>> you may begin the retirement board meeting of march 14, 2024. at this time. >> thank you, you want to call the roll please. >> mr. o'connor. >> present. >> commissioner enguardio. >> present. >> president. >> present. >> commissioner drinksco. >> present. >> thank you, we have a quorum. >> do you want to call item number 2. >> item number 2, communication. we welcome the public participation during public comment period. there will be an opportunity after close session and there will be an opportunity to comment on each discussion or

action item on the agenda. each is limited to two minutes. public comment will be taken in-person and remotely by common. they will take public comment first and then from people attending the meeting remotely. comments are opportunities to speak during the public comment period are available via phone by calling 415-655-0001 access code 26627209221 thep pound and pound again. when connected you'll hear the discussions. when your item of interest comes up, please press star three. speak slowly and clearly and turn down your computer and

radio. prohibit discriminatory or harassing comments against employees and will not be tolerated. more over public comment is permitted only on matters within the jurisdiction of this meeting body. we thank you for joining us. >> and there is no public comment, but call on the next item please. >> clerk: item number 3, close session. >> okay, at this time we're going to move into close session with an item which is legal counsel, pending litigation. and we'll

>> we need public comment to go into close session. >> do we want to go the vote again? >> we have not had a vote, do you want to make a motion. >> who brought the motion not to disclose the close session. >> commissioner tom? >> i made a motion to go into close session. >> the motion should be to go into close session and invoke the attorney-client privilege. >> let's move to go into close session and not invoke. >> i move to go into close session and not to invoke the attorney-client privilege. >> who seconded? and moved, is there any public

comment? >> thank you, we have no public comment. a reminder to any callers please star-3 to be added to the queue. >> moderator, do we have any callers on the line. >> no callers on the call. >> thank you, it's been moved and seconded. >> those in favor say aye. >> aye. >> those >> we are recording, you may resume open session. >> do you want to call the roll? >> commissioner o'connor. present. >> commissioner en guardio.

>> present. >> commissioner bridges. >> present. >> commissioner gandhi. >> commissioner bridges will be right back. >> may we have a motion to disclose the close session. >> i move not to disclose. >> second. >> all those in favor say aye. >> aye. >> those opposed? motion passes, now we can go into item number 4 on the open session. >> thank you, item number 4, general public comment. a reminder that public comment is limited to two minutes. we have no in-person public commenters. moderator is there any callers on the line? >> madam secretary, there are

no callers on the line. >> thank you, hearing no callers, public comment is now closed. >> you want to call item number 5? >> item number 5, action item approval of minutes of february 14, 2024, retirement board meeting. >> is there a motion. >> i move we adopt the minutes from the previous meeting. >> second. >> it's been moved and seconded. any public comments. >> we have no in-person public comments on the item. moderator are there any callers on the line? >> madam secretary, there are no callers on the line. >> public comment is now closed. >> it's been moved and seconded, those in favor say aye. >> aye. >> any opposed? item number 6. >> action 6, consent calendar.

>> okay, everybody has got a packet, is there a motion to deal with that? >> move to approve the consent calendar. >> second. >> public comment, please. >> we have no in-person public comment on this item. moderator are there any callers. >> madam secretary, there are no public comment on the call. >> no calls. >> motion has been made and seconded, those in favor say aye. >> aye. >> those opposed? item passes. item number 7. >> item number 7 discussion item, investment committee report. >> please. >> i'm happy to report the

investment committee met on may 6th. i want to thank for a robust presentation on the asset liability study. we had a discussion on asset allocation and we're looking forward to the outcome there. >> great. >> we have wilshire. i don't know if you want to add anything to this. >> oh i thought you were going to call them. public comment? >> we have no in-person public comment, moderator are there any callers on the line? >> there are no callers on the line. >> hearing none, public comment

is now closed. number 8. performance for quarter ending december 31, 2023. >> great. good to see you guys again after a week, mr. thomas mentioned. today i am here to cover fourth quarter performance for the portfolio and very strong year overall. really across the markets. economy continues to show resilience in the face of battle against inflation and higher interest rates so we'll touch on a few of those topics in my comments today. first, maybe starting on page 2, this is the spurs bit numbers slide. again which is meant to highlight some of the high level points. as of december 31, 2023, the

