Firefighters' Pension Plan Board of Trustees Regular Meeting

Like your pension plan. This is that's every year I yeah. I Humana you know, you as you we handle and since his second, So wins You and low as a thanks for We give you let's wait. Years you know, in I think that pretty though. Every you trying to it's >> their all right. Good morning, everyone. We'll call the meeting to order for the firefighter pension Plan Board of trustees meeting. >> For today May 27th. First on the agenda of the Pledge of Allegiance. And Scott Lilly yet to pledge to the flag. America. nation God. And it for all. Christie Snow. Next is the pledge of civility. I'll do that this time. It says we may disagree, but we will be respectful to one another. We will direct all comments to issues. We will not engage in personal attacks even if we didn't get any coffee this morning. Rowe called Ave. >> Chair Hartley President Vice Chair Joseph, president, secretary Treasurer Greg doesn't trust us know presidents do present. >> Manama sport. Good to see everybody. This month. Approval of the minutes, which is 6.1 in our agenda packet, which first of all staff, I think this was the most like the one I've seen in a long time. Thank you very much. Anybody has any questions. Comments. Entertain a motion for the adoption of the minutes from our last meeting, which was April 22nd. I make that motion to accept the minutes from our previous meeting. >> A second. Motion on tables been moved. Second it for the adoption of minutes of April 22nd. There's no further discussion will take a roll call. Vote. >> Chair Hartley. Yes. Iced year. Joe says yes. Secretary Treasurer, Greg's right? Yes. Just the snow. Yes, Rusty mushers. Yes. I see you need coffee deal >> Alright, nomination of the board officers. So usually turn that over to you shale. All right. Thank you. Love me. And I don't. Number 7.1 appointment of the selection of the chair and we open the floor of the nomination. We share. think Mike chair, I would second that in a truck >> well, as what we have the nomination of war for Mister Mike If we have a consensus us, it really need vote. We just do because it's too. >> I'm happy to do it. I go downtown a lot. So it's easy to come in and sign stuff's. All right. So we will move forward that put chair Hurley again for the chair of the firefighters, Police office. important. All right. And we will vote. I'm 7.2, the selection of a vice chair for the flavors. I make a motion for. You know, it's got to be vice chair. could that want we have a selection of vice chair to be I fully support so we can consensus this is. Is All right. Well, congratulations. So, you chair. All right. Next, one is of a point to important appointment selection should Secretary flash court. Well, it's normally always the what the city so. Make a motion make a motion to point you to remain. It's the selection of the secretary Treasurer he selection for myself. And do we have a consensus is not This is all Thank Acts like that was easy. All right. The big topic of the day, the presentation of the graystone consulting quarterly performance Review. >> Which is number 8.1, which I really miss my book. But we now have the executive summary. Your words. I'm sure. You've got 3 >> lots of discuss. Only >> I haven't him in years. But Taylor, good to see All right. Sorry. >> No So so first of all of that, you know, thank you. Thank you for this at that. How level of comfort that we have with this as far as >> administrative lead information? You know this executive summary, I mean, this was a function of of some of the rules that we have to adhere to is this is we can. We can make adjustments as needed. But I just want to make sure you all are getting information that's that's pertinent and actionable. And of course, talk a lot about stuff. I have a lot of things to talk about that. >> As far as the performance of the report of the of the portfolio. This puts it in a pretty concise summary. turn it over to staff. as long as it's compliant. >> We're good with that. As you know, the date got pushed back, right, that the city still wants to get, you know, moving on this. >> So this is interesting. So when told us about the company that you all use, it's done. Very good work is I Leon's alliance or something like And up. So we sent them a document may still yet to take a day or 2 to get done. Okay. Great. And then a couple weeks later when it was time for the meeting prepare that we sent to him was going to take 3 or 4 weeks. The reason is everybody and their brother in the state is now. And that's just it wasn't a big wasn't a big demand for this up until this year. So I would imagine that has over the next year. There's probably going to be more. A cottage industry is going to be created. And I would imagine that. How it's being done today is going to be very different house done 6 months or a year from now, especially with We I 3 years ago. Right now, it's just so you all know, we want to make sure that we're compliant with all the rules ranks. And but we also want to make sure you have actual information and has has the ability grows will continue to do more and have more and change it. You know, we this is not set in stone. This is but this is this was a a fix to make sure that we are compliant with the rules that you all of stats out with for right now. And I think >> it will some point and grow. To wear. We're all just figuring out who were still trying to the railway can do lot to do. We're trying to get his company are trying to get some 10 plus in place right? So they can be automatically done without it taking so much. Staff time is right now takes so much staff time. 88 stuff. It is ridiculous. I'm hoping like that. So within the next couple months, it will grow. Everybody have a better understanding. And then when the next April day comes around, well, the swim with a guy in, you know, because I don't want city because we've got a big