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Thursday, February 19, 2026 · Government meeting record
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>> a hearing. Are you near Mike? I can hear you. Are you near Michael? Yes, I am sitting right in front center in front of it. OK, are you close to it or you just standing there? I'm within the 3 to 5 inches. Okay? Yeah, I I can hear you. Thank But look at Has been a little bit a struggle right >> All >> right. We'll go ahead and call the 1920 ploys Pension Plan Board of trustees regular meeting to order. We will go ahead and start with the Pledge of Allegiance. Just to United States of America. >> to the Republic for which stands. One nation. >> next time as the pledge of stability. We may disagree, but we will be respectful to one. Another will direct all comments to shoes. We will not engage in personal attacks. He's number for roll. Miss Martin. >> Chair chapter your vice chair, Nicholas here, Secretary Graves here, Treasure Strickland here, trustee, Keeler here, trustee, Thornburgh here. in contact with us this morning and asked to be excused to do some work issues that came up unexpectedly. Okay. Houston consensus for that are. Is that I mean because you can move forward. Okay. >> Very Public input. Okay. We'll go ahead is to the approval of We have the January 22nd 2026 meeting minutes for consideration and approval. I still can't figure out how he does all eyes Haha. >> I'm an incident January 22nd. I'll second that motion. We have a motion by. >> Trista Keeler, seconded by Vice chair close to approve the chair 22nd 2026 meeting minutes office in favor say aye. I pose chair votes. Aye. The motion passes unanimously. Okay. Next item number 7, the retirement request. Miss Martin. >> Yes, we have the early retirement requests Stacy Mason at the age of 55 years old after 22.0. 24 years of service time retiring on that during the 7th and she has selected the lifetime option. Only. A move to approve the early retirement Things you mentioned. >> Second. Okay. We have a motion by Tris the killer second by trusty Thornburgh to prove the earlier time request states Mason. All those in favor say Aye. I posed chairman said that motion passes unanimously. All right. Moving right along to investment performance. Or do first we have clear Jeff Lindsey Vonn a welcome warning warning. You know, >> What's good? I'm Steve. I do this. My colleague, Jeff Lee and first and foremost, really appreciate the longstanding partnership believe that the city of Sarasota. More importantly, right appreciate your patience. Given Calendar year 2025, you know, certainly didn't meet our expectations. I would imagine underperformed your expectations. So the idea here this morning is Jeff, who's been with clear bridge for 18 years has worked intimately closely with the portfolio managers on this strategy. It's going take you through last calendar year. Discuss what went wrong. What worked against us? What we learned from it, our position in the portfolio on a go-forward basis to deliver on our mandate of outperforming the wrestling 1000 growth net of fees and just short of that as a backdrop. Last year was really the tale of 2 markets. The head 1st half of the year, which sure you all remember going into the under failing the tariff plan with the market sold off. And during that time as you'd expect from this type of portable and it's more diversified, we protected on the downside. We're outperforming I the the index on a relative basis by a wide margin coming out of that period from mid April through the end of the year we underperformed quite a bit. What you had there market that was up 50%. The peak, which very momentum driven for fundamentals were put aside. The market was on balance, rewarding was perceived as AI winners and analyzing what was perceived as AI And and in this type of portfolio where you Companies across all spectrums. You had a hard time keeping up in this concentrated momentum. Mega Tech driven rally. As we sit here today. And we certainly feel well position that a go-forward basis where anytime you have this. So the area of concentration index, we have 70% of the index and technology, which is really unprecedented. You're ultimately at some point going to have market that broadening out, which you saw towards the end of last year and continue this year and that tail when that benefited the index is going to act as a headwind for the index. We think that well well for our portfolio and but really it's been a challenging time for all all active managers in the large space last year. You had 4 out of 5 active managers underperformed the index. We We weren't alone in this doesn't make it any easier to digest a, however, if we think the challenge last year are are behind us and the market start to reward a more balanced portfolio. That's not 70% technology. And on the seas. Secular Com Pounders. Haven't participated quite as much. In a market that's going to be driven more by earnings growth. The last by multiple expansion that should help the portfolio. So pause there are just get into some of stats and how a position today. And and last year that. >> We'll save time for any questions. You have. >> Thank And want to states comments on appreciate the opportunity and the through the years here when I look at last year and what worked and what didn't work for us in the in the strategy is Steve said and being part of the you know that April marked January, 1st through April, 8th time frame on a relative basis, performance was was good. We outperformed on April 9th period just to put it in perspective of that magnitude, that 6 month window was the 4th best 6 month window in the markets. History from peak side down in a momentum rally. When we talk about the 3 buckets and diversification of of different types of stocks and differentiated growth rates that really caught us off signs that caught us on our heels. From that standpoint in to put some context to it. If you if you look at Page a 9 of the deck in front of you you'll see just a concentration risk that is in the market today. And and ultimately how different that has been over the last 5 years. The magnitude of change. And when you look at the it at the end of in the benchmark, it was 50 plus percent. Just it. That doesn't take into account the additional sector of communication services. Those are effectively it companies just call the different mean we had in 5 of those names. Amazon, Meta alphabet, Tesla, just to put in contact and you're roughly 70% of a benchmark. This is a 480 plus benchmark. That is one sector and 5 stocks are 70% of that. That's where we would argue that the risk is embedded in the market. The rest of the benchmark 30. But how dramatically is that changed over the last 5 years? 5 years ago, we took that same snapshot and you are up 58% and today around it, call it 70%. That dramatic shift of of market cap movement, more momentum. I'm not saying that they're not great stocks. There are. But the question then becomes waiting do you want to own those? And and so we look at it in the top 3 names in the benchmark today at the end of the year, rather, we're roughly 36% of the 3 equals 36%. That's a big number. And for us, if we're bullish on those names, you buy mathematical calculation have own more than the benchmark is otherwise you're going to underperform on an attribution bases and we look at and say that's difficult for us as a diversified growth manager. And so when you look at that Page, 10 shows you you know, I'm a market returns just to put it in perspective for you and then ultimately Page 11 shows you, you know, in the beginning of the year quality matter. And this is quality defined by the benchmark. This isn't us cherry picking and saying these are quality names. This is defined by the bench at the end of the year. That red line is momentum. And you see that the momentum really was what was driving the returns ultimately until around November. And in November, he started to see a broadening out of the You know, it came in, fits and starts so far this year. We've seen more of a broadening out that continues to take place. But to put it in context on on Page 12 shows you those different sub-sectors within the benchmark in their from April 9th. And you saw that. On the market really cared about that. Steve alluded to I am hyper Steelers. If you were in the 77 cap hardware, you're rewarded handsomely utilities like OK, utilities did well because someone needs to fuel all of these data centers that are being constructed. Those sort of components of But the rest of the market let, you know, was not with in that. And so the challenge for on Page 12 of 14, if you will. Where that you're looking at, cap ex expectations. This is the part that you have to take I think a large cup of water to small the pill that's being pushed out in regards to these cap ex expectations on a lot of these hyperscale companies and the money that they're spending last The expectation started that, you know, we'd be little less than 300 billion dollars of building up these data centers. But by the end of the we were well known to 400 were expecting this year that that number is going to be over half a trillion dollars. The question then is whether these companies have a return on invested capital they actually start making money from spending this kind of money. When you take a Google or Alphabet to parent company and you spend that money and you take your free cash flow to 0. At what point do you turn it to where that you can increase that? And that's the problem that we're having with this narrative. Yes, we like It doesn't mean that we didn't make mistakes along the way. We did a couple of things that I wanted to for your attention was health care 5 years ago, health care was about 16 and a half percent of the benchmark at the end of the year was roughly 6%. So you saw that that shift went all in to the it and everything there. Healthcare historically was more defensive. And so when I look at that, had some health care exposure. We've always had an overweight to health care in this portfolio for my whole duration of the you know, 18, 19 years now. And and so when I looked at that component of it, we had some