Firefighters' Pension Plan Board of Trustees Regular Meeting

services. Please enter your conference room number, followed by door. Conference room number, except it if you are the please enter your PIN alone. ? ? ? >> And she >> sorry, going to have and all 11.100. Where's For menu. Available command press star one. There is one other color on the call >> Good morning. This is Daniel. Can you hear me OK? >> Can hear you fine. Daniel. Great. Thank you very much. >> Daniel, are you going to be available soon? As we start at 9 o'clock. >> For about 5 minutes and then I need jump off for like I said, until 9.30, edition. >> OK, no problem out. We'll come back to you. That will stick to our agenda. That and 29. 39. 45? I probably will probably be we'll probably catch up. But I know Peter is going to let me know as soon as you're back on. >> Perfect. Thank you very much for accommodating the yeah. No problem. >> Good morning, everyone. Time 0, 9, 100 so well. Call the meeting to order for the firefighters. Pension Plan Board of Trustees regular meeting for 2/25/2026. First on the agenda is the Pledge of Allegiance and can we turn that over to you? Absolutely. the flag. Was it just justice for it. Thank you for that truck. Next. A pledge of civility and they want to volunteer for that today. I will do Okay. We may disagree, but we will respect. We will be respectful to one another. We want direct all comments to issues. We will not engage in personal attacks. Excellent. Thank you, Chuck. Next is the roll call President Vice chair Joseph present Secretary Treasurer Greg's. >> Trustee, Snow. President trustee, mushrooms, present. Good morning, Shayla. >> Morning All right. All right, they did. It. >> That's okay. It happens. But we're glad you're listening in. Public input. There's nobody in the We have no cards as well. nobody in the audience that's not on the agenda. I should say. turn next to 6.1, the approval of minutes from the January. 21st 2026 meeting. Or comments on the minutes as provided in the packet and by e-mail. If there's no discussion, Cheryl, any entertain a motion for the adoption of the minutes from January. 21st 2026. The motion to approve. Motion move in second for the adoption of minutes. There's no further discussion roll call Chair Hartley. Yes, vice chair chosen yes, secretary >> Just the snow. Yes. Trusting mushrooms. Yes. >> The motion passes 5, 0. Thank you. Next 7.1. The investments performance River view will turn it over. Great Stone consulting. Scott. Ted. Good Morning. Good Morning. T J. I like the door. Let's get to Sorry. My uncle was door, but we called head to So I don't know if you all know this. My first name 1000. Now, all we need is You know, I call >> I will it was a traumatize a child, of stuff yes, thank you all again. It's pleasure. An Pleasure and honor to be here. Opportunity to be here today. >> We couple agenda. So we at the last meeting we talked about the international space. So we've got a couple big things to talk about. The small and mid cap space, which has happened this year under Stenson transitions and then also on the last meeting we talked about was national space. So we have search for that. I'm going refrain from comment until you all see the information and then and then you then we'll see what we come up with. So we have that. We also have, of course, talk about the market and the economy. I have some some data points this year T J is going to talk about the market and the economy and then he'll kick it back to me and then we'll talk about the portfolio performance of the managers. And then we'll take a look that search. >> Greg, good morning, everybody. Good to see everybody. And I like what me capital markets to talk about good news We've had consistent 3 years of positive results in the S and P 500 in the economy continues to look good. We talk about maybe shaky employment numbers over the last year. We talk about inflation. We've talked about tariffs Guests will talk about it all. 3 of those again today if we book, though, in the books and we go to Page 4, when we talk about the good market, you know, it's just put everything in perspective. We look at the first benchmark, the S and P 500 for the quarter positive up 2.6, 5. Great return. Good return for a quarter. But the real news is that 12 month number. >> look at 17.8 8% on the S and P 500 for a one year time period. Let's go over one more column up. 23 1% per year for the last 3 years. That's really strong. Long-term average of the S and P 500 is 10%. So to have 23% per year for the last 3 years is a fantastic return. That's on the heels of 2022. Of the market was down 20% fixed. Income markets were down 15%. So we've had a strong recovery from those those lows of 2022. Now the market is always forward looking so to have positive results that we've had for 2025. On the heels of Liberation Day last year when the market was down 20% at one point to now be up 18%, for 2025. Fantastic. But the markets looking for and what we are calling it is the right hot economy where the Trump administration is being trying to push for growth in this economy. There deal. There's 3 ways that's happening. One is monetary policy with the Fed is doing fiscal policy. What the administration is trying to accomplish and that the regulation making it easier for companies to do business the way I like to think about that is to say and lots of growth that's happening right? This is a pizza place downtown. That all said all these people are starting to go there and we have the government handing out haters bought for one free pizza for that pizza pie place is now getting overrun with a lot of people coming because the government or fiscal policy is allowing that to happen. Well, now they need to expand so monetary policy to go over to the day and they get a and they're saying, hey, we're going to be cheap loans right now. So it's easy to get a low low cost to get that loan. And then the government the same times deregulating, hey, you mean more space? You can now put tables outside. We're going to change zoning restrictions for you, which is great. Now, the company that pizza place instead of being 60% of capacity making great pizzas, the redlining, they're going pedal to the metal. They're making a lot of the revenue. Their suppliers are adding more. So there's a lot more activity there now is that manufactured activity is that can go on forever. And can you run red line forever? Something's going to break at some point. So what were we see that the economy looks good. Looking at 2026, the economy looks strong because of all 3 of those happening at the same time, businesses in the business outlook is good. We believe earnings are going to be in the teens over the next year. Multiple some a contract that we think we're going to have a strong 2026. Now running that red line creates long-term issues. But I think the Fed and what's different than what we had maybe coming out of COVID where we're doing the same policies. Coming up, COVID that created inflation that created some employment issues long term. But we think the Fed is being a little cautious as Trump continues of how the table this reduce interest rates quicker. Federal chair Powell saying, hey, hold on, we need we need to watch the state. We want to make sure that employment safe that we also have inflation under control. So there's some cautionary tales here. And we're seeing that as we look at the numbers and if we look