push, right? Because I don't want come march, they are scrambling to get in trying to be right. Everybody's not sure what to right. So I we appreciate you trying to work with us because I know it's a lot for everybody to figure out how to get all of this information into something is 88 compliant. So it's a lot. >> And fact that so just keep doing that keep working with staff and as things grow and progress and get better will, you know, you know, ideally would be back to where we work with with the full the presentation but if we have to do some sort of version of that, that gives you the same information any new information may be all and see something different. The other thing just a little bit of house cleaning. So UBS, your real estate manager. >> They >> They have put a thing in place. That said it for any money that was not put in the in in the request to the queue to get out. They would a fee reduction on. So if you have money in the queue to get a fee reduction on that. They've come up with this strategy. So what's happened is there's a lot of money in the queue. And according to them, Hinders them when they're trying to get big billion dollar investors of all. You have all this money in the queue and you know, it. That's that's not a good thing, right? So what they proposed is if if you are too. Let's say you have of the 20 million dollars in the queue. And and and you're getting back. 5 or $600,000 a year. If you were to take. 19 million dollars out of the queue and put it back in the portfolio. You would get a discount on that. Then what they do is they We'll be back up. They only give back what they can give back every quarter and they know what that's going to be right. What they're trying to do is to a shell game. So that it doesn't look like there's any money in the queue. Right? As becomes a marketing strategy for them. So let's say a 20 Million. You say, okay, we're put 19 million over here and they know that you're going to be getting a check for 5 or 600,000. They keep 1 million in the queue. So now you that you get your 5 or $600,000, they'll do a calculation every quarter. They'll do a calculation and they say, OK, we can give you back a million dollars. So then what they would do is automatically slide. Money from the poll to the queue. So that you get your money back. For you of that? I've asked and they've confirmed and have it in writing that there's no difference in how much money you're going to get back of the time frame of the money that you're going to get back. They're going to act. They know that you want all of your your 20 million back there just saying, hey, we're not going put all in this bucket. We're going to put most of it in this book and we're just going to move over what we can get back to you want to Porter quarter basis. And so that reduces your fee 20 million dollars. It would $15,000 to something like that. I've had Talk about this with everybody else has UBS and it's about a coin toss or rather there were weather taking advantage of or not. I would stress it doesn't it doesn't have any impact on you as investor. It's just a marketing. It's it's kind of self what what they are saying. They're saying that. If they're able to get those investors in, it could facilitate you getting your money back faster, right? Because we're getting more. They're getting more cash flow. And that is truly the reason they want to do is they want more cash where they want the big investors. So that's something we can think we can, you know, just but I want to let you know that's out there on the anybody has do that? >> I don't know. I don't see a downside to it. I don't. It's it's basically a few seconds. So I I don't know what you don't know why they would say no. They just I mean, just like a no-brainer, that that that was exactly where >> Have you have you all received that letter from UBS? >> I haven't seen anything. I know they they send it out the sun about everybody. I'll make sure going to put that in my notes. I made sure 2 for that. ? letter ADA compliant. There you go. Turn interest. And just as side note, I just went on my today and I was like, can you? >> A document ADA accessible. It's like, yes, you can get for you. Just upload the document in to chat up make the >> The problem problem is with But >> the problem is the charts and graphs. I think putting do Try Yeah, can't do it now. I'm sure will be able short time. It. I think that housekeeping item. We had. >> All-Star talk a little bit about the mark in the economy and up and then we'll talk. Then we'll talk about the performance report. And in the executive summary and then happy answer any questions. It's interesting. This was exactly this time of year ago or we have basically the same type discussion. remember, Liberation Day and the market was down his 1st quarter. The market was down. and then immediately bounce back up. Right. And what I said back then and I'm saying it again this year is that even though we have all these problems and geopolitical issues, I think a year from now, the market's going to be higher than it is today. And I and I think that's true again this year we're having, you things were going well. We had relatively full employment, relatively low inflation, relatively low interest rates, companies. This earnings season, 8 out of 10 sectors have double digit earnings growth. Just let me tell you what that means. So you always hear me talk about P e price to earnings drive and how it's a very sticky relationship. Well, if your earnings grow by 10 or 15%, major price is going to grow by 10, 15%. Generally speaking right of that, that that relationship hold. Those things are going to move in tandem. Some sectors, your tech sector's going to be a little more of a premium. So the revenue grows it might. It might grow to more than that. And then some others have more of a discount. Few utilities are growing in might not grow at the same rate. But it's a pretty good