names that hurt us in United Healthcare. We trimmed it in a December of when that they have the New York incident of the execution of their CEO then in April, when they miss their often, we trend in the game we should have sold it at that point. We sold in Q 3. So it's no longer import fully. We sold it, but it hurt from that to put it in context. That was the best durable compound are growing earnings quarter over quarter since the inception of count. So it was a great stock while it others in health care would be like a no vote or an Lilly their thesis was breaking down the NGO piece that we're doing well in the shots. But addressable from just refrigerated shot was limited. And and and when you look at the transition over to the pill side of the equation, their efficacy wasn't nearly as high as what expectation was. And so we saw both of those stocks, right decision to sell both of them at the time. Wrong decision on Eli Lilly. What we did not foreshadow was that to Trump administration would and signed an executive order of Medicare reimbursement for them that stock ripped so it hurt us. Biden not owning it in the back half of the year. Again, the thesis was intact and nothing changed. There. And then the software side of the equation. If you think about where that you're going to get a return on investment, these from these build out of the data centers. It's the utilization of them. Who's going to pay for these large language models and and actually access what they are constructing. We think the markets a little bit offsides on some of the software company's yes, AI is going to replicating replace some of them. No question. But there's a big sum proponent of that that is going to benefit from a I and so at the beginning of the year, we own the Dolby. We owned sales, forced into it work to name a few. We sold workday. We sold Adobe. If I look at Adobe you Photoshop, you know, that's Mike business. I can use AI to reconstruct that. So we do think that that's there but into it and using sales force our commute using AI 2. Look at your taxes to make sure that you're on. It proved look eye to make sure you're taking all your deductions. We think they benefit a sales force. No one has more data on companies, businesses and this, this world and sales using AI to mine and aggregate at so we trim, didn't we still own a those 2? But they hurt From that standpoint. And so from a position where we are for this year and and what the expectation is again, we think the economy's in good We think that the labor markets, it's not great, but it's it's OK, we do think that there is the legislation that was passed last year. The one big beautiful, though, as it's and that that will add about 280 billion dollars of economic stimulus this year through over time through tips interest on a loan deduction through cap tax and depreciation in year. One. And that will be very stimulative to about one percent of GDP. But I would strongly advocate that that is not just the hyper Steelers that are going to benefit from that. That is going to be a crossed. The board and a lot of other companies will benefit from that a position. And that's why you're starting to see the market question. We're and the amount of capital that these companies are spending, the amount of debt that they are now starting to put on their balance sheet. And you're starting to look at other side of the ledger of other businesses that can still benefit from it. From an standpoint, but don't have the cap back. So I think that's in our DNA. That's what we've always done. Well, is more of a fundamental broadening out of the market with that. I love paws and see if there's questions. that's helpful to in that context that. >> I was, you know, make a point of I think the the that is certainly the logical thing would be 2 contemplate moving from active to passive. Given the success that the index said not is just the Russell 1000 growth, but really in other categories as well. But I think in the case of the Russell 1000 growth, specifically it has become more this singular that on the success of AI the slide that Jeff mention showing the cap tax numbers. If these companies don't have the return on investment that the market perceives. You could see this, this trade really work against the index in a big way. >> that you would bode well for our portfolio, certainly and be a big headwind and a negative for the for the index. So just >> something that certainly consider as you're weighing your your options. >> Again, thank you. Appreciate the opportunity. we the next set gender Join us to a final plea. >> Wait to get on the line. ? ? ? >> Good morning. As Brian. >> Good morning, Brian. This is ranch chair of the Sea search of a general place pension plan We have you scheduled to just kind of an introduction in the So while we can hear you loud and clear and please proceed. >> Okay. Thank you so My name is Brian Elliott. I'm the director of Institutional division that Jenner first and foremost. I need to thank you so much the confidence in choosing a stir our mandate. We are currently up to take that sits at about 9 billion dollars in assets under advisement. And really the farm was started back in 1968. based in West Los Angeles, which is we're calling in from. We really were originally accounting practice. So the firm's roots really date back to that There's a very conservative approach that we're managing for. You as We kind taxable fixed strategy that is manage more or are precisely to the governor credit benchmark. We employ a very high quality high conviction portfolio. So what that means is you're buying a subset of the market where we're finding relative value we really primarily are looking at into areas for value. One is. Kind of scoping out the difference between the Treasury market, the corporate bond market. And you can see dad and so within those allocations were making an active decision. And then with the in each of those sectors, we're really focused on credit selection over the past 10 years. We have been named to the 5, 6 star manager which which is owned by south for which looks at the managed universe and to achieve that, it means that you've done top 10 performance on both 3 year and 5 year annualized basis. Among your peer group. So you really have chosen a strategy that has been exceedingly well throughout the rising interest rate environment and particularly the reason we do this is because we're managed duration. That's going to be them with the broader universe, which the way the AG is constructed, you're you're basically going to have a long as possible to ration when rates are lowest and the duration can move, you know, very wide range so it it's low. You can find a duration below 4 years at its high. It could be as high as 7 years. The reason this is important is that's kind of your biggest risk factor fixed income. With our benchmark to go credit benchmark in and we specifically are managing this to the intermediate benchmark. You're you're duration ranges within about a half year around for years. Currently, it's actually slightly below 4 years. So if you actually look at power, how we're managing your account, we're using the corporate part of the of the allocation at the front part of the yield curve where yields are actually inverted. Still slightly higher. And that's, you know, could have slightly more risk. But by foreign creditors better, you know, closer to maturity, you're taking less credit risk. And then we are utilizing treasuries today at the larger part of the curve to manage duration. So when you really look at the strategy, the way it's set up today, you're looking at current yield to worst of for 12 at the end of the year. The reason I point that out is that's really your affective return. If you look at that, you'll the worst number where your starting point is you go in the future. The correlation to your forward. Tom is almost perfect. So what that means is that you would be compounding the asset here just over 4% prospectively. And if you take a at the account today, we're going to be adding approximately $582 and $137.2 in Cuba cash flow to the plan. So in March, you'll be seeing 79,009 97 to 88. It combined cash flow so that the way that we're managing the account of your fully structure today you know, we we have been seeing. Anywhere from, I'd say, but 20 to 70 basis points in excess return overall primary benchmark in the different time periods. So I'm going to kind of stop there just to see if there are any specific questions. Are you guys want me to get into any of the details today regarding the current bond market? >> thank you for for the information. The compared to the index. That's that's gross. >> That is Gross. Could >> And I just I'm looking at Page 17 of the slide deck here. The quarter today. is that January to today or is that? >> No, that was designed for 31st. Got you. Okay. Want to make sure? Yeah. Yeah. >> Yet pulled up the when they came in and it looks like. The we are fully structured Euro, but just under one percent on a gross So we've gained about 140,000. In terms that returns of about where you guys started. Back in >> thank you. Yes, so like I the you know, I can this over if you guys want to see it. But the cash comes in monthly. >> You know, like I said, it's evenly distributed. So March is actually big month. You're getting 79,009, 97 but then in April drops to 34,005 68. It's just when Cuban people to it. But in aggregate over the next 12 months, it's 5 to one 37 spot, too. Yeah, looks like we. Have you scheduled. Appreciate the introduction and thank you take the time to do You know, California, we have the schedule. Looks like October 22nd for. Full presentation. Is it something into space doing to up on a clear in person? >> That will come out in It just it was easier kind of shorter notice to do the first one And I you know, it's hard for me to kind of walk you guys through this not being there in person. I hope that you, you know, can look at the slide deck we sent over because that is, you know, a bit of broad overview how are how we're doing If I were to highway one page would be page of that you guys got, which really I think is the best thing you can see in terms of how we're going