfolio.
Think to about when we funded convertibles, the interest rate environment was significantly lower than it is today. So in private credit and direct lending, the spread over Sofer is giving you a net yield in excess of 10%, which did not exist when we were seeking income via the converter. I get
all that I really get all that. But I guess my question is that you were saying if we make a 15% allocation, opportunistic 10% goes to private debt 5% goes to convertible bonds. My question is how is this 5% convertible bond allocation different from the convertible allocation that we already have? So if you're wondering the same that my question is, why are we placing someone convertible to be investing,
we're not reversing convertible you would be so you have 10%. And today 5%, the convertible, a new allocation would be 50%. Off credit zero to convertibles. Thank you.
I'm trying to understand, because that's not what I was hearing.
Okay, so I can show you on the following page, which shows me the PC if you remained at 10% target. So as you are today remain at a 10% private debt pacing, it would call for about 30 million commitments over the next few years. And you could see it goes down to 20 million, but we run three rerun these every single year to adjust for what happened in the previous year. But if you go to the front page, and you do approve, terminating the convertible convertible bonds and you go fully into 15% target to the private debt, you can see your pacing is a little bit higher. So now you have about 55 million over the next few years. And then again, it comes down a little bit. But given we're trying to hit a higher target now the first few years, you're going to have a little bit more commitments going into the space to try to reach that 15%. And you could see by the time you were around 2029 That's where you would be hitting that 50% target. Again, this is an estimate and we work pretty run this every year. It could be a slower pace or faster pace, but depending on year over year, how how the economy, how things are moving in the economy with capital calls and distributions.
And that's the important specifically that we talked a lot about is that you know, the decision to go further into these cloud providers the importance of doing this year in and year out for you all is if we needed to slow down some of that pacing because of some liquidity needs. We can adjust that.
On the following page, we are showing you here how the private debt portfolio looks today. And we're showing it to you in a couple of different ways. So on the very top portion, you see it by vintage year so these are the strategies are rolling up five vintage here and you can see three different ones there 2031 17 and 2021, you've committed 170 million in assets. However, if you look at the very bottom of this page, it does not reflect the 20 million did react with combat six. So if you add that in it will be sorry, 20 million. So you can see the 190 million and commitments since inception of the program. You have a question.
The Board approved a $15 million investment, June 12 of last year in combat six, and it's never appeared. Thank you York's reports.
So you originally you did 15 million Yes. And that and then we ended up. I don't know why they quit. So you committed 20 million in December. It was it was brought up back at the December meeting to begin 20 million minutes
for December. Two minutes for Judo left 50 million comments. Each unit was
approved. I think December might have been the first time they called
within, it doesn't show up in New York statement. And we make the investment
date that you got into the last closing for the New York State because you hadn't drawn they hadn't drawn any money down from you effective as of 1231. What are we waiting for? You were doing legal docs, and then to get the legal docs in the last closing. So um, as we sit here today, they call assuming that they've called somebody down. So as to
show up under the property. Which POA report here? I've got the April preliminary I don't see it there.
So Kailyn what Tom's referencing is on the April flash report on the private new debt, we're not reflecting if there was any money called for combat scores
here but not six.
You will reach out to me and why I mean, we take
we made where you got the 20.
I will confirm 15 or 20. If we need to find it. Okay. It's not so the money that has been called down is it's I don't know if it's just a lag with BMI because of getting reporting right in Congress. But we'll look into that.
It should still show us an account when you create these accounts or Bank of New York when you're notified, we've made this investment, something we don't notify now.
There has to be an account at the end why I think what might be happening here is the interface between the analyzer performance team. And if you see there might be a disconnect. But we can tell me right that it was approved in June of last year. Yeah.
I can find it.
I'm just pulling up the BMI just to confirm that it's when you approve it. You do legal docs, and then you close all of that a
year later. And that's what's showing up. That's my point.
We'll get Kim, let's look into it being wise reflecting on their statements. And if not, we'll reach out to BMI to make sure that they're getting the statements directly from contest. So these are these are line items. So
285 million. How don't you make sure
Kevin have the legal documents been completed with combust deaths last year
just a reminder, that as long as that statement you're looking at is as of 1231. So this is your IRR. So Page Six is the money weighted IRR calculations which we produce for you on a quarter lag. So we'll be producing shortly and 331 valuations and we get those statements and the values directly from the IRS.
So you said Yeah, so you can see also in the middle of this page, we break out all of the managers conduct should be on here so or contest will six and we'll look into that. But all of them are performing as expected. You can see the total IRR all the way to the right is 9% You know they are in different stages of the lifecycle of their funds. But what we are going to be showing you today we're gonna be walking through some managers. Not only is Churchill out with their next fund, so we will be talking about Churchill as one of the funds to potentially re up with contest is actually out with their funds seven we are not recommending that today. ACC just invested in one to six. But there are some other managers we're going to be considering. So if you look at page eight, you can see on the bottom of the page. Well, number one, Churchill, as I mentioned, what do you want. And then there's four others here 400 capital, there's driftwood, which is a diverse candidate, we have Monroe capital and senior golf. So I'll pause there, I think we do want to go into a closed session before we get into any details. But those are the those are the funds we'll be discussing
today. And just just just as a 30,000 foot observation is when we embarked on a private credit mandate, roughly eight years ago, think about what private credit has returned to us, traditional core fixed income has been less than half that return in the last three to four years. The Bloomberg aggregate bond index has stood is roughly negative on an annualized basis. So from from a introducing the right asset class, within the context of the total portfolio, private credit has done significant to the returns, where the money was before in traditional core fixed income.
And even with the outlook for core fixed income to be much stronger when we think about where we were to where we are today, where our expectations on investment grade core fixed income, on average of a 5% rate of return over the next 10 years, we still think opportunistic credit. As you continue to structure this is low, I should say high single digit Netta fee type rates of return. So we think about the spread of return data that you might be talking about your net IRR as 9.01 versus a negative for the bark, AG, even on a go forward basis, we assume on average, you get a 5% net return from investment grade liquid credit, we still think that opportunity continues to be there within opportunistic credit. Let's call it a 10%. Spread that you got. I don't think anybody was thinking that. Let's say it's a four to 5% spread. So there's a lot of conversations about how much private credit there is in the market and optimistic credit. Is that return still there? The answer is yes. It still call it nine to a 5% rate of return outperforming expectations, right, like a 4%. Arbitrage, we think still
exists. And that's, that's excellent sets the table now for more individual manager discussions. So Michael, do you want to lead us through going into closed session, please.