relationship. All of those things are good and or in Iran broke out. We had a abduction from a girl and then this. This Iranian war broke out. And so that's created lots of uncertainty in the market. It's make inflation going up, right? And you know, it was it was interesting. Again, 2 years ago, what was a time station is transitory. Inflation is trans towards not units. And then now they're saying, well, this inflation is here because all prices because of of the conflict in Iran. And once that conflicts over you'll see all the prices drop again. Full be wants. Inflation was not transitory before. So these are the things that I'm concerned with. We don't know of. This thing's going to be over in 30 days or 3 years. We don't know the answer to that. There's a lot of discussion. No, no data to support it. Then it's probably going to be over before midterms. All right. That is ironically, things are going to start looking really good going into the midterm cycle in the news cycle is going to be all positive and great for the incumbent. So we'll we'll see what happens with that but is it is a fly in the ointment. There's a difference between the market and the economy. The economy was strong prior to this. The market pricing mechanism and saying, OK? There are some clouds on the horizon. We're not going to put those premiums on pricing anymore. So that that's going on and that. And so that takes me to what happened in the market this quarter. You saw that the large cap 10%. Right. So you think about large cap growth. What is that? That's your MAC. 7. That's your check that your AI. That trade reversed pretty dramatically during the 1st quarter right? All growth was down. Value was positive. And because it's a cap leading because growth is so heavy in these indices now, the whole index was down right? Value was the only thing that was positive pretty much across the board. Since then. The kind of bounce, but not kind. It's bounced back quite a bit. So if we were to, if look from January to June, 30th, it's probably look like a non event. Well, since we're looking at it from January to March, 30th that looked pretty bad and then and then what I'm imagining is that from from April, 1st to June, 30th, it's going pretty good right? So over that entire and it's almost exactly what happened last year. Liberation Day happened. The market was down 20 or 30%, 6 or 8 weeks later, it was backup. We're set all-time highs again. And that not that that's what's happening in. Couple of normally. So I talked about the AI trade. If so if you're underweight the I if you are under way the I treated you did well because it did so poorly. So if you are at or overweight, so your managers, so it's all grass, one of your managers paid lots of discussion about those companies with those egregious valuations, an outperform pretty dramatically. Most of your managers did outperform. It's not exciting because all that means is it's less negative, right? But that but the whole idea the managers that you all have whole risk mitigation risk mitigation, worked this this court the other thing that happened is energy was up 30 8% for the quarter for the quarter. One quarter of 38%. So the manager that was underway, energy. They just didn't keep up. Right. And most of the managers, most managers across the board, we're under way to energy. There be no reason to be overweight. Energy. So they get that balancing act. If they were, if they were under way to energy and underweight AI, we'll see what happens use the managers. The managers, all that fine. talk about overall performance and that I give you Corley performance as well. The other thing that happened this quarter which is which is also very interesting. It's still happening right now is in the small and mid cap space. So the small and mid cap space. About 49 called over 45% of constituents in the benchmark losing money. Losing have negative earnings. 21 of the top. 25 performers. We're losing money. We're managers aren't going home. Those managers aren't going home. Companies that are losing money. And you say what, Scott, why? Of the 25 21 losing my price going up? Well, because their AI and Jason, right. So if you do that, I attached to your name. If you are. So you think about at love and you think about in video, you think about pollen, tear all of those small and midsize companies that were up 3, 4 500% in a year. Everyone's trying to get that next home run, right? So that's they were buying companies of an AI. That's 2 of their purchase in the name and they didn't care making money or not. Your managers are going on that. I give you a real world example. Gallup is maze. There's a company called All Birds. The Rds Allbirds shoe company. Small shoe company. After quarterly earnings, they announced that planned that it was strategy. They said, you know what, we're going to come in AI company. The stock went up 508% that week. That's not something you're going home. I mean, that's that's just the market looking at it and say no way, I look at something good. Let's buy it. So your company and this is a pension plan will buy companies that are earning money. And so so that had an impact and and the international space. So much story down for the quarter up for the year. Exact same and then the big the big a surprise was interest rates. So 6 months ago, everybody thought interest rates were going down. There will be 2 or 3 cuts. And 26. Interest rates actually went which means the value of bonds go down this quarter. And a lot of that was driven by the Iranian conflict. Inflation starting to get a little sticky warsh, who is the new Fed chair? Thank you. Starting June June. First thing 6 or 8 months ago, he was like probably some room to cut He was leaning into it. Now he's there. There's actually been a couple of fed personnel suggest that this we should raise rates. So that's a very big unknown and we'll stand. We'll see what happens with that. Any questions on the market or the economy before I get into the portfolio performance. So just as a as a whole, the portfolio for the for the current quarter positive. 