portfolio sits at 34.6 billion. when you factor in the very strong quarter returns that we'll touch on, you can see over ten years, the return for the portfolio has averaged annual basis just around 8.3 percent so well in access of your discount rate. that is good news. 30 basis points comes from active management. sorel tiff to your benchmark over that time frame. again another positive indicators. factoring your liabilities, the based on the market value of asset over 95% this is a metric that we touched on last week and your spend ratio which represents the percentage of assets, sits at negative 2.8 percent so. that negative cash is another item. and we touched on an important

situation going forward. in terms of the comparison relative to a peer universe not what we say peers, over the last three to five years, you're on the top. you're just outside of that 12-13 percent. so i'll touch on the peer universe. i know there were questions about the relevance that we're using. currently no utilization, so you can see the tile there, those you at 100% that means you're not using any of the leverage right now. and then the last three slides indicate that you're in line with policies as it pertains to the high level macro buckets allocation to diversity assets and welcome resulted assets.

now there are pockets within the sleeves where you do have over weights and under weights and we'll touch on that in the compliance section. on page 3, just some highlights about the performance and so, i touched on absolute return performance being positive to the quarter. relative you did under perform by 2.33 percent. most to private equity and the bench equity there. as private market have retreated. we've seen equity markets rally that leads to the dis purtion that we see between public and private so no surprise there to the level of under performance. in terms of your diversifying, positive returns relative to

its primarily benchmark. that is the t bill plus 3 percent premium. if you recall in july, that benchmark was adjusted down. a lot of that to do with the overall construction within the absolute portfolio meant to be lower beta by design so that benchmark was changed in july. but you can seize it is honestly under performing. the secondary benchmark is a mixture. so we measure relative to both of those, but again that primary benchmark is cash plus 3 percent. we've obviously seen real estate in that sector in the investment universe. overall in the fourth quarter we did see some balance back there.

with regards to growth in the quarter, public equity delivered very strong absolute and relative performance and just to give you some detail there, the public equity for the portfolio was up by 11 percent. public equities were up 24 percent. so it's been a pretty drastic run up in he quits. a lot of that has been focused on the magnificent 7, these are these tech names, you can think of envida facebook due to the ai driven market t.conditions to foster even going into the first quaert. so while the narrow, your performance has been positive

on a relative basis, typically when rallies are that narrow, it can be a challenge to out perform. overall, the public portfolio continues to do well in 2023. on the income side of things, slightly under performance benchmark about treasuries, given the massive nature performed in line with the benchmark. and then liquid credit continues to contribute positively. so a lot of positive there and overall in 23 across the portfolio. moving forward to slide 4 in terms of overall economy. again, as i stated economy continues to be resilience in the face of higher length. really lead bit trend of the consumer, that continues we saw

a slightly higher than expected print on tuesday. the market usually slug that off. that has been a differentiation in 2023 when inflation came in hotter, that would pull back, markets sold off, we did not see that in the most resent inflation trend so. it continues to be a very very resilient. g.d.p. was at 23.3 percent. slightly down from the fourth quarter which was closer to 4.9 percent. job market remains very strong, pay roll is strong, unemployment did slightly tick off, most have to do with the labor participation rate but again markets are not concerned about the job market if anything it continues to be hotter than we would have imagine given what the fed is trying to do. you can see the inpact on

inflation, via the ro ducer index. a welcome sign that helped contribute to the strong market that we saw in the fourth quarter and that lead the inflation rate to annual 3.4 percent which is still above the fed target but you can see improving. given the strong run up in we've seen in equity, the ratio at 26.3 just for context. long term is about a 20pe ratio, so we're approximately 30% higher than evaluation relative to the long term averages which feeds into this concept of whether this is a rally that will have legs or whether there will this will be a bubble. moving forward to slide 5, a couple of other points here to

hit on. you can see we touch on economy growth. the housing market continues to rebound from some of the declines that we saw in 2022, i'm start to go see in my neighborhood with homes selling quicker. and some over ask if that's an indication of anything. in terms of overall market, one thing to point out too, in in he quiity market. the real interesting thing is large grow stocks out perform during that fourth quarter and for the entire period of 2023 out performed by 35 percent. that's a huge dispersion between growth and value. supported by some of the points that i brought up. but you typically don't expect