to find value for you. So what that really is looking at is the entire investment grade corporate bond universe on a Bloomberg screen and we would read you know, about horizontal axis that's looking at duration of each of the coupons or the corporate bonds and then on vertical axis. But showing you the spread of hope for a comparable treasury. So will the way we do this every day we come in and where we're looking at these. A screenshot to kind of find relative value. And what we're doing is we highlighted in that white box at the top. Those are bombs today that are offering additional spread about them kind of the overall curve. And those could be where we would roll up our sleeves and look at why are these trading cheap? Is there reason if we find a good credit that's old offer some reason just because that may be the benchmark of shot went off. We would actually do want to buyers of that. That take that extra coupon if we believe that the credits fine and that you can earn above average returns on your capital. And the process is really just to do that. Every single Drive your portfolio to the highest access return we can find with the least amount of risk. >> Well, thank you for that of see any other questions. So appreciate the information and we'll see you in October. >> Yeah, we look forward to seeing you guys in person. Thank you so much for having And this probably goes without saying, but we're honored to be managing the account for you. Thank you. >> OK, moving on unfinished business. See any so we'll go on to new business. We have a presentation and discussion Jenkins for financial statements for fiscal years ending. 25 24. So Daniel Anderson and Jennifer Trotter. Good morning. Mister chair members aboard. Are you guys doing this morning? day. You audit partner with moment. You can that overall responsibility for the plans 2025 fiscal year and audit. >> I've got jumper Trotter with me. Here is a director with us. And she really oversaw the day-to-day activity related to it as well. So I want to make sure she was here to present. Also. You should have 2 items in your agenda packet. One is the audited financial statements themselves look like this. The second is what we refer to our auditors discussion and analysis and it goes over our choir communications governance. I'm going focus my presentation on this and they'll hit some highlights in the financial statements and take any questions that you guys might have. The first couple pages of that water discussion and analysis really just talked about moment. Jenkins, we've served as your auditor for several years now. It's all kind of skip over that you guys knows pretty well. I'm going to start on Page 4. That's titled Independent Auditor's Report. We obviously performer audit issue our opinion on the fairness of the presentation of the financial statements, I'm happy to report we issued an unmodified opinion, which is the highest form of assurance that we can render. We did perform our audit in accordance with generally accepted auditing standards as well as government auditing standards, to support that opinion. Ultimately management is responsible for the financial statements in the accounting policies that you'll see and know one of the financial statements, our responsibility is to perform on it based on those auditing standards to support that opinion. On the bottom. Probably quarter of the page where it talks about the compliance report with the plan on it. I really like to say that we need to separate audits. We audit the numbers. We're testing the investment balances tested in contribution benefit payments, et cetera. And then we also do we call compliance audit, which is where really testing, you know, how is the plant operating in accordance with the plan document? So we're making sure that only eligible employees are participating in the plan. We're selecting a sample of employees. And Rick, recalculating their pensionable ages that are being applied to the plan. The contributions that they're making are appropriate as well as the retirees who are. Receiving benefits of making sure those benefit calculations are correct as well. Happy to report within that complex, appropriate. No findings or recommendations to bring to your attention in any of that compliance testing that we performed either. Before to Page 5. You know, I mentioned that management responsible for the accounting policies. We evaluated them and determined to be appropriate in accordance with all applicable standards. They're also knew of no new pronouncements that were implemented during the year. The impact of the plan you'll see later in the auditor's discussion and analysis, it talks about future accounting pronouncements as well. There's really nothing that's going to impact the plan that has been issued by guys be at this point. Moving to Page 6, the financial statements do include you. Management judgments and accounting estimates, the most significant of which are the fair value of your investments as well as the required employer contributions that are determined by the actuary. We evaluate those and determined to be reasonable and appropriate as part of our audit procedures. All talk about the most significant know disclosures. When I jump to the financial statement here to minutes, all skin that paragraph there moving to the 2nd half a page 6 when countered no difficulties and working with management performing the audit. That and Lori Anthony, they do a great job of getting us the information that we need, the timely manner. Keep great records. It's very easy for us to get through to perform audit process. And performing the audit. We had no corrected or an corrected misstatements, which is always good to see that. I present these. Everyone loves hearing the unmodified opinion. But to me, this is just as important where the information that you're getting us. We're not having to go through make adjustments, which isn't super common and governmental accounting and auditing. So I think that's just as I like, I like that because to me, that's as big of a deal as as the unmodified opinion. We had the disagreements with management over the application of any accounting policies or procedures. I think inclusion of the audit we obtained written representation for management over the information provided to us. Jumping to page 7. We're not aware of management's consultations with other accounts earlier for Kuz opinion shopping. No significant issues. Discuss with management to bring to your attention and moment. Jenkins is independent with respect to the plan in accordance with EPA standards. Any questions on that thus far. All right. So just a few comments on the audited financial statements that you just got some information about your investments, which really makes up the majority of your ballot sheet I always recommend the if you're looking at anything within the financial statements pages 4 through 8, the management's discussion and analysis that gives you good information about the year in financial position as well as the changes. That's also compared to the 2 prior fiscal years as well. It also provides management's narrative that give you some feedback as to why the changes occurred during the fiscal year. So that they put in a lot of work to that. So I do recommend, you know, evaluate reviewing if you're reviewing anything. Jumping to page 9 on the Your net position. The ending that position was almost 193 million dollars at the end of the fiscal year, which like I said, is mostly made up of the investment balances that you have offset by a little bit of the liabilities. And there are some contributions and there as well. Page 10 goes over the statement of changes and finish your net position or your income statement. Contributions of 7.7 million dollars, net investment income of 14.6 million dollars for a total additions to the plan of 22.3 million dollars, which are reduced by the benefit payments and administrative expenses. Almost 14.4 million dollars which leads to the increase of about 7.9 million dollars for the fiscal year. We have the page 10. On on the financial Okay. I'm sorry. I transition quickly >> and so moving to the notes to the financial statements and I'm going to jump all the way too. Page 9.18, top of Page 18. And this just reflects the net pension liability of the plan so that total pension liability is determined by the actuary of 219 million dollars in accordance with gaz. Be that it's offset by sheer net position of a 192.6 million dollars to come up with the net pension liability of the city at the end of the fiscal year, you'll see the 87.0. 82 1% from a gap basis. Guys, the bases, that's the funded ratio of the plan. I know the actuaries funded ratio is just slightly different because they take into some different factors on how the contributions are being applied. So that's why you see 2 different percentages. One is really based on jazz be a gap in the other ones based on the actuary, but still a very, very solid funded position of the plan at the end of the fiscal year. Moving to the bottom of the page 19, you know, a lot of that total pension liability is impacted by the investment rate of return. That's being chosen of 6.2%. This disclosure really just shows how is that pension liability impacted by a change in that investment rate of return. So if we increase that by 2% to 7.2%, that 26.7 million dollar liability drops to 7.1 million dollars. Conversely, if we decrease the percent by one to 5.2%, it becomes almost 50 million dollars of that net pension liability. So those type of things are very long-term projections so I don't recommend Getting to sway one year or another. We just evaluate that over time. And you're obviously working with your investment advisors near actuary to set those rates and ensure the plans getting the return on investment that they're they're expected to The last thing that all mention is on Page is 21. And 22 of the report. And this really just goes over that pension liability gives 10 years worth of history as far as that goes. So that's where you can see, you know, how is out? Trended over the 10 year time period and page, 22 provides 10 years worth of contributions that are being made to the plan. With