0.1, 2, so slightly positive. And then the policy was down. 2.3, 4, right? If you take a look at the one, your number. We're up about 12 and a half percent. And if you take a look at the 10 year number of that 7.86, your your target 6.60. And so since inception were up over, a were up over 7%. So, you know, so we've we've been right in line with that. And we've done it would lower risk. >> So the 6 60's with paying the managers right? The 60's. Your assumption right? I think is lower than that. going to 6. Okay. Yeah. You got on us. You got on go to 6 4 over. I think over first of this because the If we take a look at the executive summary, I'll show you some things. So what we've done is I've tried the color code to try to make really use wedge, for example. So if you take a look at wage. >> That tells you the dollar amount that we have there. 18 million, $901,000.10, and a half percent of the portfolio. >> Since inception, this managers returned 11.1 7%. >> The index has returned 9.1, 2. The standard deviation, our risk. So so that's green. So the manager has a higher return. So much green right is better than the that's better than the benchmark. The sense inception on the standard deviation on the risk. That's the risk was a little bit higher. So that's the yellow, right? That's the yellow flag because the benchmark did better. And then we say, okay, we take both of those things into account on a risk-adjusted basis. That's your alpha. So that's that column all the way to the right. You have a positive out of one 80. That's green. That means your outperforming your benchmark right? So we have because we have to manage. We have risk and return and ideally both of are doing better than the benchmark. This is an example of what is one's not. What's what's what's the >> they should. Kate Hudson and now. So it's real close to the returns a little bit lower. 9, 3, 6 versus 9, 4, 0, Then you look at the standard deviation again, a little bit higher. So so so you have a little bit lower return a little bit higher. Is that's going to give you that negative off. Now, if you were to that since inception, if you look at it over different time periods, what you would see. What you would see is a 5 year seven-year 10 year. The returns higher, right? That's all done. And over the current quarter, it's actually higher. But over the of the so since inception, there's a couple time frames in there where the return was a little bit lower. So that's one that we've we've we've been watching and then just happened. Outperform this quarter. Sawgrass. We all know the story behind Sawgrass. And that always says it's a very high quality manager. It's going to be very, very low risk. If you take a look there their return since Inception, 11 versus 12, 80. The the risk is a lot lower so that you positive Alpha. So Sawgrass this quarter really, performed right to do what you exactly what you expect the fiscal year to date. They're up nearly 500 basis points over the benchmark. And if for the quarter up over 300 basis points above the benchmark. Now, when the market was up 30, they're only up 20 right. So so that's what they do is when the markets down, they typically outperform on the market of the have. I hate blurred perform. They have a lower return. The benchmark once upon a higher return with a touchdown, their performance, which is your risk adjusted as as positive and speeding the benchmark. All spring. We you know, we just got in all spring in November. So if the numbers are negative. Since we got in, but it's beaten the benchmark, right? So the benchmark was down but it's doing better than the benchmark so we we can help with the market. Does we just help on a relative basis? So that's that's fun. If stays on that as it has these kind of numbers in the duty and love it. And the small-cap value. So you take a look at them. This is they have a higher return. They have higher risk given that positive. I got to point something out with them and this is really important. Just want to make sure that you're all aware of it. Brz has done a fine job for us for very long time. This past year as of March 31st. The one-year number, 21 percentage points less than the benchmark. That's a number. Now. Because that's now part of the 3 year average in the 5 year average of drags those averages down in speaking with them. They will tell you exactly what I told you. It was like, well, it was a low quality rally. They have some names that just did not have any earnings. It had Just shuns and they just didn't all. And that's that's what that's what we They were up 7% for the year, but the benchmark was up. 29%, right? So you know, my question always is okay. Well, how long is this going to last and what are you going to do to fix it? I don't think it's going to last forever, right? I don't think buying companies that are losing money as a good strategy. But, you know, we have to we have to keep a bright light on this because we know that the litmus test for us is always the benchmark rate. This as a manager can outperform a benchmark. We'll just bypass of was bypassed option. I'm not ready to throw the towel in yet. Their long-term numbers are very good and they've got a lot of value over time. We've had these type of situations before, especially in the small cap space where you can have a quarter or 2 that you have a big difference like they could have. They can do that. They can turn this thing around and have an outperformance of 21. And then we're back to where back to even. what I what I always look at is what the benchmark do. Different. And I want to do that. Well, if we bought the benchmark, we would buy be buying a portfolio with 49% of the companies are losing money. I'm not sure I'm glad the price went up. But as Bush years and a pension plan, I'm not sure that's a good strategy. If I came to you and said, hey, I've got an active manager and 49% of the constituents are losing money. Let's get it. You probably find me. Don't worry. I called her and told no number behind It's great. >> It did. Did you really? When I saw the numbers at Beasley, yeah. >> Congress similar stories of commerce's mid growth for the you know, we we haven't had a very long fully since. 