at the 4th benchmark down in the Russell 3,000 value. A 3.78% for the quarter. We compare that to growth up only one percent for the quarter. So valued it better for the quarter. Since the end of the quarter. We've seen that to be a continued theme as well as what we've seen is a sell off or at least some caution. Caution now on the AI from it. Call it show me the money time. All these companies are putting a ton of money into AI technology. We want to see a return for that. Now, as investors are saying, OK, great, you're spending all this money. You're doing this capital expenditure. We want to focus on profits. We want to show see revenue go So there's been a little bit of a selloff in those magnificent 7 names that we've talked about down about 10% since their all-time highs. So it's been some volatility. Some changes in the marketplace. And if we look on the top section again, 4th from the bottom, though, mid cap growth is negative for the quarter down 3.7%. Stop going to talk about a little bit that of the mid and small cap space when especially what's going on there because we're seeing a lot of these companies that are doing well, don't have revenue, don't have earnings. And that's going to look to theme of performance for those managers. The bottom half of this if we look at the sectors for the S and P 500 technology is now the 5th one down 1.4, 2% for the quarter. But health care is turned around 2020 for health care is one of the worst performers that's come back into favor communication services, though, that still Google Amazon, Netflix off all their of 7 in the quarter than we have financials and energy positive real estate, utilities of negative for the quarter. I'm not a big influence on our portfolio, but we'll talk about private real estate compare to public real estate. We think we've really bottom that private real estate sector, but the anomaly so value the better the growth for the quarter going to see a lot of changes this quarter. If we look at the next page and what Page, 5. >> As tensions, a real quick to just 2 to 2 points about that. That's happened for coastal one of the things TJ said value did better than growth. Right. so we look at a lot of different things other than what we show you when we look at a lot like goes a lot deeper. We just try to summarize everything. So one of the things that happened. This could happen, the quarter that we're reporting on and it's continuing to happen. So the S and P 500. Is a cap weighted index. That means larger companies have more of an impact that smaller com. That's right. Other things that we look at is an equal weighted index among other things with a lot of stuff. But an equal weighted indexes is and it's the exact same 500 names. Now in the Equal Weighted Index. If you sold in video, which is that's 1.5 trillion dollars. And you bought Home Depot. Nothing would change that. But if you bought milk, if you sold a million and bottom million, nothing would change. The index would change. You'd be like moving from the checking account to your savings account, your network stays the same. In the Cap Weighted Index. Which is what we're looking at here. If you do that exact same trade, the benchmark goes down. Because you sold something that was much bigger. So the bigger things have more of an impact than the smaller things. It's also what drove the market up. When you're buying big companies, you spend all that money on big companies. They have more of an impact. You can spend a million not if you're buying the markets via million dollars worth video about a million dollars with a Home Depot. The market's going to go up. The benchmark is going to go up more than the than Home Depot because it's being driven by those larger things. Right now, the cap weighted index this quarter. And since then, as outperforming. weighted index is far outperforming. The cap weighted Index, which is good news. We've talked for 3 years now about how concentrated the market was and I was getting worried about it. That's why we've stayed in Sawgrass and not go into these momentum. Trains because we were worried that just can't last forever. The what this means is the market is broadening out. So even if the even if the benchmark goes down. The money's not coming out, that's very, very good news. Typically typically historically, whenever you see the benchmark going out, people are panicking and they're selling. They're taking the money out of the market because they're scared. That's not what's happening. You're seeing it go down and people are just my other stuff. Which is going to lead into like the small and mid cap discussion and act amendments. So I'm going to a bill that can in the lobby. You'll see it. Sawgrass outperformed the benchmark had a higher return to the benchmark, which corroborate son of everything. I'm saying the money is not coming out. That just to higher quality stuff. Right so that so that means Drg should have done well and starting to do well. Yeah, because of higher quality all all of them and all of your active managers should start to do well. In the small and mid cap space. Little bit different. I'll just go ahead and show you This. These the green. Is the top. 25 performers and the small and cap space. The white boxes, our. Where those companies in those categories were profitable. The red boxes are where they were losing money or was that the point to this chart is to show you that that as of 12, 31, the top. 25, we're losing money. 4 out of the 25 were profitable. 21 of the top. 25 are losing money and then there's all these other bat categories. A lot of that was driven. By the I treat. Right. You think about Palin tear you think about app love and you think about some of those stock at one time were small and mid. Everybody's looking for that next home run. So if it was, I'm Jason, some of these or mining companies, rare Earth metals. Some of them are tech companies. Sometimes there's other stuff in there, too. But people are looking for that next home run. Your managers are not going to home. They might 4 of these top 25 because they were profitable but probably not much right. So there's been this year has been a huge dispersion between high quality and the benchmark because the benchmark driven by companies that are losing money. So when we get into the returns and I'll show now, the RZA just had a conversation within a couple days ago since the end of the year since January, they've turned their outperforming pretty significantly. The point all that is they could go bad in a hurry, but it can get good her and can correct itself. So I don't want to panic just because you're like, well, but we get to that charge will talk about a little more of our panel just because they have bad year. Usually that's the worst time to get out. Right. what should you do want to now? I'm a lot more it's so separate lives. And this is one of little thing this goes to show. So this is this was in August of 2. 