respect to the actually determined contributions as well. And how is the plan contributing with what the actuaries require you to contribute? So those are just good. Signs to look at. Are. Schedules to look at as you're kind of value in the plan's performance over time running. Well, isn't sure is. It sure is. That's the highlights from the financial statement. Any questions on the statements themselves? Thank you very much. We appreciate serving as your orders and look forward to working your team again next year. It's a it's a testament to the pension as well. Have opinion and finding so. >> as well. Just before you all move on, you need a motion to approve. Okay. I make a just think. For fiscal year September 32,025 second. Okay. We have a motion by Treasury Stricklin second by a trustee Thornburgh to approve >> statements here from 25 to 24 seconds. All those in favor say Aye. Aye. Post your votes. Aye. The motion passes unanimously. think you're getting much. Thank you. All Moving to attorney matters. >> Just a good morning, everyone. I just have one update from the Internal Revenue Service. Some good news for you all. When you travel on behalf of the board or on behalf city? Well, you know, get 72 and a half per mile, which is to have since more than the last year. just year-old reimburse Muntz and I know one in service made the changes that will discuss the last meeting. And I believe that's going to be talked about the March meeting. Okay. and that's all I Thank you. Moving on to other matters. MS Martin. >> In your packet for your is an asset allocation. >> As of 11th 26. It's just for your information is before we did withdrawals for payroll. Then. Next item. Yeah, I'm pretty sure everybody you are well aware >> 80 challenges we have coming up in. I just spoke at the police board meeting before this and just putting it on the radar that this is something that we become compliant in compliance with. So we're going to be asking our consultants to provide their documents. Already 80 a so we need to make sure the board is aware that this may come with more fees. So, you know. We don't know how much that's going to be as of yet. We just be aware. We need to put the board on notice. so we're all trying to get through this process. We all are in. We spoke at our last they that everybody is dealing with morning very good. >> So this is coming from the so all governments are going to have to their website will need to be ADA we're looking at it because it came up in Tampa first because they have to be 80 live by this April. Some don't have to be until next April, depending on the size. So we are trying to look at some solutions space on Sunday. So on that of the deadline of when you have to become compliant size of the community, it's I think it's the amount of people looking at the Web site. I think it's 50,000, I think is so we are we're looking at this, too, because it's going affect all of our clients. Really? The plan sponsors. But this is going to affect. So we are working on a memo of trying to figure out system solutions because I think the biggest issues are the reports with the graphs to get what you race. there reports and I guess if day. If they provide hard copies and just, you know, maybe there's a couple pages that provide. Electronically. Is that knows that option or the quarterly report doesn't have to go on the Web site, right? So maybe not that one, the audit on it, it has to go to Web sites. So we're working not that you guys use on Mars, but salt marshes, one of the ones we're working with of how did they make their report compliant and we would pass that along to all of the auditors of our plans the gas, the report has to be put on the website. Actuarial valuation has to be put on the Web site. So we also reached out to the state because we were trying to figure out how do we our how we comply with the state requirements of certain reports, but also the DOJ and the state. That wasn't their priority, right? They care that you follow the state law. They don't know how to help you follow the federal law. So we are we are trying to do some guidance. I I think I know you talked about software earlier in season, looking some right. You know, so hopefully that will. >> But we just have to be mindful that these clients me increased their fees. >> So obviously we have some items that have to posted on the lot. But then we have items that just me, you know, her just routine business. They're on. On the website by virtue of just the link to the meeting and with the backup materials. Those will have those have to be right that point earlier. So the quarter performance report. Yeah. Do we? Do what he post? Just maybe a couple pages of that and provide the larger hard copies or does this. He deposed anything he was providing to the board in hard copy format. That also needs to be posted on the website and media comply or can there be difference? There could be a different right. It might make it might be easier for the city if they just deal with the things that have to go on the Web site. Right? And then, yeah, okay. >> Yeah. And then as they get more comfortable that maybe they move for the other things. But like the quarterly board doesn't have to go there. I think you guys put on there because it's easier and it's convenient. So we've already removed a lot of stuff, OK? You don't have And that's what I I think that is yeah, in this case early on, we should do the least that we have to do until we know how to handle all of it. But yeah, it is something we're looking at. I hope that we have a memo out for you for all of our plans in March. That is our goal. But I I think it's going to be a little rocky. might be a little price to it for us do. that's something to be shorter This is going to cost okay. >> And that was really all just wanted to bring it to them. Yes, down that. All right. >> Yeah. Haha. >> All just said >> we had the tension that the board report on Tuesday with commissioner. They went well, you know, questions for. Everyone serving on the sport. So thank all the fellow board members as well for your participation and and a continuing effort as manages plans of. Thank you for that. >> Thank you to Miss Graves and our staff and area can do without yeah, they're very So I wanted to just to thank you for for that Reese's Sept and in and out. It really almost. >> Shocking that we that every time. That's Up. All Is they do have 2 things that I wanted to to bring up first. I just wanted to take everybody's temperature and hearing that the clear bridge presentation that there was a question to us that. >> We may want to move from active passive. So I just wanted to take everybody's temperatures. That's something that we want to put on an agenda in the future. >> Yeah, I did respond. But I mean, we've already done with Vanguard for the large cap We've we've done that. I guess we can certainly pose that question Scott and he did when they're here the next time. I didn't know if you want to put all our eggs in the passive since we already have. You to vanguard. But >> I mean this to be if you know, I be an agenda item to into the discount. Yeah. We want to do it then the next here and have that discussion want to do before. I'm fine with Everybody else. to go with Okay. Which think that's April as a provocation. And then the other thing I wanted to bring was the legislature and property taxes and wanted to see we need to have a discussion about that or where where things are. Do we want to wait until we find out exactly what will be on the ballot? But I think it's a discussion that we need to have as far as potential impacts. Sure. Yes, I guess I would suggest you need a discussion and we're going to new board presentation see the mission for presentation. >> A March second. I >> for those purposes for this board, we should wait. To see more about where we're going with that. Yeah, we'll see what the final product that there's a final product that comes So that should be coming out with legislation so well. >> See how it goes in life my We have passed it. Yeah, passed committee and I think are waiting for House floor action. If any, there's no counterparts in the Senate right seeing exactly affecting a special session. Well, that, that special session is what also do with redistricting is also being that's that's right. yeah. So I guess we'll have more information by the April meeting. Allison, him maybe in the future planet out of weakened a little bit >> They have okay. That sounds good. Anything else? going join the meeting 11, 19. Thank
Book 1 Page 531 02-19-2026 10:30 a.m. MINUTES OF THE CITY OF SARASOTA GENERAL EMPLOYEES’ PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF FEBRUARY 19, 2026 Present: Chair Ryan Chapdelain, Vice Chair Mark Nicholas, Treasurer Kelly Strickland, Secretary Shayla Griggs, Trustee Jan Thornburg, and Trustee Barry Keeler. Others: Attorney Lindsay Garber, Pension Plans Administrator Debra Martin, and Pension Specialist Peter Gottlieb. Absent: Trustee Robert Reardon. 1. CALL MEETING TO ORDER: Chair Chapdelain called the City of Sarasota (City), General Employees’ Pension Plan (Plan) Board of Trustees Regular meeting to order at 10:30 a.m. 2. PLEDGE OF ALLEGIANCE: Presenter(s): Secretary Griggs. The Board and meeting attendees stated the Pledge of Allegiance. 3. PLEDGE OF CIVILITY: Presenter(s): Chair Chapdelain. Chair Chapdelain stated for the record, “We may disagree, but we will always be respectful to one another. We will direct all comments to issues, and we will not engage in personal attacks.” 4. ROLL CALL: Presenter(s): Pension Plans Administrator Martin. Pension Plans Administrator Martin called roll; Trustee Reardon was absent. 5. PUBLIC INPUT: None. 6. APPROVAL OF MINUTES: 6.1. Approval Re: Minutes of the General Employees’ Pension Plan Board of Trustees Regular Meeting of January 22, 2026. Presenter(s): Chair Chapdelain. Trustee Keeler made a motion to approve the minutes of the Board’s January 19, 2026, regular meeting; Vice Chair Nicholas seconded the motion. The motion passed unanimously (6-0). 7. APPROVAL OF RETIREMENT REQUEST(S): 7.1. Presentation and Discussion: The Early Retirement of Stacie Mason. Presenter: Pension Plans Administrator Martin.