So the Open Meetings Act right allows you to go into closed session for very specific purposes. One of the references in the Open Meetings Act is to other provisions in law that offer that and if you look at public act 314, which is that state statute that applies to all public employee retirement systems. There's a specific provision and 314 in Section 20 out that talks about if you have information that is of a proprietary nature, that has been submitted by an investment company for an investment, either real estate or alternatives, then you have the ability to consider that information confidential, comply with the request for confidentiality and to go into closed session to discuss that. So, it would be appropriate for the board to consider the investment committee to consider a motion to go into closed session pursuant to section 20 L of the public act 314. Excuse me, 1965. For the purposes of discussing the information related to the private debt,
material non public and it's
non public, its proprietary, it would cause a breakdown in the competitive nature of the different investment. You know, The Act defines financial proprietary information means information that has not been publicly disseminated or that is unavailable from other sources, the release of what of which may cause the portfolio company of the investment, fiduciary significant competitive harm. Financial proprietary information includes but is not limited to financial performance date, data and projections, financial statements, list of CO investors and the level of their level of investment, product market data rent, rolls, leases, things of that nature. That's what's covered with materials. Just
wondering we're doing about the Collins.
We will we will have to remove them because Colin is going to cope was going to stay
because he's foreign state Correct. Anthony, individual
will have to go. Kim
case as well
was killed calling for. Let us know.
Could we say this would be a 20 minute conversation during conversation at a time to it was a 30 minute conversation and then we jump back in. Right.
Very good. 30 minutes,
I'll take any action while we wait. So for those of you online, the committee is likely to go into closed session to do a motion and vote. And we will not take any action. in closed session, we will only take action and open session and we will convene back in open session at 1240 1215 1215.
Very good. We need a motion to go to closing. All in favor. Hi.
Roll call roll call. You need a roll call. I'm sorry to
make sorry.
i Yes. Aaron. I
Anthony, Sal.
I do want to cover
June, are you there?
Yeah, I see here. Yes.
Yes. Yes. Can June, can you and Anthony just confirm for the committee that there is no one else in the room with you to protect the integrity of the closed session? Not
only for lights?
No, college has gone? Oh, no. So
color two was still there. Or two could be one of the
robo media.
You can excuse it? Can you excuse our two, we're going to excuse you. We're going into closed session. And we will continue to get to a 55. There we go.
Rates, covenants. And then to add to that, should we be concerned about real estate loans by any of the managers? And lastly, this very long question, the opportunity set in Europe versus that in North America? How are the banks in Europe bearing on the lending verse here in North America or the interest that these managers are able to extract in Europe or North America?
I'll try and think through those. I don't answer. So as far as a competence question. So as far as confidence goes, the smaller there is the further down mark, you go towards smaller companies, more covenants you tend to get. So something like a Monroe or Breitling like a 234 covenants for deals, whereas Churchill will will further up market, they might get one or two that play around kind of Max leverage on the underlying portfolio company. So they're still getting covenants called blight, that money is a trend in the market. But again, it tends to be at the highest end of the market, which competes against broadly syndicated loans, because those loans have to be exclusively white. And in order to be competitive against those, sometimes that matters, you have to kind of match those sorts of terms of documentation. So it's not an issue for any managers we're discussing here. They're still getting comments, but it's certainly a good question. As far as default rates, so we haven't seen an uptick in the fall rates thus far, that says, when you look under the hood, there are some kind of signals that things may not be going perfectly in some portfolios, whether it be kind of decreasing interest coverage ratios, now that we're in the second year of higher interest rates, we've seen some kind of covenant breaches or amendments to loan docs. And this is broadly speaking across the market. So again, nothing. So you're getting the follows and it's still well below kind of the red flashing warning sign levels. But when you open up the hood, there are a couple of concerning things, particularly for loans are made maybe three, four years ago, when folks didn't necessarily anticipate a race to be where they are today. That said, again, that talking from a broad market level, we look at this extensively part of our manager due diligence in there ability to work through potential issues. So we tend to favor manners that are more conservative, you have the capabilities are reserved for capital and maintain low loss ratios. So all the meetings we're looking at today, I flagged a couple of errors, their loss ratios, but it's also kind of one or 2%, which is below the broader markets. And we're looking for the best in class managers and preserving your capital. For US versus Europe, the pricing and terms are pretty similar between the two markets right now, up until 2017. The European market really kind of lagged the US in terms of markets has been developed as quickly so there's less competition. So you can drive a bit of return premium and maybe tighter documentation that sort of kind of evened out around 2017. And since then, they've been pretty similar. So I wouldn't say there's necessarily a premium or we have a bias between US and Europe right now in the markets. Both are kind of relatively similar as far as tracking. And then I believe the last question was our real estate. So the only manager that we've discussed today that nimble investing in real estate is former capital. Again, they do extensive experience investing in space, they're not new to the market, they're not a tourist, they could attract or invest in space, many different market environments, they're triggered again, over decades to get them through some ups and downs, and been able to preserve capital throughout that period. There could be issues within the market, again, broadly speaking, this strategy will look to be a little more optimistic. So they might look for opportunities to get access to deals and flight discounts. Even if it's a performing credit, that's just kind of discounted for market sentiment, or the look for deals where maybe they can turn around real estate, improve it, and then from there, and so that kind of their specialization is being able to do that. So if there is any kind of broad market downside, they're kind of particularly well set up to capitalize on that opportunity. Thank you, not answer.
Yes. Great.
Color six.
Color six, would you please identify yourself?
I don't know if I call her six. But this is John Nichols.
Yes, you are. Thank you, John.
So I'm trying to understand some some of the profiles, it was indicated that the managers use the lever unlevered times, which are we looking at levered or unlevered?
So called the question is that some of those strategies and strategies offered both levered and unlevered. So the ultimate decision is up to you all. So the strategies are the same. It's just a matter of the leverage that may be cold and talk about the attractiveness of a levered vehicle and the risk of electric vehicle and before he jumps in, when interest rates are obviously much lower. The levered options were attractive, you're borrowing money at a low cost and the arbitrage. So I think there's a there's a lot of kind of discussion today about with interest rates higher, Are We Now assuming more risk, if we get into a leveraged fund, so called maybe you can hit that?
We mentioned most of the funds that we went through have both leverage on leverage often. So again, you'll have the ability to choose which which is your preference, the leveraged funds historically, and broadly speaking, have tended to add around 200 basis points, the net return for most strategies, so is a returning answer to all that said, given where we are in the interest rate environment, a lot of kind of unlevered returns are pretty compelling, and same loan basis right now, that says, These are kind of multi year private drawdown vehicles. So you might be investing kind of over multiple years, and we're not so sure where the interest rates may be in three years from now. So that's just kind of one consideration on a forward looking basis, but right now, you can get some pre compiled returns on on number basis without taking on a potential added risk.