23. This is from vendor Vanguard's. One of the largest money managers on the planet. Forward looking what are the expectations for the returns? In the growth space? The it's the return projection. Was between one and 3. Large money. Much of planet said the next couple years. You're only going to between one and 3%. You know, the annualized return was since then. 26% as can say it was over 20, not even close. Again. That's why don't panic when things, you know, you know that this is why we have policy. This is why we have targets. This is why we have ranges changing from one manager to the next. You know, that could make some difference. If you're taking more risk, you're taking less risk. But this is why don't panic right? That's most data. This is what we did was to commit more wrong. Right? So. I think. That we are transitioning eyes affecting companies now we're having lots of volatility. But traditional finance. We've got low inflation. Relatively low interest rates. We have full employment, everything's working. So. Obviously there's going to be problems with what they're going to be. Winners and losers and companies generally speaking. And I said it last year. So I think we're going to be higher year from now that we are today. I just think it's going to be lobby. I think that exact same thing's true today. We have. tell you our return for the one year's 11.6, 8. And I really love the year. It's a great return. Sorry hijack. No, no, that's perfect. You're setting up for everything you need to talk about. But we've been we've been in a risk on environment is what he's saying, right? We've seen big point at all time highs. >> We see this seeking of risk returns and that's why seeing that shift into A cap and small cap growth areas. Now because they're the people that they're not that same returns. They were in bitcoin. Bitcoin is down 2030, 40% right? And they're looking at seeking other areas of the market. And that's what's got to say is were there in the mid cap and small cap space finding stocks that have been run as well. The head that has that same potential. But what we've also seen as a performance on Page 5 from International, which is something we haven't talked to hasn't seen it maybe 15, 20 years now, if we look for quarter today, the MSCI Cuba first benchmark of 4 point 86% for the quarter. Almost double what S and P did for the quarter. What's interesting this quarter, though, is the 1st half of the year. It's because Kirstie was down 10%. We saw a rebalancing a portfolio we saw International's and investors say, oh, my gosh, tariffs are coming. We don't know the new administration is going to do with policy mistakes our money back out of U.S. economy. So the dollar depreciated, the 1st half of this year, what's different this quarter, the right hand side of this page shows local currency left hand side shows and in U.S. dollars. So as an international investor, we covered our money into a euro yet, whatever a bind. And we have to convert it back to a dollar. So that telling the 1st half the year is everybody converted everybody money back to the dollar's down. You can buy more dollars. So that's a telling for the quarter, though local currency was up 6. And in U.S. dollars up four-point-six the dollar actually strengthened. And international has done better. So we're seeing good returns, good earnings and actually multiples expanding international markets right now. So it's becoming trendy, we think possibly for 2026, we can continue to see that trend of multiples expanding in international markets with the possibility of contractions in the U.S. market. So I >> one of the discussions I've heard from your international managers is that so what multiple expansion means? Is a multiple of something like a P e a price to earnings. That's the price you're paying for. The profit that they're making. So if you're P e is 10 and you're making one dollar, that means the price is $10 making and you're paying $10 to get one. That's a p e 10. Think about those price per square foot. Obviously the lower the P e the better the prices for you right? So what happened? What happened in our market over the last couple, 3, 4 years, 5 years is that earnings didn't change. Price went up, but things didn't change. Right? So company was making $5 their P e was 20 right. So what happened is? The price was 20. They're still make a $5 price one to 30. But there are still make a $5. So they're Pete that that multiple expanded. It got bigger. What's happened then and so are multiples are well above average, right? The long-term average is like >> 16 or 17 in the tech sector. Way up there. But let's call it 18 or 19. Now. And the international space that multiples are like any left. What could potentially happen this? We talk about multiple expansion. People are just saying, hey, this doesn't this price per square foot for this house doesn't make sense anymore. Let's go by the same company that has I can get. I can buy that profit for a lot less. So that's multiple expansion. So we're we're above average international below average. And if that tree continues to happen and things will normalize, what you'll see is overpriced. Part of our stocks would go now to get right size. We were they should be. And then the the undervalued of international should go up to get where they should be. So that those are things that we look at down the road. >> And I think that should spark a then why don't we have more international right now? I think long-term trends, though, is we're still leader in the tech space. So we during the AI space, we think it's a telling for now. But a long-term S P 500 has an our projections. All show this higher returns with lower risk over the long term. But those multiples, that's what creates what what Scott said. Some of this in the market. Any bad news multiples are what disappear, not the earnings overnight. So that that that is what could lead to some of the volatility by Page 6 where we've seen volatility start to settle down is a fixed income markets. We have a lot of volatility for fixed income markets. We went from almost 0 and interest rates up to 5 on a 10 year Treasury down to 3 and a half for half. That of the 3 have trying to go back to 5. But we've settled down in 2025. Break between 4 and for the quarter. On the 10 year Treasury. If we look, what does that mean for The 90 day to build on this page is cash money market accounts. The second benchmark down the Bloomberg U.S. aggregate is the broad fixed income benchmark and for the quarter to date in the year today or 12 months, bonds done better that so should be for a time. Cash was doing better than bonds. And you can see that over the last 5 years and a 3 year, still 5 years. But that's reversed. That was the inverted yield curve we talk about that's why we made some decisions and had conversations about fixed income. Well, that's normalized again. You're paid to put your money into the market long term like you should. So 10 year Treasury is paying more than cash. So we've seen we've seen that. We've seen the continue to focus on reducing interest rates. They've called a couple times in 2025. We anticipate a couple cuts this year as long as economic data holds up, we're seeing employment at least came down a little bit. unemployment rate came down by a 10th of a percent at the last reading. We're seeing employment least looks strong right now. But we think it's fragile. So the the feds looking at that fragile jobs market, they're looking at inflation, which was at 2.4 last month and we have the ability to produce rates. But we're a little bit worried about employment as well and inflation. We're going to take this in a measured approach. So we think there is cuts, maybe not as fast Trump would like to see it and we have a new fed chair coming in. May we think that they're going continue to maintain their independence where that new chair is and then continue to be measured pace, not as quick to trumpet like, but focusing on the data and that will be a positive for fixed income managers. As we have a higher yield on intermediate part and rates trending lower over the long term. But good results across the board. Domestic international fixed income. And when we can now go to page 7 and look at the results, it's positive results for our portfolio. It's all going to go into those themes that Scott set up for where we see differences in performance and outlook for for the managers of the 2026. Any questions on the economy? Comments concerns? All right. >> All right. let's move forward. Let's go to Page 7. this is if you take a look very top line all the way on the top right? >> The since inception. 