Book 1 Page 532 02-19-2026 10:30 a.m. Pension Plans Administrator Martin advised that Ms. Mason requests an early retirement effective February 7, 2026, with 22.24 years of service at age 55; she selected the lifetime only option. Trustee Keeler made a motion to approve Ms. Mason’s request for early retirement; Trustee Thornburg seconded the motion. The motion passed unanimously (6-0). 8. INVESTMENT PERFORMANCE REVIEW: 8.1. Presentation and Discussion Re: Clearbridge, Performance Review as of December 31, 2025. Presenter(s): Jeff Layn, Director, Client Portfolio Manager, Clearbridge; Steve Votto, Director, Institutional Consultants, Franklin Templeton. Jeff Layn of Clearbridge and Steve Votto of Franklin Templeton appeared before the Board and introduced themselves and their presentation. Mr. Votto provided a brief market summary, noting the portfolio had been relatively outperforming its benchmark until early April 2025, but then trailed for most of the remainder of the calendar year. This underperformance was due to a momentum-driven rally and significant concentration in a small group of mega-cap technology companies and hyper-scalers which were perceived to eventually benefit from artificial intelligence (AI) and caused the market to disregard fundamentals; a high-quality portfolio such as Clearbridge’s was unable to keep up with its benchmark. He asserted the portfolio is positioned to outperform as the market broadens and returns to rewarding fundamentals. Mr. Layn provided additional details of the market environment in 2025. Referencing the page titled, Mega cap concentration continues to increase, he explained how active managers are unable to match the pace of a highly concentrated index, as had been the case with this strategy and its benchmark, the Rusell 1000 Growth Index. While the stocks and sectors in which the index is concentrated are reasonable investments, an active manager would need to hold greater allocations than the index to outperform, which is an unreasonable concentration risk for Clearbridge. The page titled, Momentum stocks have dominated since Liberation Day, shows how the market favored momentum over quality through approximately November 2025; from mid-December 2025 through the current day, the market has been sporadically broadening. The page titled, Russell 1000 Growth Index since Liberation Day details the returns generated by the sectors and subsectors expected to benefit from AI, and those which suffered. On the page titled, Drivers of 2025 relative underperformance, Mr. Layn explained that the difference between the capital expenditure (Capex) expectations and actual amount expended in 2025 changed dramatically and accelerated the disruptions in digital industries. The strategy additionally overestimated the growth of health care; while the portfolio has traditionally been overweight in this sector, this sector lagged during the market’s concentration in perceived AI beneficiaries. Some of the health care companies which detracted from the portfolio’s performance include United Healthcare and Novo Nordisk which declined in value; Clearbridge has since sold both. Eli Lily benefitted from a presidential executive order assuring Medicare reimbursement however the portfolio sold its position before the gain. He discussed how AI is reshaping software companies like Adobe, Intuit, Sales Force, and Workday, but that the market isn’t accurately rewarding those changes, which in turn, hurt the portfolio’s performance. He asserted the economy is healthy, the labor force is adequate, and provisions of the One Big Beautiful Bill will begin to inject approximately $280 Billion of stimulus into the economy in 2026 which will benefit not just the AI hyper-scalers in the market concentration, but the remaining companies in the market; in this broadening environment, he asserted the portfolio will outperform. Mr. Votto noted that it would be reasonable for the Board to discuss moving from active to passive management in the current environment. He added that because the Russell 1000 Growth index is so concentrated in AI beneficiaries, if the massive Capex investments into AI do not result in substantial earnings, passively managed funds will suffer and the portfolio will outperform. The Board thanked Mr. Layn and Mr. Votto for their presentation. 8.2. Presentation and Discussion Re: Genter Capital, Strategy Overview.
Book 1 Page 533 02-19-2026 10:30 a.m. Presenter(s): Brian Elliott, Senior Vice President, Director of Institutional Division; Christian E. Kraus, Vice President, Director, Southern Region/Institutional Division; Genter Capital (Telephonic). Brian Elliott of Genter Capital (Genter) appeared before the Board telephonically and introduced himself and his presentation. Mr. Elliott provided a brief firm history, noting the Plan is invested in Genter’s Taxable Quality Intermediate Strategy; the strategy is benchmarked to the Gov Credit intermediate index. The portfolio is both high quality and high conviction. It looks for relative value between treasuries, corporate bonds, and agency debt, and within each of those sectors, credit selection. Zephyr, a comprehensive portfolio analysis and investment manager search platform, has ranked Genter 5 or 6 stars in each of the last 10 years; such rankings require top 10 returns amongst its peer group for both the 3-year and 5-year periods. Mr. Elliott attributed Genter’s success to having a tighter duration than the broader aggregate universe which will have the longest duration when interest rates are lowest; this is critical because duration, which can range from 3 to 7 years, is the most significant risk factor in fixed income. The portfolio’s duration is within half a year of the benchmark’s, which is slightly less than 4 years. The strategy is using corporates at the front part of the yield curve, which is still inverted and has more risk, and buying credit closer to maturity to mitigate that risk. Genter uses treasuries in the longer part of the yield curve to manage duration. As constructed today, the portfolio’s Yield to Worst (YTW), meaning the lowest possible yield before default, is approximately 412 basis points at the end of the year; he noted that the YTW almost perfectly correlates to the forward return. Based on the account value, he expects to add approximately $582,137.02 in coupon cashflow to the Plan, and the Plan will receive $79,997.88 in March 2026, which represents 20 to 70 basis points in excess return above the primary benchmark. To Chair Chapdelain’s questions, Mr. Elliott confirmed the returns are on a gross basis; he clarified that the quarter-to-date and year-to-date data on the Annualized Performance Comparison page reflects data as of December 31, 2025. As of the current date, the portfolio is up approximately 1% gross since the Plan’s initial investment in November 2025. He further noted that coupon payments are irregular and the April 2026 coupon payment will be approximately $34,000. Chair Chapdelain thanked Mr. Elliott for his presentation. Mr. Elliott advised he anticipates presenting at the Board’s October 22, 2026, meeting in person. He suggested the most informative page of the materials is titled, Finding Relative Value, as it shows the entire corporate bond investible universe which measures duration on the horizontal axis and the spread over treasuries on the vertical axis; the white box shows the bonds which offer additional spread over the curve. The Board thanked Mr. Elliott for his presentation. 9. UNFINISHED BUSINESS: 10. NEW BUSINESS: 10.1. Presentation and Discussion Re: Mauldin & Jenkins, Financial Statements for the Fiscal Years Ending September 30, 2025, and 2024. Presenter(s): Daniel Anderson, CPA, Partner; Jennifer Trotter, Director; Mauldin & Jenkins. Daniel Anderson and Jennifer Trotter of Mauldin & Jenkins appeared before the Board and introduced themselves and their presentation. Mr. Anderson briefly reviewed the Auditor’s Discussion and Analysis. Beginning with the Independent Auditor’s Report section, he noted the opinion is clean and unmodified, which is the highest assurance an auditor can render. The audit was performed under generally accepted auditing standards as well as the Government Auditing Standards Board (GASB) to provide a reasonable basis that the financial statements
Book 1 Page 534 02-19-2026 10:30 a.m. are free of material misstatements. At the end of the financial statements in the Other Auditor’s Report section, is the compliance statement which discusses the auditor’s tests and concerns over internal controls with respect to laws, rules, and regulations; this section only lists negative findings and deficiencies identified during the audit, which Mauldin & Jenkins found none in the current audit. He briefly reviewed each of the Required Communications listed on pages 5 and 6 of the Auditor’s Discussion and Analysis. Turning to the Financial Statements, Mr. Anderson encouraged the Board to read the Management’s Discussion and Analysis, as this is the Plan’s narrative of its financial operations over the course of the audited period. The Statements of Fiduciary Net Position states that as of September 30, 2025, the total liabilities and net position was $192 million; the Statements of Changes in Fiduciary Net Position for the Years Ended September 30, 2025 and 2024 show the changes in Additions and Deductions which resulted in the Net Position at the end of the audit period. Under the Notes to Financial Statements, Note 5. Net Pension Liability (Asset), Mr. Anderson explained that, within the Plan fiduciary net position as a percentage of the total pension liability, Gabriel, Roeder, Smith, and Company, the Plan’s actuary, determined the Total pension liability of $219 million in accordance with GASB, for a healthy funded ratio of 87.82%; he noted that the funded ratio on an actuarial basis is slightly different. He reviewed the Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate which recalculates the net pension (asset) liability if the expected rate of investment return were increased or decreased by 1%. He briefly reviewed the Schedule of Changes in the Net Pension Liability (Asset) and Related Ratios and Schedule of Contributions pages. Pages 21 and 22 of the Financial Statements have the Schedule of Changes in the Net Pension Liability and Related Ratios, as well as the Schedule of Contributions, which include 10-year histories of each to show long-term trends. The Board thanked Mr. Anderson, Ms. Trotter, and Pension Administration staff, for their efforts in producing the audited financial statements that resulted in a clean opinion. Treasurer Strickland made a motion to approve the Financial Statements for the fiscal years ending September 30, 2025, and 2024; Trustee Thornburg seconded the motion. The motion passed unanimously (6-0). 11. ATTORNEY MATTERS: Attorney Garber advised that the Internal Revenue Service has increased the mileage reimbursement rate in 2026 from $0.70 per mile to $0.725 per mile. Attorney Garber advised that Attorney Kaufman has incorporated the requested changes to the proposed ordinance regarding in-service distributions and will discuss the matter with the Board at its March 26, 2026, regular meeting. 12. OTHER MATTERS: 12.1. Presentation and Discussion Re: Asset Allocation as of February 11, 2026. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin presented the Asset Allocation for the stated period for the Board’s information. 12.2. Presentation and Discussion Re: Public Meeting Materials and the Americans With Disabilities Act. Presenter(s): Secretary Griggs. Secretary/Treasurer Griggs advised that, effective in April 2026, the City will require all documents posted to its website, including digital copies of materials presented at public meetings, to be fully accessible as required by the Americans With Disabilities Act (ADA). As such, the Plan is asking presenters, including fund managers, the investment consultant, as well as the Plan’s actuary and auditor, to ensure their materials are
General Employees' Pension Plan Board of Trustees Regular Meeting
GENERAL EMPLOYEES' PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING
10:15 a.m. February 19, 2026
2.