24, they did not perform this quarter, right, but that that it's a very, very similar story. We haven't had you know, there are longer term numbers when we did the search love that they're not learn on longer term numbers were fantastic. And we was art. So Lazard has a negative office. So if you take a look at as a law, return has about the same risk, just 5 basis points difference that gives and that. And this is what Lazard is done the last couple of times. So this quarter, they outperform a nearly 300 basis points. So what happens as well as bill will fall behind and then get caught back up. And so we've we've had was our sins. 15 and you know, we've had We've had periods where they look fantastic. And then we've had periods where they got hurt. Well the last year with the fiscal year to date, which is 6 months. They're up almost 200 basis points. for the year they're down almost 250 base. That just tells you how far they were down up until the last 2 quarters and they're turning it around. So this is another one that's kind of a we're keeping a bright light on. The international space has been. The very well this past year, More than U.S. markets. And I'm just I'm I'm glad to see that our managers outperforming again. We have 2 or 3 quarters like this. going straight. Those numbers out. And now a renaissance. And this is an example of that. So Renaissance is a manager. They had several bad quarters in a row we on the chopping block we in. We talked to all like we look at their 3, 5, 7, It was all bad. And then all of a sudden they started turning the corner and all of those numbers are good. All of them are good. So, you know, these guys don't get done overnight. And what I always what I always. think it's very important to know is what's going on. Why is there a difference now renaissance? The reason the renaissance fell behind was because they take a 2% position and 50 holdings. If something was in the benchmark, it was a 3 or 4% position and was doing well. They're going to be underweight. That thing right? That's what was happening and not to the same degrees. What was going on us. But that's what was happening. Well, now that the markets kind of normalized, they're they're back to. They're back to doing well. So this is a perfect example of just because you've got a bumpy road for a short period of time. You know, jump ship right there longer. Term numbers always been good. And then a Richmond capital continues to hit home runs over the long term, a quarter of a percent, 20 basis points of outperformance. The risk is a little bit higher, but the returns a little bit higher. I want to point something out because we get rid of the discussion too. The one your number. It's 4.43. All right. So for a half percent. The 10 year numbers, 2% that. Over every time frame, they have a higher return. All right. So they've been up. They've been very good addition to that. A little more risk. But I want to put that in perspective. For example, Renaissance has a little more risk. The standard deviation from the benchmark is 16. And renaissance of 17. For Richmond. The benchmark is 4.6. And the standard deviation for the Frenchman's 5.3. So it's still a fraction. I don't want to see a little more risky. I don't to make sure that that's that's a relative term. So for bonds, it's a little risky. But for the rest of the portfolio is very, very low risk. And you're getting paid for that risk. So you're getting you're getting that big positive outcome. I said I sit for 4 point. This call 4.4, 2 point '03. Us the the real estate for the one year's 5.2, 9. So it's more than bombs. And the 10 year is 207, which is almost the same spot. trustee Joseph. Brought this up a little bit ago. He's like okay. So there's a couple things that want to set the stage a little bit. The reason we waited in 2 real estate years and years ago 6 was because bonds. We're doing that. were in 2 or 3%. We thought rates will go up, which makes the value go down. else can we go to get that? 46% return. With low risk. And if we've got a diversification benefit so we did search. We didn't asset allocation. Study a real estate will stay place to go. That has the same. That actually has lower risk than the benchmark. But it's 5.3, which is the same as Richmond. The problem with real estate that we've with that we've witnessed is that we were expecting it that had 2 or 3 years and it was COVID was driven by COVID driven by It went down and he had some pretty significant negative returns. There's also there's also a thing they call a cap rate cap rate is basically an investment term and they use its net operating. You come to I Capri. And so what happens is the higher the the lower the value. So so we didn't win. The cap rate is high. The values low and then and then vice versa what happened was the capper exchange that it was it was that all-time highs, right? So it may devalue the low and that's what happened. But now the cap rates coming that down, which is making the value go up. It is just getting back to normal. So this year's return is is what we had hoped. 20 years ago that we would get 5 and a half percent year 6 percent a year. Paying for 5% that we use to pay our bills. We've had lots of discussions about real estate. We have were trying to get the money that kind of real estate. But I think trustee just in the same thing or he actually brought up was OK, we're almost halfway really have a target of 10. 