7.18, versus 7.45. our target? 6.6. >> A little bit lower in time, but we've got a little bit lower risk. We still have a positive out of that means we're getting paid for. The risks were taken. If you take a look at them and keep in mind, this fund is changed dramatically over that time frame. We've got different asset allocations and different. We take a look at the last 10 years. 8%. Take a look. The last 3 years, 10% last year, 11%. So. >> We're real. All. >> Is to get the 6.6. That's what our target is. Obviously with that target, we have 2 other goals. We have return goal relative to benchmark in a risk goal relative to benchmark. So we take both of those things are returns a little bit lower. So it's not as good as the benchmark, but our risk is a little bit lower. So it's better than the benchmark. You combine both of those things that gives you your your risk. Adjusted return was the alpha. So we're beating. We have a positive outcome which means on a risk-adjusted basis for beating it, even a 6.6 were doing with low risk if we take a look at. Let's go to Page 10. This demonstrates that. If we take a look. >> All the way on the right. That bar square number, because the question always is, is OK, we're compared to a benchmark that, you know, that's the right benchmark. Our squared is a measure of how representative the benchmark is of the portfolio. Anything above. 85 is considered a good benchmark. We're over 98 behalf. The benchmarks that we put together our program. If you take a look at the return, as I said, a little bit lower about a quarter percent lower standard deviation risk about a quarter percent lower. You have lower or up and down. Capture both. 95 that gives you that positive alpha of 6 basis points. So. It's a were beating one measure compared to benchmarks were beating one measure and we're lower one measure. Take both of those into account beating overall. see how are allocated you. Take a look at Page 12. This is your general allocation. Equities. A little overweight. About 2% fixed incomes a little under way about 2% alternatives are underway about 4%. And that's that cash, right? So and then you say, OK, we'll have. Let's take a look at all that now let's drill down to the managers and this is what you see. everything is very, very, very close to the targets. You see real estates under way where, you know, we we divested from real estate everything else is very close. We do have, but overweight, the cash. There's nothing out of compliance regarding allocation. Everything's pretty close. Any questions on market economy. Overall performance, anything like that before getting to the individual managers. If we take a look Page 14. So you take a look at the first thing always do is look up in that chart in the top right? The blue boxes, the manager, the intersection point that blue circled, that's intersection. That's your benchmark. So what this tells you a higher return. That's higher than the horizontal to the right of that line is a little bit higher return a little higher risk. All right. Let's let's break that down. Apparently. What are we doing? First thing I do is look at that So you really beating this How much beating. And then you look at I look at return. The next thing to look at is returned much higher return. Alright, standard deviation. That's volatility. Bait is a little fall of cases or more volatile. So then I say, OK, where is a volatile? And then I look at that up caption that down captured. You're only more volatile when the market's going up. That's great. No one cares that you go more right. And you're actually less volatile in the market goes down. So I'm okay with this kind of risk and still protect on the downside. and you're getting more on the up. It's hard to draw it up any better than this. You take a look at the one-year number. 69 versus 59. Every time frame except for the quarter. A little bit behind time. You take a look at the next manager H 2 K. Similar story. So you take a look at this one. You're saying, OK, Scott, this looks like it's about the same return but has a little more risk. You look down. You look down on the return. Yeah. Almost identical. A little more risk now. This was the numbers. Aren't that great? You're up captures actually less than you're down. Captured. That's not good. You always want catch or higher and you have a negative off. That means you're not getting paid for the risk. You're taking. What's happened with 8 U K is if you take a look at the sense because all of these measures are since inception doesn't measure all So if you look at the 10 year number, the 70 number, the 5 year number, thanks for get really good. So we're like, let's hold on to on this quarter. When your number's good. But then. the 3 numbers back drop off a little bit. The one your number was good. And now the fiscal year to date for the quarter is down a little bit. So this is a manager we've talked about in the past where we're like, okay, should what should we do? Show the kind of on the fence and every time they have. Bad quarter, we said let's put them under bright light and then I have 2 or 3 good quarters. And so we just we keep. And that's kind of where we are with this. I mean, I'm I'm. Any discussion. We want to have that they've they're not doing terrible 9.35. Only since inception versus 9.42. with just a little bit more risk. But, you know, then you have some periods where they're actually doing a lot better. So it's kind of a push. It's not controlling one way or the other. You're not making a record. don't know. I'm just saying is that, you know, if if they have 2 good quarters that can turn all that around and that's what happened to check. All of these numbers are annualized. Their averages. So if you've got 2 good quarters, it can bring those averages up. Got to back could bring him down. And that's kind of what's happened with U K. There large cap value there. There are. We need to take a look at ledge right wages outperform over every time frame. We have 2 managers. There are other large cap value managers that are not on the fence. That are doing better over every time front every we look at age, UK, a botched every time we look at the lead to better the next recourse, All right. Let's hold off so. You know, I I I think this is a discussion. Are we do we want to do is start and again, every time we do a search doesn't mean that's a recommendation to change. That's just to show you what else is out there and then you can decide whether you want to make a change or not. Sometimes managers do a little better. A little more high risk. Our vice versa. You might say, you know what? I'm really OK with giving returns. Laws have lower risks. And that's what I'm trying to do is bring