Again, so to be clear to on these managers, they mostly strategies are extremely conservative, so we're not overly concerned about them applying some of the leverage, broadly speaking. So it is just supposed to be a slight enhancement tool. If you do want that kind of potential added maybe two or 300 basis points return, just
like we're talking about the rest of it. Obviously managers are assessing that risk as well. I guess there's no direct question. I think bringing this back to kind of a decision tree. Like there's the first step. And Kevin, you can chime in as well as do the questions that we'll put on the table is do we want to go to 15%? In true opportunistic credit, yes or no, which will dictate the 30 to $55 million.
Within, I would like to
think we've demonstrated the risk reward. Top down is more compelling in direct lending than convertibles compared to when we first invested in convertibles in particular.
One motion to approve that, I think we should make a motion. Second. All in favor, aye. Great. Now the second decision, we'll throw it on the table, it's we've got five managers that we just discussed, again, the real recommendation with Churchill. And then the other four managers
we talked about, like 15 million for each. I know. So
obviously, we would like bigger check sizes, so that has more impact on the portfolio and
remind everybody we did look at another investment with Seminole trusts. A year ago, we approved it, and then Wayne County coming up with their part of it, they have now they pay 8% on the mortgage trust every quarter. This is site plus b is going to do the same thing. Last year, they gave a 1.25 bonus. So we get nine in the quarter last year. It's almost I don't want to forget about this as an opportunity for getting getting rid of the convertibles, I think this fit right into we're gonna get 8% using multifamily solar. So I'd like to put this in the mix as we're designing.
Before we can maybe this is the time to also discuss about so now the decision has been made to just step back and say convertibles will not be part of the investment policy. Correct. As you invest in these funds, they draw money down over that two to three year period of time. So I think the implementation question is, do we terminate them to managers immediately take that money and put it elsewhere in the portfolio, which ends up being utilized to fund future commitments? Or do we use? There's kind of quasi and we use part of it now key part of the convertibles and draw that down over time talking about
55,000,015 here, you've got 50 To go 40 to go? Yep. 22 others?
Yep. So I mean, our recommendation, I think our choosing our recommendation would be to just to liquidate those portfolios, use whatever we need for cash purposes, some of the capital calls and then have staff makes a determination on what would not be needed immediately can be put back into the overall asset allocation of the portfolio, ie things like US corporate state come to the cash or even if we needed a little bit of that to true up some of the global equity portfolio that could be easily done.
I've got questions on cash side now what we're gonna do the private debt like unroll? Everybody over,
and a convertible liquidation? I think it's a question of opportunity cost opportunity cost best elsewhere to proceed with liquidation sooner than later.
So they would need to make a motion to terminate both of those Yes. No. As we approach the fiscal year ending at the end of the month, we look at rebalancing from the asset allocations extent we can look at allocations, so it would go to whatever asset classes is most underfunded, which would right now is probably probably more reason to
just want to remind everyone, there's a lot of money that was now coming from the Terminator managers, and we got the $82 million in state put their money in. And I've got questions on cash.
So that is part of the discussion, we're gonna have caching
so you can liquidate them. Point the time going forward. July one or August one effective, whatever you want to do if you want to slow it down, but it is independent cache. In fact, you're saying don't do it. I think it's I think
I think we have consensus liquidation and I'll make the motion to liquidate it. terminate and liquidated, terminate. Do we have a second support for All in favor? I
go back to the Churchill. Churchill and one of the more
we have 55 million to commit to so I think you know, I think two to three is a is a is a reasonable, there's enough money to allocate doesn't
I don't want to forget summit all I want to do that there is a three year deal. I mean, it's a 710 year deal. This is a three year
I'd like us to think about as we as we work through the decision trees, Kevin mentioned, we have dollars to allocate. I think we have good options among many good managers. And I wrote down to think about what each manager brings on a risk reward basis. Our experience with any of the managers in the past and then maybe think about it like you might a equity portfolio, your asset allocation, how they all fit together, we're not 100% large cap growth or small cap how these managers on a on an asset allocation work across the size of the companies that they invest with in light of their risk reward. So I thought that was a good way to begin a discussion before we start just putting out different names and different combinations
I've already been in past I think, maybe does it because it helps everyone kind of state their their top consensus is down
22 Churchill, 22 Monroe and 52 Seminole 55 D
I like a combination of right wood signature golf doors,
I like the combination of Churchill and circular golf. I thought this combination was good for diversification. We talked about Churchill being conservative, investing in sort of the larger companies having a really large portfolio of holdings and secret with golf, on the other hand, being somewhat a little bit more diversified in terms of their exposure with smaller companies that they are lending to. And, and that they have would provide a little bit of equity to the mix. In terms of in terms of investments. So I sort of liked that aspect
between the real estate
of 400 So call you can chime into this. I mean, you probably can't hear foreign capitals.
Okay, John Aaron.
My first pick was Monroe I like just their type of companies that they are always that they're focusing on. Churchill was going to be one reo. I was opposed to the real estate concept. And so I make cold ones tend to be a contrarian and I think while others are running, there could be opportunity with the proper underwriting and if you have conviction with that manager, I will be favorable to an allegation. Anthony you're on mute.
Yes, and allegedly should be hopefully, yes. Yes, yes.
Okay.
If I think of all the streams of the conversation, I becomes two existing managers. I like the idea of Churchill. And I hadn't really thought a percentage of this is going to be transparent. So I was interested in based on a lot of what Colton shared with us the state of the materials on right would be good.
All right, June, please. You dropped off when we close. All right. She comes back in welcome secret opinion. And I tried to work with that risk reward partner firms asset allocation. And my feeling was Churchill. Sigler second.
Monroe third.
I like you when you hear small business owners to Sigler when he hears small business, he thinks risks, but their downside protection was very good, their loan portfolios good, and they outperform their peers by 300 basis points. We've had good experience with Churchill. We did that one row a few years ago and they were good than we did not for them. And they're as good today as they weren't that was a look at how it's all kind of falling in. Spend more unit enmity with Churchill Sigler golf. And then I think the other two that come up are Brightwood in Monroe is I think that that to speak for my committee members. We have more unanimity with Churchill and Sigler golf camp, we're doing a third allocation we have on the table Monroe and Brighton.
We got two people interested you can take them off.