0.6 where we're almost halfway. probably need to go. And the reason that we've been kind of kicking the can down the road, as we said, hey, we've got to make a couple decisions. Do we want to reduce our weight and real estate? And if we do, we're going to put the money somewhere else right? Well, when we're at 7% in real estate and let's say we wanted to reduced by 5%. That means we would have been overweight real estate and underweight. The thing that we're by just because we can get our money back. Well, now we've got we're down to 5%. We should probably do asset allocation study and say where else can we put the money? Should we should we keep it real estate? That might be the answer. Might a 10% weight might be the answer. If we take 5% out of real estate, should we put it in? Infrastructure? Should we put and fixed income? Should we put it in large cap growth? Where should we put what's going to give the biggest impact to the portfolio? any thoughts on that? What are we getting cash right now about 4%? And take this 5%. Is that going to have to go to the channels of the queue? So what what's right now as we're overweight? A couple things because we already have the 5% were 5.6. So were underweight real estate relative to our target, which means we're overweight, other places. So what we would do is we were just rebalance the portfolio when we would get rid of those overweight and we would take that money and put it wherever you chose to put either back in real estate, maybe in a different manager, maybe say manager, if you decide you want to put in infrastructure, some something else. We have education on private equity, private credit in a couple of things and that there was not an appetite for that. So so really where we are now. Is we have stocks. We have bonds. We have real estate and we have infrastructure. Those are the places that we can put the money. The other things we look at other things we said we don't want. So what I would do is I'd say, OK? If we had a 5% weight real estate where we put that other 5%. And we put in infrastructure, see what that would look like. Keeping it real estate. See what that looks like. Putin equities. See what that would look like. Pretty fixed income. So think about this. The reason we got 16 from schools range for 2 or 3%. Now they're getting close to 6 or 7%. it and everything else that we have is live with. So we would be increasing the liquidity in the portfolio. Ideally, we would want to keep it. I don't know if I want to put in equities because I want to keep the diversification benefit and the real estate, the bonds of the infrastructure is the only thing that's doing that. We have to see what the data tells us. But you know, those those are the things I think about. So I would I would say, hey, let's do an asset allocation study. If there's compelling suggests we need to make a will bring a search like if they're so I can do. I can talk with the check and send you guys and say, hey, look. The numbers are crazy. If we put it here, you will researchers. We can expedite things so that because it's going to be 90 days from now. And if you say, OK, let's put the money here than we get into the search, which is another 90 days. And then if you have managers and that's another 9 days. So just trying to, you know, we can we can talk about it. might decide. Take the 5% just change the percentages of the things that we already half maybe week. Then we move really, maybe bonds up 2%. They will move infrastructural one and a half percent. They move you know, something else. A one-half percent. That gives there to be could be sure. doesn't have to be dramatic. They can just be a small change. But to just to be a Joe says point, we're we're underway. We're we're we're compliant, but were underweight our target. But I just want to get the conversation going because I think we are getting to the point where we're going to have to do something now, not. >> Discuss it. We're getting to that point because that the market changes a little bit. We're going to be at 5% or less, which is going to mean we have >> We just thank you for saying I'm leaning toward on. I want study. I want to ultraconservative. I'm worried about the future and I don't want to put it that quickly. >> That's just me. No, I agree with. >> Yeah. The bottom of the range, it's 5%. Your 5.9, so many pretty short order. You have to make a decision add to it to be compliant. Our our to our to reduce the whole thing so so well, theoretically, what we do is we changeup? Yes, we have a target of 5 and have a range 0 to 10 and we can still decide on whether you want to get out of it. Are you just want to? Recuse herself from the Cuban say all right. We're going just maintain a 5% position. Those those will be all the things we do and the asset allocations that he would tell us that all allegations that 0 real estate, 5% real estate, 10% real estate and then. Those differences. We go to different asset classes. To make sense. In that discussion. >> What about if we increased our state and ppl. >> Absolutely. Did. The UBS Tpi Tpi. Yeah, it's has been more consistent The 10 year numbers. 