PLEDGE OF ALLEGIANCE: Presenter(s): Secretary Griggs.
MEETING NOTICE AND PUBLISHED AGENDA
Click to View Change to the Order of the Day, Meeting Notice and Final Published Agenda.
1.
CALL THE MEETING TO ORDER: Presenter(s): Chair Chapdelain.
5.
PUBLIC INPUT:
OTHER INFORMATION: The next Regular Meeting is scheduled to be held on Thursday, March 26, 2026, at 10:30 a.m. or immediately following the Police Officers' Pension Plan Board of Trustees Meeting in the City Commission Chambers.
Click to View the 2026 GE Regular Meeting Schedule.
3.
PLEDGE OF CIVILITY: Presenter(s): Chair Chapdelain.
"We may disagree, but we will be respectful of one another. We will direct all comments to issues. We will not engage in personal attacks."
6.
APPROVAL OF MINUTES:
6.1.
Approval Re: Minutes of the General Employees' Pension Plan Board of Regular Meeting of January 22, 2026. Presenter(s): Chair Chapdelain.
Click to View Backup Materials.
4.
ROLL CALL: Presenter(s): Debra Martin, Pension Plans Administrator.
SPECIAL NOTES: Proceedings will be electronically recorded. Should an individual require verbatim transcription of the proceedings, the individual shall bear the burden and expense of arranging for the same. The Pension Boards are committed to providing qualified disabled individuals an opportunity to participate in meetings of the Pension Boards. If you are a qualified individual with a disability who requires reasonable auxiliary aids and services in order to participate in these meetings, please advise the Office of the City Auditor & Clerk in advance as to the nature of the auxiliary aids and/or services necessary.
Notice to the Public
Click to View Notice to the Public.
7.
APPROVAL OF RETIREMENT REQUEST(S):
7.1.
Presentation and Discussion: The Early Retirement Request of Stacie Mason. Presenter: Debra Martin, Pension Plans Administrator.
Click to View Backup Materials.
8.
INVESTMENT PERFORMANCE REVIEW:
8.1.
Presentation and Discussion Re: Clearbridge Investments, Performance Review as of December 31, 2025. Presenter(s): Jeff Layn, Director, Client Portfolio Manager, Clearbridge; Steve Votto, Director, Institutional Consultants, Franklin Templeton.
Click to View Backup Materials.
8.2.
Presentation and Discussion Re: Genter Capital, Strategy Overview. Presenter(s): Brian Elliott, Senior Vice President, Director of Institutional Division; Christian E. Kraus, Vice President, Director - Southern Region / Institutional Division; Genter Capital (Telephonic).
Click to View Backup Materials.
9.
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>> a hearing. Are you near Mike? I can hear you. Are you near Michael? Yes, I am sitting right in front center in front of it. OK, are you close to it or you just standing there? I'm within the 3 to 5 inches. Okay? Yeah, I I can hear you. Thank But look at Has been a little bit a struggle right >> All >> right. We'll go ahead and call the 1920 ploys Pension Plan Board of trustees regular meeting to order. We will go ahead and start with the Pledge of Allegiance. Just to United States of America. >> to the Republic for which stands. One nation. >> next time as the pledge of stability. We may disagree, but we will be respectful to one. Another will direct all comments to shoes. We will not engage in personal attacks. He's number for roll. Miss Martin. >> Chair chapter your vice chair, Nicholas here, Secretary Graves here, Treasure Strickland here, trustee, Keeler here, trustee, Thornburgh here. in contact with us this morning and asked to be excused to do some work issues that came up unexpectedly. Okay. Houston consensus for that are. Is that I mean because you can move forward. Okay. >> Very Public input. Okay. We'll go ahead is to the approval of We have the January 22nd 2026 meeting minutes for consideration and approval. I still can't figure out how he does all eyes Haha. >> I'm an incident January 22nd. I'll second that motion. We have a motion by. >> Trista Keeler, seconded by Vice chair close to approve the chair 22nd 2026 meeting minutes office in favor say aye. I pose chair votes. Aye. The motion passes unanimously. Okay. Next item number 7, the retirement request. Miss Martin. >> Yes, we have the early retirement requests Stacy Mason at the age of 55 years old after 22.0. 24 years of service time retiring on that during the 7th and she has selected the lifetime option. Only. A move to approve the early retirement Things you mentioned. >> Second. Okay. We have a motion by Tris the killer second by trusty Thornburgh to prove the earlier time request states Mason. All those in favor say Aye. I posed chairman said that motion passes unanimously. All right. Moving right along to investment performance. Or do first we have clear Jeff Lindsey Vonn a welcome warning warning. You know, >> What's good? I'm Steve. I do this. My colleague, Jeff Lee and first and foremost, really appreciate the longstanding partnership believe that the city of Sarasota. More importantly, right appreciate your patience. Given Calendar year 2025, you know, certainly didn't meet our expectations. I would imagine underperformed your expectations. So the idea here this morning is Jeff, who's been with clear bridge for 18 years has worked intimately closely with the portfolio managers on this strategy. It's going take you through last calendar year. Discuss what went wrong. What worked against us? What we learned from it, our position in the portfolio on a go-forward basis to deliver on our mandate of outperforming the wrestling 1000 growth net of fees and just short of that as a backdrop. Last year was really the tale of 2 markets. The head 1st half of the year, which sure you all remember going into the under failing the tariff plan with the market sold off. And during that time as you'd expect from this type of portable and it's more diversified, we protected on the downside. We're outperforming I the the index on a relative basis by a wide margin coming out of that period from mid April through the end of the year we underperformed quite a bit. What you had there market that was up 50%. The peak, which very momentum driven for fundamentals were put aside. The market was on balance, rewarding was perceived as AI winners and analyzing what was perceived as AI And and in this type of portfolio where you Companies across all spectrums. You had a hard time keeping up in this concentrated momentum. Mega Tech driven rally. As we sit here today. And we certainly feel well position that a go-forward basis where anytime you have this. So the area of concentration index, we have 70% of the index and technology, which is really unprecedented. You're ultimately at some point going to have market that broadening out, which you saw towards the end of last year and continue this year and that tail when that benefited the index is going to act as a headwind for the index. We think that well well for our portfolio and but really it's been a challenging time for all all active managers in the large space last year. You had 4 out of 5 active managers underperformed the index. We We weren't alone in this doesn't make it any easier to digest a, however, if we think the challenge last year are are behind us and the market start to reward a more balanced portfolio. That's not 70% technology. And on the seas. Secular Com Pounders. Haven't participated quite as much. In a market that's going to be driven more by earnings growth. The last by multiple expansion that should help the portfolio. So pause there are just get into some of stats and how a position today. And and last year that. >> We'll save time for any questions. You have. >> Thank And want to states comments on appreciate the opportunity and the through the years here when I look at last year and what worked and what didn't work for us in the in the strategy is Steve said and being part of the you know that April marked January, 1st through April, 8th time frame on a relative basis, performance was was good. We outperformed on April 9th period just to put it in perspective of that magnitude, that 6 month window was the 4th best 6 month window in the markets. History from peak side down in a momentum rally. When we talk about the 3 buckets and diversification of of different types of stocks and differentiated growth rates that really caught us off signs that caught us on our heels. From that standpoint in to put some context to it. If you if you look at Page a 9 of the deck in front of you you'll see just a concentration risk that is in the market today. And and ultimately how different that has been over the last 5 years. The magnitude of change. And when you look at the it at the end of in the benchmark, it was 50 plus percent. Just it. That doesn't take into account the additional sector of communication services. Those are effectively it companies just call the different mean we had in 5 of those names. Amazon, Meta alphabet, Tesla, just to put in contact and you're roughly 70% of a benchmark. This is a 480 plus benchmark. That is one sector and 5 stocks are 70% of that. That's where we would argue that the risk is embedded in the market. The rest of the benchmark 30. But how dramatically is that changed over the last 5 years? 