Nepal, I think the selections and explanation was very helpful.
And as far as I can respect for the times question at seminar, I don't think we have to make a decision at this meeting. I think we have a meeting in August we can decide we want to allocate capital,
the 80 million coming in from the convertibles. We've heard money's going to be there. Right? When you're probably.
Personally, I think we should at least wait because right now we're talking about direct lending seminars that is a different animal. And how does that fit? In terms of institutional quality with the managers we're looking at? Recognize we've invested with Seminole a long time, but are they still the same institutional quality? Is that is that is the managers we're looking at today? Well, your
apples and oranges.
Which is why maybe we revisit some of our August meeting. Alright.
All right, I think we have to get more in consensus with how about entertaining more discussion among us, if we want to add some combination of Monroe and or Brightwood?
Yeah, so I would like to I'm very interested in the sponsor, versatile sponsor diversification portfolio. We say that we are complemented they do a smaller deals seem to be diverse. First manager, definitely a benefit, especially in the process, I think we're terminate those managers. So that's something to consider and look at how we want to add them into the mix. more aggressive than Churchill, but you know, smaller, smaller, smaller companies in different sectors of golf. I do like Samsung to go for, especially when they really need to invest the cost of capital structure, I think that's going to happen too optimistic. Of course, I like their fees. So Churchill being an incumbent. And I really would like to see what kind of benefits Braidwood can bring to the portfolio.
So we've decided that the right
level, and it doesn't have to be one or the other could be a combination of the two, three or four. That's always open for conversation.
I mean, so sorry, we weren't whispering behind me back. We were discussing. So the commitment calls for 55 million, right? We talk a lot about how that is a, you know, that's an estimate, right? You've got we will run we're talking about 55 million next year. So I think what we're saying is if there is enough if there's not consensus, you could allocate all four and you could dial the commitment up to 60 million and figure out a way to split I know I'm joking when you're when you're when you're living maybe we're gonna continue to be building up this portfolio right next year while you're sitting at the table and hopefully we are talking about a recap, right, potentially with some of your system managers, but right your 15% of your overall portfolio will be targeted to officers Mr. Credit, we are certainly not looking to build a portfolio of 1520 underlyings. But if the rest of your overall portfolio, you want to build out a diversified portfolio, first of all good strategies that we want you to build on, and then obviously, diversity of underlying funds themselves. And here,
Monroe is going to give us a 1% fee on this thing
called the discount that we were. Yeah.
the carried interest tax why, like, there have been $16 billion assets under management, they know what they're doing.
And so were you able to put
together no fee negotiated.
But we do have been negotiations with Monroe Sigler and Churchill. And if we were to do more he's on.
Like, with Colton, as I'm looking at you probably quicker private fees on committed or drawn,
leveraged to run leverage.
They are invested in equity.
So that does help because it's invested not committed
to one. Right. Okay. All right. Because they charge on equity as well. There's they're not charging, leverage. Leverage. So just want to
select the leverage or under leverage, we have two
choices. Correct. So I think I think we should be consistent with that viewpoint across all of the managers offset both and just leverage, leverage or on muttered.
He's asking what? Oh,
I'm sorry. I'm trying I'm trying to answer three questions at once. I've got this going on with me. I said yes. He said, Yes. I mean, so I think our our viewpoint is, is that still allowing managers to utilize leverage in this environment we think, is beneficial. And it's a big piece of when we're underwriting managers to be comfortable with how they utilize leverage and understanding in this environment, there's more risk in the use of leverage, but our confidence in the managers ability to apply it, where they think it's a prudent thing to do. So we believe in leverage vehicles.
Appreciating Tom's comment about four managers. We can consider Churchill's just to re up, the original fund is going to zero even distributions. How say one allocation to entertain, could be 20 to Churchill, 22, Sigler, golf, and 10 each to Monroe and in bright.
Women can't make a decision just with everybody, right?
Well, that's where that's how companies operate. Like, a sausage factory
will charge you for the second way? Like, well, I mean, I'm indifferent. I could go either way.
find myself the same. Yeah, he has a compelling reason to go or
other discussion on a potential allocation that I just offered up?
My preference would be to do three that you know if the rest of the committee feels that four is a good number. I'm happy to go with four I would just prefer to do three. Three.
And when you say three, I could go either way with Churchill's one of the three natural
fibular golf. One, two, and I don't I'm indifferent between right like in Monroe. I like Monroe a little bit better because I just I like I just liked the fact that I thought they had a deeper a deeper staff. So that's why at the most high level that's that was the only reason I just leaned towards them. Thank you, but it go either way.
ditional discussion
I guess it's up to you
everybody, that's why that's why we operate well, as
we've all said, we could go either way. Think about just Because I don't want to put words in my mouth. I believe Anthony had said Brightwood over Monroe. I mean, if you've laser focusing, I thought maybe I'm wrong, Anthony if I don't know if we have more than two minutes ago, and I did say
Brian would even access.
So maybe that's the discussion. We're gonna go to three than I think is a good discussion, maybe a poll vote to say Right.
Or I'm in row
number two in favor of enrollment.
I'm fine to go with right. I'm fine to go with, with the eyes habit.
Tom, your perspective, please. Churchill. See, gotta go with that singular and liberal. It's really just a question when right when everyone's on church and secular. And we have So
personally, I think men are always more Institute's institutional quality, recognizing the merits with bright
and they were one of the three. So that was my three to me. That was my three. So I mean, if we were going back to the same three, I think we're not going to make any progress.
So what's the value of bald spots versus non Spicer? Deals?
Colton, I put that back to you responsive versus non sponsored.
Yeah, so non sponsor deals tend to get a bit of a return premium relative to sponsor because there tends to be less competition, those types of deals. So it might be kind of 1%, one and a half percent higher than a sponsored deal. And similarly, because of the limited competition, that markets tend to get some tighter documentation. So more covenants, stricter covenants. So there's benefits. On the flip side is, those deals tend to be a little harder to find involve a little more work, you kind of have to pound the pavement to find them. So there's pros and cons to it. And at the moment break would be the smallest of the companies that we like that Sinclair catheters
I would just look for the compliment. I think they complement they're different than other 365.
So maybe we're back to where you get suggested 2020 1010.
Maybe the compromises were really adding three one is an existing record
I guess are leading the conversation with the there is diversification between them. And then it's not impacting fees when we think about like these aren't asset based fees when you think about like a traditional vendor. So it's not the your quasi increasing fees or having a
super consultant. Both very good, Kevin. Yes.