you different managers that the thing that gets me is the alpha. I always want to have a positive off. I don't or indifferent that that higher risk. As long as you get the positive, awful, our lower risk as a low return as long as was It's it's that now I want to make sure you get paid for the risk. You take. I like to watch him a little longer. seems like every time we talk about the around, that's it. That's exactly right. you don't want to sell that's exactly We have talked about when we're looking at core managers that they were going to be one that was. I mean, back up for second. Let's go back to page. Just show you this. Let's go back to pages for want to show you some. Because when we look at these managers were compared to benchmark. Let me show you what happened this quarter. It was actually very, very good timing. Not that we try to time the market. We went from a growth manager, 2 in court manager. So if you look at the benchmark, the growth was up. 1.0, 1, 2, poor was up 2.4, 1. So moving from growth, the court at the time that we did it worked out well. That doesn't mean that your core manager be the core benchmark but probably shouldn't be the growth benchmark. And that's where we took the money from. Does that make sense? like I said, there's a lot of things that we look at. There's that that is called an allocation decision. Well, it's a they would let. Let's let's look Page 4. Look, it's So Sawgrass. If you thinking about just return. They've underperformed. But what you rather have Sawgrass. Suffocate. If we look at the Rz, the next manager over the 10 year period, they outperform. Which manager would you rather have? Sawgrass got 14% and underperformed. D'Arcy get 10% and outperformed which will address that. It's relative to the benchmark. They outperformed the benchmark. If you they didn't outperform each other. outperformed their benchmark, got 10%. Sawgrass underperformed. Its benchmarking got 40. So that's an allocation decisions. So being overweight, here's what happened. overweight Sawgrass would put more money in your pocket, but we would have major portfolio on a relative basis. Look like you underperform. For Think most money in my pocket. All right. So that the Alex. So there's 2 things I always considers allocation and manager performance. I always look at there out for that. Bring up to me. It always explains the picture yet. So that's and this is what I'm talking about. So we've held on the Sawgrass. So now we have one growth manager that's very defensive. And we have to value managers and a court This quarter that we're reporting on. Value and core outperform growth right? Because this is a high quality manager. Look at the court earlier Remember what I said about why the return? Because everyone selling out of I that's why growth well, there are underway all that. That's why they outperform. happening? That's we talk about Sawgrass. A lot. There are extremely So you look at the chart, their lower return, lower risk. You go look at the return number. I-2 percentage points that 20% less risky than the benchmark 13 versus 16, 80 versus one. Up captured 82%. But the down captures 81 and it's demonstrated here. Well, I would even say that they went down. I would say the drivers, those larger companies went down there getting hammered. That's why they outperform. So, you know, so allocation and manager selection, both of those play a really big role, would you? Would you rather be overweight? Would you rather have more of somebody that's underperforming if they have the highest return? All spring, we just got in all spring. It's one month for me too much time for. So there's that the misses the this isn't good for me. is not good enough not do anything Brz the rz. So this is another perfect example. You look at this chart, you like they're not going other partner doing a fantastic job. You know, high return. We've got lower than it actually makes risk high standard deviation. is the same. But it goes right back to that. They're only higher on the to 103, on the 96 on the Dow. It's hard to draw it up any better than that. What could possibly go wrong? Look at the one you're That this is why I wanted to talk about that mid and small cap. That's the Smith is what they call it. Low quality. not Dr. He's not going to You're not going home. Things that are losing money. And I had a conversation with DRC a week ago and they said they're outperforming like 5 or 600 basis points since January. So as as badly as it went one way, they can go back the other way positive. So I'm not panicking on this at all. They were here last month. Okay. Said that. See probably for an hour. So they they did a very good job. They say is that tell you they perform. Yeah, I just And so that and they told us why, you know, they are such high quality. They're sticking to their discipline. I thought you're going to come in or not. You are they explained it very well. So think about this. agree. Oh, yeah. So so think about this. If I came to and I said I got this man he's doing really, really well. 50% of the names of people of blues and money. What would you say that Domingo Kid we can. We're for dishes and a pension plan. We can all do care. What happens to the price. We cannot justify by a company that we know is knowingly losing money. We just can't do that. And they're only buying companies or holding companies that pay a dividend to. So now you're even reducing that you. Well, that's right. That's starting to pay off. So have you hear me say this all about every manager in your portfolio has a job to do. You saw grass because they're they're the most predictable manager. They're going to be defensive. But the market's up 30% without looking at anything. I would come in. But you tend the one that they're going to be a lower return in the benchmark. If the markets down 30%, I would bet you that they're going to outperform. That's that's what they do. There's, you know, there's there's you get some and the the possible option in the large cap growth space has been the jogger not write this, but there hasn't been a team managers have a heightened been very few that have a higher return. Some have higher risk. You know, very few of high return. 2 ways to get the whole thing. Babe Ruth hit the most home runs what you hear about. Look at that. And most strikeouts and no strikeouts. You've got to be able to weather that storm. Ozzie Smith was in the Hall of Fame. Yeah, 20 home runs but is the 5th. They call the Wizard of Oz. He was the most his defense got in there has a pension plan. I'm not sure that we want to have the most strikeouts, right? So we try to we try to be now. And so so. You've got to understand that and say, OK, and I was trying to say is we talk managers when we're doing searches. When are they gonna underperform? Because they will managers don't change the way they do things because of what's going on in the doesn't always reward the same behavior. You're never going to have a manager that always outperformed the benchmark over every time front over the long term. It should DRC is a perfect example. Over the long term. It's killing 192 basis points of Alpha. That includes a year that had nearly 14%, not 40%. 