4.6 number Bonds were too. The one you number 5.5. You know, again, got ups and downs during those periods. But it has been very consistent is an income fund. It's almost like a bond fund, but it is a liquid as well. They've never had an issue. But the other one ever had an issue until they that. >> So my concern where bonds are a lot. >> Well, and that's, you know, it that makes a lot of sense. when you when you think about. But when you think about why you make a trade. There's a reason that you do that. That case were low. They weren't anything. know, you think about the long-term averages between. >> Let's call it, you know, 5, 7, 5, 8%, and get one or 2. But you're not going to get yourself if you're its 40% in fixed income, you're not going to get your assumption read. We didn't want to put it all in equities. That's just too risky. So can we go? That's what we did. Well, now. That there's not that big dispersion anymore, you're getting 5 or 6% real estate. You're 5 or 6% bonds. Not that I would go into bonds today because inflation sticks around rates would go up. But let's say things level off and you went into bonds in the rates went down. You just a bigger pop and watch. And that's that's a certainty. Interest rates go down. The value of bonds go up. So it's not like stopped or anything else where you don't know what's going to happen the next day. >> Because we're in the private real estate and the income fund. Are they able to let's see we're at 5.9, 2.8. Are they able to make it? >> for? >> Or we know. It's it's you know, they're just too big to said. It's as if they're 2 different companies to be like And the problem is we can't get the money out right of the real estate, even if we want, even though they're the same companies can get the money out. I'd say the asset allocation study that will talk us to. >> Make some decisions right? I mean, that's that's the prudent thing to do. I'm sure staff likes liquid better makes it >> and and then lastly, we have Cohen steers a global infrastructure. And you see the returns a little bit lower. The risk is a little bit lower. You have the positive outcome low volatility. Low standard deviation, low risk. >> and since we've 9.9, they're very numbers, 19%. But if you take the since inception is 9, the Concours 9, the 5 year numbers, 8.8, they've been pretty consistent. Pretty consistent performer. >> Just a quick back to the vs. Yes, both of you and UBS will be here in July. Oh, good. Yeah. your. Yeah. I mean that that so little. We'll have more discussion. You know, all too little too up. That is Julie going to be the one you think. >> Julie Pirro. just make sure that the chill discussed that that fee thing too. >> I'm going to be looking for. You can also tell her as a board, we're going to be looking for what what's their expected outlook for the next year? Help us make some decisions on real estate. Right? So I know they sometimes cover, but >> so you know, we do the asset allocation study right? How we do that asset allocation study is we? Morgan Stanley. >> Our our Global Investment Committee. >> Which is made up of. A senior professionals and use of Squawk opening bell in closing bell shallow islands under all these really, really, really smart people. And they're supported by. 60 different. The Congress to analyst. And what they do is they prepared all forward-looking. They prepare the outlook for large cap growth, large cap value real estate, whatever it is, they prepare with. The expected return is with the expected risk. Is all of that. That's how we or asset allocation. So we all of that mean it's nice to hear from the managers. I would imagine that most managers are not going to tell you much So, you know, we use all of our independent objective outlooks for everything, how to get there. And if we're wrong and the managers, right, and it's better than expected rate. You know, we're going to be a little more conservative than those estimates. That concludes my prepared remarks. I'm happy to answer any other questions. Comments concerns. Manager issues out there that you're aware of. >> Now just the ones we we talked about it, you know that you get a Lazard which are kind of. >> You know, but I'm just I'm watching them. other thing to forget to mention. It, the last meeting Cohen steers that I was here. Cohen steers was here and their benchmark was different than our benchmark. So I'm working on. So the way it works on our side of the industry, Morgan Stanley buys. Access to a of the benchmarks which are always the, you know, the most common things. It's that hundreds of them. The one they use was not in that all we're we're we're accessing it just takes a minute access it. So what's the name of you know, that there's was the FTSE global core infrastructure, fifty-fifty that tax and ours is not huge Yeah, Uses the DJ. Brookfield infrastructure. It's like it's all encompassing. >> So they have a very specific benchmarks. Now, here's what we're going to do. We had discussions with a minor. So we build the asset allocation. We used to DJ Brookville because that's the most common one. That's the most comprehensive one. When we compare our performance to that. So we're going to maintain that because that was something a line that would join Sen once we get this other benchmark, all included in the upper floor. So you have both right. So this is what the the world is doing. And this is what coldest years doing relative to that specific benchmarks. And why is the U.S.? Bloomberg on there? Because it's never hear what it I always wondered. >> Which looking on the floor? >> So they were showing what they just that's what the bonds are. So that was that the infrastructure money was more money that we've taken from bonds. if you look under, if you look at all of all the holes. So all those calls, the they have the Bloomberg aggregate on there because that money came from Bonn. So we've to show you the allocation decision, OK? So in all instances. it's been a very good allocation decision, which I really important to note that. You think about this for a second. And this work is real technical. I'm sorry take up so much time. But I think this is important. You go from something very risk free. Right? Bonds and you put in something else that has risk. All right. But you choose a manager that's low risk. Well, that manager of markets isn't going to keep up. So when you compare him to the curb, benchmark. You know, that's why we do the risk-adjusted with That's the lower risk of even though the law return. But the whole idea was to make more money that you did bonds without increasing risk. So when you compared on allocation decision, it's been a home run. In retrospect, should take a lot more risk in those things? Yeah, but that's not what the goal was. The goal is to keep risk as low as possible. If