I will move to Ohio for outside he couldn't do it here the mobile application I moved to add Churchill theater Well, secret golf, right would in my role as a for managers for our private debt application. 2024 How much?
We might we do need the allocation.
That was $20 million to Churchill. $20 million dollars. 10 million, and 10 million.
So here's an even better way. We're eliminating to managers. So our net scores Where were you?
Any further discussion? All in favor? Aye. That's how good committees
work well altogether, I think
we will take it as a hopefully a compliment that if we make it difficult for our clients to make decisions like, it just it means that we're going to appreciate them more and to move forward with these managers. Very good. Thank you. Thank you for calling turtle fishing. All right, Margaret, and I owe you a couple of days. evergreening.
That's pretty good.
You tickets to the next court side CoreSite Celtic Sea.
The last agenda item we had? Well, we had to two items. We had the discussion about the Blackrock short duration fund, and then performance as well. With the help what we do the Blackrock Corporation discussion for this? Yes, you're looking at?
Going so I can say,
Okay, so first of all, it was a lot of questions about the performance of the Blacklock short duration fund, if you could turn to the April flash report, page six. So we did a full audit of the Black Rock short duration fund performance, and we work directly with black rock, and we work directly with the performance that we have been shown before, I want to say to you is when we do we do a time weighted performance calculation on when you're looking up the managers on this on the splash boards the performance, time weighted basis, stop and moving to a different direction behind his back, that v and y have started the Blackrock short duration fund, what that is, is all of your separate account managers, at the end of every day, any cash that they have in their portfolio is swept out of bn y into the Blacklock short duration portfolio. So it is a money market substitute. I'm sorry, I've been looking at your bed yet, right. So that is a so when you think about everything, when you think about a traditional custodial services, when you have a separate account manager, the traditional way is is that the manager that at the end of every day, if there's cash available, that's not invested in stocks and bonds, because God will sweep that below $1 into the custodians, what we call the money market, when interest rates were low, and this portfolio has been in your portfolio a long, long time, you all as an enhancement to what you would get from traditional money market made the decision to utilize the Black Rock separate account to enhance your cash. Now the reason why when we were showing the performance and there was a big spread between the return is the cash flows that go in and out of that account. On a day to day basis, we all is massive. And when you're doing time weighted return calculations, when you have date day movements of millions of dollars, it gives you kind of just crazy performance numbers just the way these themselves. So what we did was is we went back, and we did that audit again with BlackRock and got their month to month performance. And the way they do performance is on a day to day basis, the way we do performance and every other consultant does is month to month. And so when you have this massive cash flows, and on a day to day basis, we don't have the ability to do day to day performance. So the numbers now, what you're seeing, so for example, the one year performance in that short duration is 3.3%, outperforming the benchmark return of 2.7. So what we're doing is we're utilizing the Blackrock performance and putting into our performance because there's no way we'll ever match because we do the monthly performance, and you need to do the day to day. So I think the question on this portfolio is with interest rates the way they are, do we really need an a separate enhanced cash portfolio, which becomes an administrative problem or two? If the answer is no, then we just go back to utilizing the be and why money market suite vehicle for each of those. That would be our recommendation given where interest rates are. And given the ability within what being wise money market fund,
essentially the Blackrock is outlived its usefulness correct. And it's too complicated. Correct, within the total portfolio? Correct.
So our recommendation would be to, and this is not a reflection on BlackRock, they've done exactly what you've asked them to do. It's just at administrative structural, to just go back to utilizing your custodians sweep the traditional sweep vehicles for each of the underlying them separate kinds of
very good time. That's what I've seen the return for the one year it's a 3.3 Extra paying 5%. So this
is a custom benchmark, this is ridiculous.
Let me just go through December. In that account, we had $53 million. In February, we had $26 million. In March, we went up to 40 million incorrect. And now we're at 99 billion
crimes. And this is just all your separate account managers, whatever their residual cash balance will get.
Let me cash over here just captures another client for just cash. December 39 million. February 11 million, march 29 million or 25 million and now 84 million, and there's no return witnesses. We've got two cash
accounts. So so the cash is your is your separate account that you haven't BMI, which is used for cash purpose systems,
I can't follow what you're doing here. I mean, to get to cash accounts, what was sweet
about that as a sweet vehicle for your underlying masters? That is, that's what we just finished, that's not cash that you that you would use for operations, that is cash available, that the managers can utilize, except
running out of cash that has no performance there.
So that is the that is the BMI sweet vehicle that they have in there. You
can do sweeps
would be ideal. So
Kim, are you still on? Or no?
I guess they're still here. What is the
April performance? You can see these two accounts? Yeah,
yeah. So the so when we say short duration investment grade, that is your mantra sweet. Okay, cash would be a cap time, and you all use that as your Operational Cash account. So the money can first the money can fluctuate based off of your terminating managers and swept into there, what's, what's the government money market account at BMI, which is probably yielding about a five 5%. So I think what we're running into the same issue here is the cash flows that are coming in and out of that portfolio is skewing some of the returns that we have because of the daily versus
monthly. So just to get the confidence.
We do know what's going on. And it makes sense. I mean, you're trading there,
all the international and emerging market and we're going to global
money, that's when you terminate a manager and if that manager liquidates the money before you fund the new manager, it would go into that cash account. Okay. And you're also paying, and I would assume that that's where if you need money to pay benefits, and Kevin liquidates money. So this is a point in time to you're looking as of April 30, there was $84.5 million. The next day, there can be $74
million, depending on where it stands, oh, I just want to know, what
gets earning it is earning the money market equivalent that you're getting from sweets,
you don't have to sweeps when you told me the investment grade was a
sweep the investment grade would that will go away as a line item in your portfolio if you approve this, and then it will go back into the money manager account. So the cash correct. So at the end of every day, sorry, into cash, your cash account into your sweet sweet vehicle sweet Ramallah cash. I'm trying not to so we don't use that. But yes,
we will always have two accounts down, we always have the cash account, which is essentially the checking account to pay the bills, they pay everybody out of that. The sweet vehicle is when a manager buys and sells stuff at the end of the day, they have some cash, right? They sweep that into a sweep vehicle. We've been doing that at BlackRock, it's now going to go and be
talking about an operational account here. It's just the cash account of $99
million. Correct. And that is invested in government money market account. Correct? It's already interest? That's
correct. So you really have to, because to Toby
right now, right now, there are two super accounts. Corporation account, that's all the manager cash, that's okay. You can really, we're gonna get rid of it. And though that cash is gonna go back to B and y, the managers have direct access to that cash
has to look right to me when I look at your cash account isn't a sweep account, so that we're clear the cash account in cash is correct. When we use the
terms we think about that being the cash that the managers that when I use the term cash, that's your checking. your checking account is for you to run the fund. It's your Operational Cash that oh, that's invested in a money market account. Okay, so that's invested in money. Can you control that? That's you putting money in and out of that? What we say sweep is if a manager has $20 million, they can buy $20 million in assets and you would have zero cash at the end of the day. They typically will hold anywhere from one to 5% in cash and that manager correct that gets today, the NY wires that money into the Black Rock, enhance cash account and then they have to wire it back in
now this one up you as a committee
maybe many years ago, it was even longer duration parameters in
here that discussion here, someone making the motion with respect to Black Rock. So the motion would be terminate to terminate the Black Rock short duration, correct fund and utilize why why and why? Money Market? Correct. For this work cash sweep
accounts for the manager cash last week. And we will have to work with Devin will have to work with EMI to set all that up to notify the managers with all that administrative stuff is done. Then we terminate Blackrock account on one day and the next morning, everyone, everything that everyone's investing in. I'll second that door. So
if you made that motion? Yes, yes. John is seconded. Any further discussion? All in favor? Aye.