14 percentage points. Let's return. That that to me show you how good they have been doing because now that 3, 5, 7.10, all include that really, really bad year. And they're still doing better. Congress. Smith grossing, same exact story. Same exact story in this space with a I just want to give it a little more time because things are starting to turn around and we'll see. We always have passive as an option, but I'm always going to talk about passive just like I would talk a lot active management. You like passive space. I don't like in pension plan. I'm not a big fan of passive because you're getting everything. Yeah. You get injured. You know you're getting jump. And passes. Wonderful one. It's going up. But you need to just of as a trustee as a consultant who has a who has a legal fiduciary obligation. If someone said Scott, why did you buy that when you 50% of them, we're losing money. My answer cannot be will because the price went up really well for 3 years in a row. That's not a good answer because price, you don't know what the price is going to do. I do know that if a company makes profit, I don't know if they have little leverage. I do know management. You know, all of that. can't control price, but we can't control that type investment we get in. Over the long term. What you're going to see is that earnings growth and price growth should be about the same. growth of 10%. You should have growth. You should have price growth of. Usually there's a little bit of a preview. 10 to 12% right? If you have earnings growth of 15%. So we look for companies that focus on earnings that doesn't happen every month doesn't happen every quarter. But over the long term, that's what you should get the profitable companies fine companies that are not profitable not. A good strategy. Maybe short look But it's not just that. can pass about this. What they thought about it you know, the trustees may have a different feeling. I I think that I like active managers that sit in front of us. You're close plan. A passive options. Do not have any risk management. I have plans that are 100% pass. They're all pass. That's what they What I'm trying to do is build official portfolio. I'm not trying to. Steer you in any direction trying to be giving you unbiased advice these are the pros and cons and then the boards decide. Do you like how we are allocated? Senators? We have for a closer plan. I think that now we again, we talk about relative performance a lot. But at the end and you can always make morning always make less if we're achieving our goal. Efficiently, in effect. I mean, you have a positive outcome and you're achieving your goal. That's that is what I try to do now. You get to your goal. 6.6. We've got 7. Would it be better if you got a yes. But I don't we don't want to take the risk that right? The sirens started going off into not achieving that goal. Then what we have to do something differently and we can, you know, my job, I want to make sure you got sleep well at night when you have the information to all of that to sleep well at night, yeah. And that's what I'm trying. So if you say Scott, I get this. I got on the board What we're doing all that. We want to get a little more. Okay. I can do that, too. all recognize will be Morris's. We mala to all of those things. Well, we've been here watch. Our wings get clipped in this fund before. Want to prevent that something this is funny. the board is that I deal with that. The members that have been on the boards for. 15 or 20 years and they saw a way that's all some of them seem. 2000. They never want to address. It's the it's the ones that have been on the board trustees smartly written in only been on for 5 or 6 years. And they see that you're behind a lot of legal openness of that works when it works. You know, up, I'm indifferent. But what is our By the way, there they are all achieving. There are some great they're well in excess of their children. It's not like there. It's not like they need to change and they just want to reach and reach. Okay. And get hit by a sledgehammer yet in a while. That's right. And it's common. I don't know when, but promise you there's going to be there's going to be a downturn. The next manager dissipates 20. This is Lazard. So we're doing a search for Lazard. And so when you look at Lazard, we've had lives are for a very long time. Those very high quality we talked about international how international they just haven't had the the international markets haven't had the multiple expansion that we've had. If you talk my powers who's up are full of manager the way he describes it. He's like, think about a beach ball that you take and hold it under water. You know, whats to go up to the service. He said that's where international markets are. That's those are the type they're buying. The company's that have the lowest P e's and that biggest value and they just haven't hit yet. If you look at their numbers, they're all upside down. That has a lower return. As makes to risk. Has a negative The up captures lower than the down captured on the search today. Again, it's not I'm not saying right now that we need to saying this is what else is out there. Let's take a look at it and compare and then we can have a discussion about what to do. Renaissance because I know When you look at a one in 3, you're doing that. it's hard to say what I understand against your peers. But I mean, that's what I'm saying. Same thing with Congress. If I'm OK, he underperforming of underperforming means getting I'm okay with that of underperforming. Losing money. That's a different animal. Same thing we saw this. I've got a question for you and Lazard, please. Quality is stocks that they buy. That very well. Extremely They're similar to DRC. The sense. Go ahead. Every manager, you have high quality. Some sectors finally said what I was trying to get out. Every single one of talk about some sectors, large cap growth was not rewarding high quality Smith right now, not rewarding quality. Every single this is why said would you change out of it? You're cheating your goal. You got high quality stocks. You've got company, every company in his money. And growing. I'm not sure that when you want to change that. Well, I I'll be honest with you. And I know we're going to get to it later after we do our homes. report. I'm not convinced these other managers are going to do anything different or better than what we have. On. Those aren't yet. It just depends on what field you want to play, but we'll get later. So here's another Renaissance next international manager. Looks great. Every single measure looks great. Renaissance was on the chopping block multiple times. They had a couple bad quarters were like action. And we said, you know what, let's give a little bit of and they've turned completely around. These managers don't get Dom overnight. We do searches. We look at long-term numbers. There will always be periods where the things that they do is not being rewarded and there will be it time. When that is rewarded. When it's not being rewarded because when we do, we want to take the pain. And how long is that going to last? If they're getting 25 and the benchmarks 30, we can. We can make that last a long time. If they're getting negative 3 in the benchmark is 5. We might not can take that pain that much longer. Right? So and then as it is, I think the whole thing in this make cakes make out. I think that's a short-term thing. The large cap growth. That's a long-term thing. Those those companies are big. I mean, that's there's going to be. It's a cap weighted index. There's all sorts of reasons why those larger companies are going to be driving things for a long time. Companies that are losing money are not going to be driving things for a long as a whole different than him. So you're sticking with that matters. Richmond, you know, it's it's a broken record. Every single time frame it out for farm little bit higher. Volatility, little bit more return. You know, it's not real exciting in the and that fixed incomes base. So this is another example. Would you rather have any one of those equity managers that are underperforming versus There are underperforming. This guy's got 4%. You can underperforming to 8%. It's an allocation decision. But this managers knocking it out. The park. And then you ups the trouble funders of the property funds. TJ said every for every real estate spoken with says we're at the literally at the I just close to the bottom like things are getting better that we we we bottomed out. It's nice to see that. The out. Here's an example. They outperform. For the way here. By a lot. Would you rather have them Richmond, Richmond, them better. They have more money in their pocket. They did not perform much but they have more money in their pocket. So and then the next one is the tpi fun. 5.6, 9. I returned lower risk. This was an interesting this and I love this chart because if you take a look at the down captured, it's actually negative. Which means. When that when the bomb that actually went up when rates. So that can't nothing better than that. It's not really exciting. You know, 5% over the entire time frame. But that's why we have a live report for as we have managers to do that. And then Cohen steers. The coldest years a global infrastructure fund. You take a look at that chart. Little bit lower risk. Little bit lower. Return. Take a look at the one-year number. They actually have a higher return over the one year and and the court. So that's really nice to see that. Not only do they have good risk adjusted measures that for the year they have good absolute measures as well. 66 versus 9.28. lower risk. Lot lower. Volatility. Positive alpha. You have a question shop. Went in and I pulled up the. Benchmark that they use. Remember, I was telling you that your benchmark is one thing. They came in with another which >> totally skewed the numbers. >> They use. >> The FTSE fifty-fifty. Yes, yes. Yes. The wind. We'll remember when we do asset allocation. Studies. So we don't asset allocation. Stay. That helps us determine how much we want large cap, how much we want small cap, how much we want in front structure. How much? Well we use is broad based benchmarks. That's your benchmark. So >> we used the DJ Brookville, Global Infrastructure. >> Right. That's a very broad based infrastructure benchmark. It's going to have a bunch of different types of infrastructure funds in there. And that's where using that as your asset allocation. So that's what you're being compared to. That's what the total things be compared to. Within that. You have funds that focus on different things and they use different benchmarks. Cohen steers uses the fifty-fifty. That's what they compare themselves to. We can add got so that you can see what they compare themselves to. But the D J is more broad based. So let's say that. Let's say they're doing really goes right back to that allocation decision. Let's say they're doing really well against the fifty-fifty. That's 50% utilities. And then it has some other things. Some other infrastructure, things. What if you had a different infrastructure manager? I was doing a lot better Dan Cohen steers. Relative to their benchmark, but not as good to the DJ refill. You can have. doesn't make sense. You can have those 2 managers. Relative to their very specific benchmarks. So he's going to do this when you do that. But neither one of don't get to the compared to everybody. So what saying is we might decide that. With the DJ Brookfield. gives us more things to consider. Then just managers that are comparing themselves to the FTSE fifty-fifty. I can add So you can see what they see. But I think from an allocation perspective, we want to keep that kind of a broad open thing. Utilities that could be a period where utilities are not doing well at all. But something else is doing well. We would know that if we're only comparing ourselves. To the fifty-fifty, does that make sense? And that was my concern is that they were pulling something that makes them look better. >> What the whole big picture and I couldn't understand why. One would be different than the other. >> That's just what they compare themselves to. That's so every time I say every every manager has a job to do in the poor So we'll use go back to Sawgrass. It's a great example. There is I think it's a it's it's a benchmark is like a loaf. All SMP 5, something like that. We compare Sawgrass to that and they would look better against that. need to compare against everything. >> I'm not seeing you all are doing this. saying that they which you basically just said what I did concerned about is that they came in with the benchmark that makes them look better. >> It's pro. It's appropriate for what they do. I'm not saying they're doing anything. She does know shenanigans, but that's what they do. You know, they say we're going to work with a focus on that. But there's so there. So that's a year for them. That's what they do. But we have the option to do anything. So I want to compare you that everything in that space because we don't have to do what they do. There could be somebody else does something better. In a different space. But we wouldn't know that. So they do well against or 2. There's other. Like I said, there's other infrastructure that don't have a lot utilities. So maybe those are doing better in general. Then the utilities. Does that make sense? So it's not there's no shenanigans or nothing like that. It's just that's what they do. That's what they compare themselves to that. I want to have a broader. You know, a broader pool to compare him to because you know that there might be somebody that does something differently. That's doing a heck of a lot better. And that's what we have. That's what we have I would be in favor of drone us out there. If we get back to Cohen steers a DJ Brooksville to be in there. Report that they send us along with their 50, 50. Yeah, they can do that, too. That we know Yeah. All that. I know will have them do it. Yeah. Okay. That's a good idea. Yeah. and by both measures they're doing great school fight On the next page. Your compliance checklist. There's good to see. No, no, no, no. That's right. you know, I'm just pleased with the performance of the par We're you know, we're shooting for 6.6. We've got 11. The market's been fantastic. You know, we've had markets. We've been able to protect. So that's that's worked out. Well. Would you like me to take a look at the Our thing we want to look at that pretty quickly. I think that somebody waiting it's funny that we got a call Jake, and they're not going to be a long time. Okay. You want to stay here since will stick to the agenda since they jumped in between. Okay. Yeah. Yeah. State. You can you don't need to get out. Okay. >> I'm Daniel, are you on the line? >> I and your We can hear you just fine. So I believe we're up to you under the presentation for moment. Jake Financial statement of the physical years, the first one. >> I think you've got it. >> We've got the auditor's report and the financial statement right? >> That's correct. Yet. >> OK, so you go ahead with whichever