5 years ago, we took that same snapshot and you are up 58% and today around it, call it 70%. That dramatic shift of of market cap movement, more momentum. I'm not saying that they're not great stocks. There are. But the question then becomes waiting do you want to own those? And and so we look at it in the top 3 names in the benchmark today at the end of the year, rather, we're roughly 36% of the 3 equals 36%. That's a big number. And for us, if we're bullish on those names, you buy mathematical calculation have own more than the benchmark is otherwise you're going to underperform on an attribution bases and we look at and say that's difficult for us as a diversified growth manager. And so when you look at that Page, 10 shows you you know, I'm a market returns just to put it in perspective for you and then ultimately Page 11 shows you, you know, in the beginning of the year quality matter. And this is quality defined by the benchmark. This isn't us cherry picking and saying these are quality names. This is defined by the bench at the end of the year. That red line is momentum. And you see that the momentum really was what was driving the returns ultimately until around November. And in November, he started to see a broadening out of the You know, it came in, fits and starts so far this year. We've seen more of a broadening out that continues to take place. But to put it in context on on Page 12 shows you those different sub-sectors within the benchmark in their from April 9th. And you saw that. On the market really cared about that. Steve alluded to I am hyper Steelers. If you were in the 77 cap hardware, you're rewarded handsomely utilities like OK, utilities did well because someone needs to fuel all of these data centers that are being constructed. Those sort of components of But the rest of the market let, you know, was not with in that. And so the challenge for on Page 12 of 14, if you will. Where that you're looking at, cap ex expectations. This is the part that you have to take I think a large cup of water to small the pill that's being pushed out in regards to these cap ex expectations on a lot of these hyperscale companies and the money that they're spending last The expectation started that, you know, we'd be little less than 300 billion dollars of building up these data centers. But by the end of the we were well known to 400 were expecting this year that that number is going to be over half a trillion dollars. The question then is whether these companies have a return on invested capital they actually start making money from spending this kind of money. When you take a Google or Alphabet to parent company and you spend that money and you take your free cash flow to 0. At what point do you turn it to where that you can increase that? And that's the problem that we're having with this narrative. Yes, we like It doesn't mean that we didn't make mistakes along the way. We did a couple of things that I wanted to for your attention was health care 5 years ago, health care was about 16 and a half percent of the benchmark at the end of the year was roughly 6%. So you saw that that shift went all in to the it and everything there. Healthcare historically was more defensive. And so when I look at that, had some health care exposure. We've always had an overweight to health care in this portfolio for my whole duration of the you know, 18, 19 years now. And and so when I looked at that component of it, we had some names that hurt us in United Healthcare. We trimmed it in a December of when that they have the New York incident of the execution of their CEO then in April, when they miss their often, we trend in the game we should have sold it at that point. We sold in Q 3. So it's no longer import fully. We sold it, but it hurt from that to put it in context. That was the best durable compound are growing earnings quarter over quarter since the inception of count. So it was a great stock while it others in health care would be like a no vote or an Lilly their thesis was breaking down the NGO piece that we're doing well in the shots. But addressable from just refrigerated shot was limited. And and and when you look at the transition over to the pill side of the equation, their efficacy wasn't nearly as high as what expectation was. And so we saw both of those stocks, right decision to sell both of them at the time. Wrong decision on Eli Lilly. What we did not foreshadow was that to Trump administration would and signed an executive order of Medicare reimbursement for them that stock ripped so it hurt us. Biden not owning it in the back half of the year. Again, the thesis was intact and nothing changed. There. And then the software side of the equation. If you think about where that you're going to get a return on investment, these from these build out of the data centers. It's the utilization of them. Who's going to pay for these large language models and and actually access what they are constructing. We think the markets a little bit offsides on some of the software company's yes, AI is going to replicating replace some of them. No question. But there's a big sum proponent of that that is going to benefit from a I and so at the beginning of the year, we own the Dolby. We owned sales, forced into it work to name a few. We sold workday. We sold Adobe. If I look at Adobe you Photoshop, you know, that's Mike business. I can use AI to reconstruct that. So we do think that that's there but into it and using sales force our commute using AI 2. Look at your taxes to make sure that you're on. It proved look eye to make sure you're taking all your deductions. We think they benefit a sales force. No one has more data on companies, businesses and this, this world and sales using AI to mine and aggregate at so we trim, didn't we still own a those 2? But they hurt From that standpoint. And so from a position where we are for this year and and what the expectation is again, we think the economy's in good We think that the labor markets, it's not great, but it's it's OK, we do think that there is the legislation that was passed last year. The one big beautiful, though, as it's and that that will add about 280 billion dollars of economic stimulus this year through over time through tips interest on a loan deduction through cap tax and depreciation in year. One. And that will be very stimulative to about one percent of GDP. But I would strongly advocate that that is not just the hyper Steelers that are going to benefit from that. That is going to be a crossed. The board and a lot of other companies will benefit from that a position. And that's why you're starting to see the market question. We're and the amount of capital that these companies are spending, the amount of debt that they are now starting to put on their balance sheet. And you're starting to look at other side of the ledger of other businesses that can still benefit from it. From an standpoint, but don't have the cap back. So I think that's in our DNA. That's what we've always done. Well, is more of a fundamental broadening out of the market with that. I love paws and see if there's questions. that's helpful to in that context that. >> I was, you know, make a point of I think the the that is certainly the logical thing would be 2 contemplate moving from active to passive. Given the success that the index said not is just the Russell 1000 growth, but really in other categories as well. But I think in the case of the Russell 1000 growth, specifically it has become more this singular that on the success of AI the slide that Jeff mention showing the cap tax numbers. If these companies don't have the return on investment that the market perceives. You could see this, this trade really work against the index in a big way. >> that you would bode well for our portfolio, certainly and be a big headwind and a negative for the for the index. So just >> something that certainly consider as you're weighing your your options. >> Again, thank you. Appreciate the opportunity. we the next set gender Join us to a final plea. >> Wait to get on the line. ? ? ? >> Good morning. As Brian. >> Good morning, Brian. This is ranch chair of the Sea search of a general place pension plan We have you scheduled to just kind of an introduction in the So while we can hear you loud and clear and please proceed. >> Okay. Thank you so My name is Brian Elliott. I'm the director of Institutional division that Jenner first and foremost. I need to thank you so much the confidence in choosing a stir our mandate. We are currently up to take that sits at about 9 billion dollars in assets under advisement. And really the farm was started back in 1968. based in West Los Angeles, which is we're calling in from. We really were originally accounting practice. So the firm's roots really date back to that There's a very conservative approach that we're managing for. You as We kind taxable fixed strategy that is manage more or are precisely to the governor credit benchmark. We employ a very high quality high conviction portfolio. So what that means is you're buying a subset of the market where we're finding relative value we really primarily are looking at into areas for value. One is. Kind of scoping out the difference between the Treasury market, the corporate bond market. And you can see dad and so within those allocations were making an active decision. And then with the in each of those sectors, we're really focused on credit selection over the past 10 years. We have been named to the 5, 6 star manager which which is owned by south for which looks at the managed universe and to achieve that, it means that you've done top 10 performance on both 3 year and 5 year annualized basis. Among your peer group. So you really have chosen a strategy that has been exceedingly well throughout the rising interest rate environment and particularly the reason we do this is because we're managed duration. That's going to be them with the broader universe, which the way the AG is constructed, you're you're basically going to have a long as possible to ration when rates are lowest and the duration can move, you know, very wide range so it it's low. You can find a duration below 4 years at its high. It could be as high as 7 years. The reason this is important is that's kind of your biggest risk factor fixed income. With our benchmark to go credit benchmark in and we specifically are managing this to the intermediate benchmark. You're you're duration ranges within about a half year around for years. Currently, it's actually slightly below 4 years. So if you actually look at power, how we're managing your account, we're using the corporate part of the of the allocation at the front part of the yield curve where yields are actually inverted. Still slightly higher. And that's, you know, could have slightly more risk. But by foreign creditors better, you know, closer to maturity, you're taking less credit risk. And then we are utilizing treasuries today at the larger part of the curve to manage duration. So when you really look at the strategy, the way it's set up today, you're looking at current yield to worst of for 12 at the end of the year. The reason I point that out is that's really your affective return. If you look at that, you'll the worst number where your starting point is you go in the future. The correlation to your forward. Tom is almost perfect. So what that means is that you would be compounding the asset here just over 4% prospectively. And if you take a at the account today, we're going to be adding approximately $582 and $137.2 in Cuba cash flow to the plan. So in March, you'll be seeing 79,009 97 to 88. It combined cash flow so that the way that we're managing the account of your fully structure today you know, we we have been seeing. Anywhere from, I'd say, but 20 to 70 basis points in excess return overall primary benchmark in the different time periods. So I'm going to kind of stop there just to see if there are any specific questions. Are you guys want me to get into any of the details today regarding the current bond market? >> thank you for for the information. The compared to the index. That's that's gross. >> That is Gross. Could >> And I just I'm looking at Page 17 of the slide deck here. The quarter today. is that January to today or is that? >> No, that was designed for 31st. Got you. Okay. Want to make sure? Yeah. Yeah. >> Yet pulled up the when they came in and it looks like. The we are fully structured Euro, but just under one percent on a gross So we've gained about 140,000. In terms that returns of about where you guys started. Back in >> thank you. Yes, so like I the you know, I can this over if you guys want to see it. But the cash comes in monthly. >> You know, like I said, it's evenly distributed. So March is actually big month. You're getting 79,009, 97 but then in April drops to 34,005 68. It's just when Cuban people to it. But in aggregate over the next 12 months, it's 5 to one 37 spot, too. Yeah, looks like we. Have you scheduled. Appreciate the introduction and thank you take the time to do You know, California, we have the schedule. Looks like October 22nd for. Full presentation. Is it something into space doing to up on a clear in person? >> That will come out in It just it was easier kind of shorter notice to do the first one And I you know, it's hard for me to kind of walk you guys through this not being there in person. I hope that you, you know, can look at the slide deck we sent over because that is, you know, a bit of broad overview how are how we're doing If I were to highway one page would be page of that you guys got, which really I think is the best thing you can see in terms of how we're going to find value for you. So what that really is looking at is the entire investment grade corporate bond universe on a Bloomberg screen and we would read you know, about horizontal axis that's looking at duration of each of the coupons or the corporate bonds and then on vertical axis. But showing you the spread of hope for a comparable treasury. So will the way we do this every day we come in and where we're looking at these. A screenshot to kind of find relative value. And what we're doing is we highlighted in that white box at the top. Those are bombs today that are offering additional spread about them kind of the overall curve. And those could be where we would roll up our sleeves and look at why are these trading cheap? Is there reason if we find a good credit that's old offer some reason just because that may be the benchmark of shot went off. We would actually do want to buyers of that. That take that extra coupon if we believe that the credits fine and that you can earn above average returns on your capital. And the process is really just to do that. Every single Drive your portfolio to the highest access return we can find with the least amount of risk. >> Well, thank you for that of see any other questions. So appreciate the information and we'll see you in October. >> Yeah, we look forward to seeing you guys in person. Thank you so much for having And this probably goes without saying, but we're honored to be managing the account for you. Thank you. >> OK, moving on unfinished business. See any so we'll go on to new business. We have a presentation and discussion Jenkins for financial statements for fiscal years ending. 25 24. So Daniel Anderson and Jennifer Trotter. Good morning. Mister chair members aboard. Are you guys doing this morning? day. You audit partner with moment. You can that overall responsibility for the plans 2025 fiscal year and audit. >> I've got jumper Trotter with me. Here is a director with us. And she really oversaw the day-to-day activity related to it as well. So I want to make sure she was here to present. Also. You should have 2 items in your agenda packet. One is the audited financial statements themselves look like this. The second is what we refer to our auditors discussion and analysis and it goes over our choir communications governance. I'm going focus my presentation on this and they'll hit some highlights in the financial statements and take any questions that you guys might have. The first couple pages of that water discussion and analysis really just talked about moment. Jenkins, we've served as your auditor for several years now. It's all kind of skip over that you guys knows pretty well. I'm going to start on Page 4. That's titled Independent Auditor's Report. We obviously performer audit issue our opinion on the fairness of the presentation of the financial statements, I'm happy to report we issued an unmodified opinion, which is the highest form of assurance that we can render. We did perform our audit in accordance with generally accepted auditing standards as well as government auditing standards, to support that opinion. Ultimately management is responsible for the financial statements in the accounting policies that you'll see and know one of the financial statements, our responsibility is to perform on it based on those auditing standards to support that opinion. On the bottom. Probably quarter of the page where it talks about the compliance report with the plan on it. I really like to say that we need to separate audits.
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Department: APPROVAL OF RETIREMENT REQUEST(S): · Staff lead: Debra Martin, Pension Plans Administrator
ment Request of Stacie Mason.
Department: INVESTMENT PERFORMANCE REVIEW:
Debra Martin, Pension Plans Administrator.
Department: INVESTMENT PERFORMANCE REVIEW: · Staff lead: Jeff Layn, Director
rtfolio Manager, Clearbridge; Steve Votto, Director, Institutional Consultants, Franklin Templeton.
Department: INVESTMENT PERFORMANCE REVIEW: · Staff lead: Senior Vice President, Director
Institutional Division; Genter Capital (Telephonic).
Department: NEW BUSINESS: · Staff lead: Jennifer Trotter, Senior Manager
Senior Manager; Mauldin & Jenkins.
Department: OTHER MATTERS · Staff lead: Debra Martin, Pension Plans Administrator
TTERS
Department: OTHER MATTERS
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