Given the time we have the roll flash report, how much detail would you like to get in on
on he hit when you think are the most salient points that we shouldn't be paying attention to versus
the composite level then we get into some of the major detail maybe just to quickly set the background and what transpired for the month of April, if I could ask you to go to page two of the APL flash report. We'll see we're showing you some of the major market index returns. You'll see that first column titled APR dash 24. So that's the month of April, why TV would be the calendar year to date Jan one through April 30. You can see here under equities if I call that from risk assets, you'll see across the board with the exception of the emerging market equity and to see everything was negative for the month. You can see All Country World Index which represents us developed nine US and emerging markets for the month of April was down 3.3%. Bringing the calendar year return to 4.6. We break that down by us shall see the Russell 1000 which is a benchmark for us large cap the Russell 2000 is a benchmark for US small cap, large cap for a relative basis outperform for the month down for three VS minus seven for small cap. And now see for the first four months of the year, small cap is negative. So Russell 1000 year to date five six positive Russell 2000 minus 2.2. And then moving into the nine US space, the MSCI EP, which is a benchmark for development on US equities for the month down to six year to date three one so for the month that developed nine us in emerging markets outperformed the US one month doesn't mean a whole heck of a lot. But we haven't seen the nine US world outperform the US in some time. And again, em benchmark for a month up 40 basis points year to date at 2.8. Moving into the credit you can see across the board in that vertical column of APR across the board negative returns. Note the second benchmark, which is the Bloomberg us ag duty aggregate. So that's the benchmark for US investment grade fixed income for the month down 2.5. Year to date down 3.3. The US high yield index below investment grade for the month of 90 basis points year to date up 50. So we talk about the correlation of below investment grade fixed income to that of equities will be the page three to look at the overall preliminary performance. Again, this is preliminary does not include the final market values for your alternative portfolio. So page three top left, you'll see the preliminary market value of assets at the end of April was just shy of 1.7 billion. We'll be left to right that first column titled One mo that's the month of April again year to date will be the first four months of FY TD is your fiscal year to date number. So for the month the portfolio was down 2% versus the policy index return which was down 1.9 calendar year to date positive 2.4 versus the policy index return of 1.5. So what drove performance for the month of April again on an on an absolute basis, we're dealing with a market where we saw pretty much negative returns across both global equity and traditional fixed income, your total equity composite was down 3.7, which lag in All Country World Index, which is down three, three, year to date three, nine versus four, six so underperforming with your total equity. If we focus on your domestic equity portfolio, you can see that one month down four, seven, the Russell 3000, which is an all cap benchmark, or year to date for seven versus five to your international composite for the month did outperform you can see down nine relative you can see 90 basis points, negative versus minus 1.7 for the benchmark, and then year to date positive 2.8, slightly trailing benchmark by 20 basis points, fixed income for the month was down 1%, the aggregate index was down 2.5. And then you can see again, we're talking relative performance here. But you can see a big ol performance on the year to date with a positive 60 basis points year to date versus your benchmark which was down 3.3. I will just be the highlight here again. Even though your equity portfolios outperform fixed income on an absolute basis, you can see the relative outperformance at one year return for your fixed income six, two versus minus 1.5. It was on a seven year trailing return, or one versus 60 basis points. And now on a 10 year trailing Three versus one, two. So on a relative basis, very strong performance, fixed income. And then I'll make any comments here in the alternative because again, these are either all employment even go into a couple of managers obviously that we've had discussions on page four, if you look at your large cap active portfolios, you can see about three quarters the way down, your large cap value portfolio for the month was down 3.3%, outperforming the Russell 1000 value benchmark return which was down 4.3. You can see year to date that composite up four, nine of forming of 1000 value benchmark of four, three, and one, which is your large cap growth manager, it's slightly trailed for the month down five, seven VS minus four to see year to date, they're still outperforming seven, one versus six, seven. And then going back into the kind of the enhanced index portfolio Cauvin for the month, down for six versus their benchmark, which was down 4.2%. A highlight just started quickly one of the flip pages or small cap composite for the month was down by nine really being driven by performance of artist partners, they were down for one versus their benchmark, which was down 6.4%. And then I mentioned your international equity composite for the month did outperform, you know, a lot of that had to do with some strong performance from your emerging market portfolio pluton up 2.7. But as you know, you're already in the process of an RD have I should say, liquidated all your non US equity managers and replace them with with I'll stop and pause there and answer any questions or whatever direction
three favorite
I don't I don't see the expenses for this managers, managers tobacco. We paid a $39,000 quarterly fee for their their product. We're paying 3000 For both of those rumblings just the basic Russell 1000. It's like they're at 160,000 a year for this token, which is just disappointing. I thought Kevin was gonna come back at some point, Kevin, when are you going to come back and tell them? Right, I think
I mean, so in the conversations that we were really focusing on, obviously, there'll be a mutation in the private debt for this portfolio. I think, you know, one of the conversations that we have with Kevin is, when we look at the overall asset allocation, we are under allocated to global equities today. I know there's been a lot of conversations about the Taliban portfolio, I think there was a consensus that at any point in time they would be terminated. I think there's been a lot of discussions about where that money can go back into. So the question was the three things that we left off with, can the money be utilized? If you were to terminate them? Let's say today, could that money be used in other parts of the portfolio as part of the rebalancing? Yes or no. The other question would be is do we liquidate that and put that into the active managers, your to your active managers, or the third leg of the stool was to look for other replacement managers that can be similar to what Taliban is providing today?