you didn't want to change the risk profile of the portfolio, but you want to get more. So we've done that. We've accomplished exactly that. It's lower risk. The things you move too. But it's higher return than the thing you left from. Does that make sense? for from my perspective, when you're building portfolios, that becomes really important. I mean, always talk about returning return return. That's probably the hardest thing. Handicap you just never know. And and but I try to use building official portfolio when we get paid for the risk. You take. That concludes my prepared remarks. Thank you. Thank you as always. It's not a pleasure. She'll if you have if there's anything you get any insight because we are working on that very diligently with a couple of different providers on the 88th thing. There's any information you have or any new Senate leader Hunter we've got. We've got people internally internal of Morgan Stanley. We have 2 or 3 vendors and we're just trying to figure out the best one, the best the most efficient that can do it right and timely and all of those things. And if you all want to see this executive summary change, please let you know, and what can. Thank TJ, still with know yet just bring them so you can talk >> Just want to make sure there would not changed the way we can make a know he's he is absolutely still And he just running in different directions today. So we'll a I'll tell him. I'll tell Asked about it. I'll probably try to start bringing Hunter someone, TJ, is to remember when he was analyst, he would come with me as an analyst and then hunters get into the house here to talk to I think it's I think it's a good does great. The dinners, you know, I I think he's a star coming to meetings and seeing how this stuff works. You know, it's funny. talked with him about the report in the flow of the report. And, you know, he gives me a little push back in like you get it. I got to present this in a manner. That's so everyone it's it's actionable, pragmatic and everything else. I you know, I want him to come to start seeing how you all respond to the information and as well and always trying to improve or our service model. So if there's anything I can do it now, OK, thank you. Thank you. All. >> Anybody have anything under unfinished business or do business? We'll turn over to Houston. Very good morning, honored to be here to join All of a lot to I get all of files from office. I have been going them one by just a couple of things that I would like to do. But for right now, spend hours on turned up, was it like to your thoughts and >> commission? with regard take a look at the operating rules which have not been updated in quite some years and doesn't seem like it's in accordance with all the provisions of veteran a city code. So we'd like to take a look at updated It will be a few hours of returning work, but yet trouble when you're not abiding by our own policies. So I would like to make sure that, you know, we updated some things. Just some still has like 2 year terms and there for the board of nothing about like the one. It says that you shall publish. You are spdr biennial which I don't know if you're doing or not. So those are just a couple of things that I'd like to take a look at. I also. I don't think you're asked PD has been updating years and they do the benefits of not changing but but still, I think at a minimum you should have it on file with an updated date on it at very least. So if anybody asked for a copy of it, be it, you know, beneficiary of a joint, it wouldn't down the road. We have just available I think it's just the best practice. So we'd like to that document as well. Scott, I didn't just take a quick look at the investment policy. I think it needs to be just updated for the boycott Israel language. I don't know if it's in their last when I had my file from 2025. So it's like April. 25 and I so. Just take a little in with process of adding up to. >> I just may not happen so that judge. Take a look. I nothing urgent and there. next on the updated. Just take a look to make sure that that's in there. Yes, Other than just to remind you, we don't have meeting for ones are due July first. So just to make sure everybody has that taken care of. >> And then just want to address any saying that you think I should be taking a look at a and you'd like me to do anything be updated any way I could be of service to you. Talk to your thoughts on that. I definitely appreciate review of the files. And if we need anything updated. >> A few hours. Attorneys, we've got to get it done but for them enjoy it and you. Recommended he's done that. know he's covered all the bases and I think the ISP has been updated. You might not have one. And we recognize part a while that the operating rules and SPD had not >> updated for several years. we're advised that that didn't make any difference and more so right on say. >> I mean, it doesn't as a whole just going to process of fall for just the research strike just watched things. Okay. Thank you. urging. But I mean, housekeeping, really need to have your policies and much that you're following them. You know, get in trouble when you're not follow policy. So and for the border. So, you know to they sent out an email Peter did yesterday or the day before one 4 electronically filing for for one's own for Thank you for your confidence and Thank you. All right. Other matters will turn over you for >> administrative expense budget for January to March of this year. 12.1. Yes, it's in your overall. The total expenses or 46.5% fixed and wind compared to what was budgeted. >> There's a lot of work situations in specific line items do too. When they are paid. Are there any questions on any of those line items? And the next document is the check register for the same period. There are any questions dispersed months. Appreciate you know, things. Anybody's anything else. This is a record. >> And I'm not going to. We