one you want to start with. >> All right. Perfect. I'm going start with a document called the auditor's discussion, then out the and I'm really at the highlights here. Jump to Page 4. First and foremost. Good morning. Thank you very much for being accommodating for me here in the morning. I apologize for our our do with meddling. I'm happy to come back at a future meeting over this presentation or talk anymore about the audit was old. If you'd like me give you quick presentation of the audit summary and the opinion that we issue. It discussion in the mouth of document just goes over. Some of those resulted are with our communications. The government. And then you have the financial statements and but all touch on just some of the highlights. Shortly thereafter. So we performed our audit. Is your opinion on the effectiveness of the financial statement presentation by the statement we have issued a modified opinion, which is the highest form of that we can render. We performed our audit in accordance with generally accepted, auditing underdeveloped government auditing entered the port that it ended. Ultimately management responsible for financial statement and the accounting It was the no one of the financial statement. Our responsibility is to, you know, follow already there to support our ammunition. Moving to Page 5, you know, our our benefit plan report. I really like they are on. It are kind of 2 separate on one for auditing the numbers and protecting the invest. The balance them are testing the overall contribution benefit. And if that were made and then we'll what I call a compliant at which is falling under the of the report, which is our report of art at the internal controls and compliance with respect the laws and regulation. The we're doing testing of how would the plan operating in accordance with the plan document? You know, are we only allowing eligible members being the plan, the that have opposed plan? But, you know, are the beneficiaries receiving the appropriate came in? I'm still on the board. So we went through those procedures as well. I'm happy to report that we had no findings or recommendations with respect to any of It's good to hear moving the page yeah, I like to point that out there partly because you need that important company in your shoe is make sure they'll be following the plan. Document. Moving over the finance tended to have a few that bring your attention. The first of the fair value of investment. >> We do independently at the fair individually, significant security to determine that there are reasonable in relation to what was being reported in the financial statements and had no issue there. As well as the required employer contributions that are based on actuarial calculations. We evaluate the actuary report and underlying assumptions that they're utilizing, make sure that there are reasonable as well. We had no significant difficulty encountered performing our audit, working with an event that Maury Anthony, they'll do a great job of getting us what we need, the timely manner. Moving to the top of Page 7. There were no corrected or uncorrected mistaken, identify the result of our audit of again. That's kind of the Earth big thank you know, we have a modified and with everyone love. We had the mind binding and then, you know, no adjustments from the initial trial for, but that's not super common governmental auditing the, you know, the for that as well. I do want to we have no disagreements with management over the application any accounting policies and procedures at the conclusion of the audit. We did have a representation for management that they answered all the questions that we had and they hiding anything from us. We're not aware of many of the complications with other accounts reported shopping. Independent perspective, the plant. I jumped quickly to the financial statement, then And I'm on Page which the statement that hearing that mission, potentially the balance sheet of the plan. I know that you're getting about the presentation that their information and even more up-to-date than what we have here. But the plant with over 180 billion dollars in investment in total at that. All that by about 1.4 million dollars in liability end up with just under 180 million dollars as your final that position restricted for those pension that. 8, 9, summarize and you know, the name. Activities that a community that change. So it's a 1.5 million dollar increase. Net addition overall, the city of big contribution of almost 3.5 million dollars. A couple that investment income of about 12 and a half million dollars for the year, which is often then reduced by about 14 and a half billion dollars in benefits payment to participate. I talk about a few of the significant but closures and I'm going to take you all the way the bottom of Page 17. Let's talk about pension liability. Of the many. At the end of 2025. That edge of my ability with about 11 point 5 on the 11.6 million dollars which made to and in percentage on a gap or the of just under 94%. If you're looking at that comparison to the actuary, they do have a little bit different calculation on the funding though. They are different numbers, but they're very similar and there's a reason because, yeah, the and the actuarial standards just have 2 different apartment. If you knew to the bottom of the page. 19. That is, you know, we talk about significant from the utilizing an investment return of 6 and a half percent. And it's charred here at the bottom really shows that we change that investment rate of return by percent or decreasing of percent. What is the impact on edge of my ability of the plan? >> I should bring this a lot of things that I have been there. This does city managers what he thinks about that. At the 5 and a half 32 million >> The >> last thing that all of the wreckage was on page is 21. And 22 and this really get 10 years worth of information on how into my ability of an impact over the years. And then 22, this poses what the actual contributions to the plan were determined contributions. And that the presentation that I have, I'm happy to answer any questions that you And again, makes more sense for me to come out in the in person for a future meeting. They you know, I'm happy to do that. >> Only say that Allison was always here. Just now you did a good job, a thorough tie, governor. then I apologize for Not and I just give our time had to throw Allison's name in this year. She was a very we do it well. She's very good her job as well. Nice any. First I want to say kudos to administration. Thank you. That's a very good report card. I know this is Their audit every year. No deficiencies noted. That's good to hear. I know several years ago we had a little difficult time. So, that. So we don't have that anymore. That's good to know Yeah, we have it. But I want see if there's other discussion. Any other questions for Daniel. All right. And there's no further discussion or questions. Then Terrell Entertain a motion for the adoption of mild and Jenkins, financial statements for the physical year ended September 30th 2025 24. I make a motion to adopt the financial statements dated September 30 are for the fiscal September 30th 2025. >> In 2024, second. Motion tabled been moved and seconded it. There's no other discussion entertain a >> roll call. Vote. >> Jair hardly. Yes, ice churches. And yes, secretary Griggs. Trustees know, yes, Yes. >> Alright, that motion pass