Well, that's for the next meeting. It'll come back with?
Well, I think we want to I mean, I think that there has to be a decision on if you're going to replace them with a similar manager, then we're coming back with managers that are similar to him, or is it utilized to fund a partial portfolio? Or do you liquidate it and give it to other existing managers?
What about bringing this allocation to its target? Right now? We're at 9.2, and four, but the policy is 13. What about just rolling that money?
Because you're if you look at the top line, door's locked, large cap at 22%.
I'm sorry, you're right.
But you do have an allocation to large core of, of what, which are the two benchmarks 13%. So my question is, why can't we just roll it up into the index fund, the Russell 1000, index and exponents? I
will maybe respond to that. And then I think it becomes a committee discussion we've had that conversation about, you absolutely can do that. And I believe that there, I won't speak on behalf of, there's a concern of reallocating back into a cap weighted index at this point in the discussion that we've had for the last several Well,
we were I think we just we just we just need a recommendation here. Because we continue to see this portfolio of underperform,
euro and temporal data, perform there in all caps, by giving them some money, but I don't think that's what that's what's on our watch list. We have $100 million with them. And we're paying management fees quarterly $260,000, over a million dollars a 1% fee on this manager for their underperformance.
So our recommendation would be the first thing would be is if you need money to true up your global equity allocation, we should be considering that you're currently at about 3% of the overall portfolio. So it's the 1 million. I don't know what the answer is Kevin is gonna have to update this. But if we need one or 2% to true up the global equity allocation, you can utilize that and then is the remaining of that money utilized for cash flow leads, right? If we have cash flow, or that can go back in or if there's money left over, they can go back into the existing equity portfolio.
Okay, guys don't see what we're paying with these managers. And I think it'd be important to fix that we have in the V when you give us a list of all the fees that we know what the fees are? Well, I think we don't know. I mean,
when you see, you know, when you're hiring managers, you know, the fees, but we can provide, we can provide
in the report $260,000 A quarter get to get a growth manager that half of that does better.
And now we're going up and then we can go out fiscal and
the other one is King Anderson $100,000 A quarter.
And this gets back into the conversation that we've had again about the MF N I'm not trying to push back on you we've had this conversation several times as a matter of the committee
nothing happens they continue to underperform.
So that's a real assets you had to do MLP managers. Yeah, we were looking for liquid, you hired Nuveen. And at the time you chose not to terminate both. You chose to keep me understand. And up. So that was a discussion. The other? Yes. So you would have that conversation, the intent at that time was to terminate both MLP managers and please that with a new movie, real asset income, the committee's vote was to keep Amy Anderson and higher up. So I when I keep saying this is a committee decision. original decision for me was to keep okayness and not terminate all these underperformance when
I say just a reminder on that one,
I mean, the underperforming relative to the short benchmark that they are sort of a nice play that their midstream infrastructures don't have exposure to run the nice
toe BAM case and what was going to be your third edge what now? All right.
So can I make a suggestion on the equity portfolio, whatever you all decide today, but what we can do is now that we've done the private equity implementation, we can do an equity portfolio review of active managers and and spend time on that one of the upcoming look at all your active managers and have a discussion around your activators.
I sort of like your idea of using him to fund strategies.
I'll just like to say, as you think about that, as you think about this rebalancing funding strategies, I believe many of these managers are outside of looking at their pure benchmark or additive to this over a one year, three year, five year, many of these managers add value to being in essence, different returns higher than the portfolio's return at the moment. As per usual, receives that.
I disagree with that. I'm being told it's been edited.
TO BAM. So, yeah, so for one year, the eight point folders 7.7 bands on perform. But it's mostly that, you know, I believe told them to index a very passive index that we selected. But I'm really saying that the managers are underperforming, but as a sourcing mechanism. They're some of the ones that we've mentioned that edge has been added to the overall over the last year. I agree with that. Yeah, I added some value to older portfolios, not necessarily relevant to this month, but they formed it in over Amazon portfolio for the last year.
I weigh in and say, I think we have good discussions for the upcoming August meeting. Let's do something as committee members, I would I would suggest, our prime number we should always be looking at is the total fund, which three year five year seven year tenure. We've outperformed our policy index. And and the natural tendency sometimes to committee members is is that first you look at the top line, are we achieving our objectives? Yes, then you start to look at each individual component. And there's always this proclivity to say, this manager is lagging this manager is not and you get human nature, sometimes you feel like you want to do something, as opposed to in totality, as I described it, like an orchestra is everything coming together to give us our top line return. I'll finish with respect to tobacco. If you're paying attention to the markets today, you know that five stocks account for 25% of the s&p 500 This is the most concentrated market, we will know in 30 years. The last time it was this concentrated was at the end of 1999. The rubberband took a little while to snap. But when it does snap into more breadth in the market for the next six years, the s&p compounded at minus 1.1%. The s&p equal weighted compounded at 8%. That's almost that's a nine percentage point difference when markets are no longer as concentrated. I won't pretend to tell you when that rubber band is going to snap but when it does, you go through a very prolonged period when the cap weighted index lags and meaningfully lags the cap weighted index. Kayne Anderson something we should be taking a look at. If you look at commodity prices along with the new theme. It has been a very oil dominated commodity returns this year outside of a few other commodities like cocoa when commodity prices start to move up, I think we're going to be better benefited from real assets that are beyond simply oil or something that we should always think about it as we think about this in detail at our August meeting in a value portfolio. I know any PC is going to come back with a deeper dive into is the more common ality or diversification say between barrel Hanley and enduring Devereaux one is one is supposedly an all cap manager, one's a large cap manager. But when we look under that hood, are they more similar than that? And there's there's something that we should be responding to as we dig deeper into our our important equity portfolio.
And I think that's all good discussion that we should all weigh in before even before we have the August meeting as trustees, and investment committee members
Any other discussion?
Thank you very much.
Kevin, we'll circle back to the CIO report. Can we get a legal report update, Michael?
Nothing formal to the committee today. Just to inform you that since your last meeting, there was a special reporting obligation of Janay Glick to the foundation for Detroit's future. And I presented the appropriate document to me chair for Signature Assignment forwarded to, you know, routine matter and No, no action required to the committee that that's just informational. Other than I have nothing else to report today, unless there's any questions, comments, concerns, from committee members,
thank you receive and file. Kevin, on the CIO report, that we've had a robust discussion on cap weighted equal weighted total, bam, was there anything in addition to that, that you want to share with the committee please? Sign up, you trying to rethink, I just want to, I want you to have your sufficient time to update us on what you think is most relevant. Sure. Thank
you. So the CBO report provided just wanted to give everyone a year in review, if you will, as we approach our fiscal year end, sometimes folks don't think about the June to June period, often, but it is very relevant for us. And then we'll go into detail you can read along, like the portfolio, as indicated did did well, in the fiscal year. We had domestic equities, again, leading the charge along with international equities, actually, over the last 11 months, US equities yield 11.4%. With international, contributing 16.2%, the fixed income market was relatively flat. If you look at the NNPC class report from the end of April, in May, the domestic market was up 5% With international equities of 2.9%. So I think we're rounding up nicely here to where we're probably sitting at an 8% Return estimated at the moment. So look pretty good to hit at minimum, our x variable, assumption homework return
for the period. And just a reminder of
you know, what we didn't fiscal year, I think the biggest item was the global equity transition, we eliminated our mandates with hotel markets in emerging market equities internationally. And transitioned those two things. So that sort of de facto will increase our exposure domestically, with the added benefit of minimizing exposure to emerging markets, specifically China.
And so something will really start to see the managers reflected in our reporting for this global mandate.
So I think the next May, flash or June IPA will have the new managers listed. And to the extent there is any interest, these managers are really all of our managers always offered to come and provide updates and accents are one of the new global folks to to chime in. But I can I can just make a feedback on that. And that's something folks are interested in
looking at might have been nice to see the dates when they were actually funded, or have they been funded yet. So
they hadn't been funded as of April 30. Heavy conduct roommate. Yeah, so you'll see them on the main flash. Okay.
It'll be nice to have an update. You know, one of the things that I would really like to see here is a little more meat here in terms of recording it, you know, would have been nice, nice to see the actual dates that these managers got funded and the amounts that they were funded. And right now we're sitting I can
certainly, certainly detail then that our next report for sure, that's a good things. Yes. Just quickly, the real estate piece liquidation of the real estate side when I update on UBS, that was always a hot topic issue around here. Give us projects that will receive all the proceeds in the next three years and that's that's dependent on transaction volume, obviously in the marketplace, in we are receiving distributions from them. And in 2023, we received about a million dollars, half of which was through a call reduction, liquidations of sold properties as well as income that we earn on a pro rata basis. The same for 2024. The balance at the moment is 15. Point 1 million. So it's taken a while, but it's it's heading in the right direction. And it just made that being down to zero within three years if they're if their best estimate at the moment. And then, you know, things are listed here. We're just some initiatives in the year intermediate term 24. And we checked off a lot of these today, which is kind of nice to play for that allocation. Convertibles, as well as electronics, corporations. So that's a good start. And that's the next step. Sorry, um, that was the last piece
of your SEO report you the second bullet point, I think you want to set combis? Six? That's correct. And then I'd like to more detail on these liquidations of the real estate, we've got five going on. And like a progress report, in your CIO report how much has come back from that, because we're really probably accused for at least three years trying to get this money out. And I'd like to have your team look at this to your real estate team. Give us some feedback on what's going on with these managers.
Yeah, we can do that. I think we had Shelly, three, three meetings, call them so we can have her call back. And
I just want to let the report and that's going on here.
I mean, yeah, we can do that. And again, you're out the window right now of all these open end funds have been accused. And it's all dependent on when they can sell the property. So this
one here, this made the target, I think you probably want to call it Global Allocation, not just global equity. And if you didn't put the 19% in for global, she'd left the money in the presumptions. And for the International, small and emerging
we should have the targets in there, right? That the actual Miss location.
So that would be helpful. So it's one of the
things I would like to see here. And I don't know that. I don't know if this is the point to have this discussion. But I would really like to have a little bit more information on the point. And I think it's really kind of old school, perhaps to look at the cash flow, you know, like, here's the market value. Here's what impacted that market value. Here's your earnings over the quarter. You can even break that down by income and appreciation, but you have the earnings, what's coming to the fund from earnings, what's coming by way of contributions, and what's going out by way of benefit payments and expenses. I kinda like to see that. I don't know, I may be the only one at the table who wants to see that information? Perhaps you're not the one to provide it? I mean, do you see that you're bored?
To me, evaluation.
To me, it's just the frequency should be monthly quarterly, it should be much more determined presented more transparently than what we are. I'd
like to see that least quarterly. You know, because we always talk about the cash flow and what's going out it was
easy enough to create a trade that was being White House. And then marrying that with the accounting team. Made a quarterly monthly basis would show you your earnings which are your income, earned your dividends earned attribution. I didn't
want to put it together and nobody else wants to see it because I just sort of like to keep my mind around what's coming out. I think it's also nice to know when you're making, you know, some investments that's going to require liquidation for for capital calls.
Next item on the agenda was not on the agenda, but discuss at the beginning of the meeting, which was that background August 2023. I gave every committee member a evaluation of Kevin as ours. CIO, we did a similar exercise, everybody responded back. Thank you. I have consolidated the output. And given the topic of the discussion, Michael?
Yeah. Just for clarification, for those that are present, I believe this is the last item on the agenda. Yes, right. A board is going to do an evaluation of the CIO, it's a personnel matter. And a typical to closed sessions in one meeting, it is recommended. And I'm gonna the Open Meetings Act, you can glow go into closed session and discuss a personnel matter when the individual with whom you are going to speak, are going to speak about the person covered in the personnel matter request that you do so in closed session. And so it's my understanding, you're going to discuss your evaluation of Kevin and his role. And Kevin has indicated he'd prefer that being done in closed session, there's no reason that that's a public discussion. And as requested that you consider closed session for that purposes. But those that are here, those that are on line, if we come back in open session, there may be some discussion around that evaluation. But there'll be no other further business other than a German. So you're welcome to wait and stay or, but I don't want you sitting out there waiting for 20 minutes and coming in and we ejected. So just so you're aware that. So it would be appropriate for the board to consider going into closed session to discuss personnel matter, at the request of the CIO.
Very good.
One,
just one quick plug that I we've got to mention earlier. Our client conference, I know in years past, people will always say, When is your client, so you see client Conference, which typically falls around April this year will be September 9 and 10th. At the Westin Copley that is for our clients only. So I think we did send you an email notification on how to register for all that. But I just want to as we sit here today, again, that is our annual conference where all of any PC clients, not just public funds are invited. So obviously we'd love to have love to have you attended if available. And we can get you more details on how to register for that and what the hotel's
motion is on closed session promotion and support for roll call. Yes,