to see that type of diversion. valley stock should out perform over the long term. but this is a different environment that we're in with the a i driven contributions. >> from interest rate stand point, also lead to very strong income returned portfolio. the feds in the first quarter caused rate hikes and that lead market participants to expect rate cuts to 100-125 rate basis points as we get towards the last few levels to try to get to that target. we've now seen the market indicate a lower indication of low rate cuts this year. maybe three, somewhere in the neighborhood of 7 basis points. i think that's an important

consideration but it still does give you an idea of where things are expected to go through the rest of the year. moving over into your actual portfolio on slide 7. this is the asset allocation compliance page. the gray bars with the ranges via the ips and the triangle to indicate where you're currently positioned. and as i mentioned in my earlier pockets really two pockets where you're on the outside of the ranges. first the portfolio and outside that range, although when with you couple that with your cash over weight which is the last row there, from liquidity stand point, you're within range collectively across the two cohorts.

real assets, you can see that is very slightly outside of the range too just over 15%, the policy target there is in terms of outer bond range is 15.9, i believe. again as i mentioned, very strong fourth quarter of 8.2 percent right in line for the policy benchmark, had a return of 16.9 percent. outpacing, sorry, 9 percent under performing the policy benchmark there, 16.9 percent, let me reverse my comments, the return was 4 had the 4 the policy benchmark was 4.2 percent. again we'll touch some of the drivers of under performance in the attributes.

you can see going long term the portfolio performing well. moving to slide 14 this gives you an idea of pure ranking. this is a over a five-year period. so we roll the portfolio every quarter and look at where you rank and you can see a fairly consistent story there, your rankings towards the top. now one of the questions that we did get at the last meet ining december, was about the relevance. this is all public plans, greater than a billion. the question specifically was really more about private market allocations, clearly has a large amount allocated at the private market, does the question, i'm paraphrasing here, do the smaller plans compare in terms of portfolio

production. first answer is there is going to be a wide range allocations to call it a peer universe there are caveats there and we want to take these analysis with a grain of salt. in terms of private market allocation to address the question, we went back and analyzed all the plans within the greater universe and laoktd at the average allocation to private markets across the quintile and we saw no difference. at the lower part of the spectrum and going to the higher end of the aum peck trum. we saw the mega cap funds had the lowest to private markets and that has to do more with sample size than anything. the summary is the large universe or a larger universe

will not have really have anymore meaningful impact in terms of ensuring that this analysis is done. we feel confidence that the greater than a billion has a similar amount if nothing towards the overall private market universe. and so we continue to use that. you know, the down side of switching to a larger peer universe is the sample size goes down. currently here, we have 180 to 190 funds that we were looking at if we were to increase that greater to 50 or 30 billion that may increase. so you get a little bit more robust when that sample size comes down. i wanted to be sure to address that question head on but happy to follow-up with any information in regards to that. page 15, takes another look at that type of peoria nal sis,

talking about not only your return but your risk. you can see the circle is way off to the left of all other funds and the sample. again a lot of that has to do with private market exposure and the inherent smoothing that you get and your return continues to be higher than most of your peers. again in an ideal world, you want to be at the top quadrant. but these have different considerations in terms of their portfolio construction. we always evaluate in that lens. last two slides here are on attrition. this is the three-year access a

tr--contribution how much of that contribution is coming from your deviation laert ra*ert than your policy. that was positive in terms of 20 basis points of positive contribution. but in deed what we open and expect is that most is driven by the manager value add which is orange. for that three-year period that add was a head wind to a negative tune of 3.8 percent. we can see the drivers of that. and really what that comes down so is the public equity portfolio. so i touched in my previous comments how well they had done in 2023 in an access basis.

over the last three years is the only place where the portfolio has under performed. you can see that with the primary head wind on regular basis. if we flip forward to the next slide, you can see the same information over the last five years with a different story. you can see the portfolio under perform by 30 basis points. most was coming from the manager section. but in deed when we look at the bottom right, the story there is it different. you can see that it did it contribute to any of that. for excess performance over the five year period. sxl that is a result no more than public he quits have been

in the long run. have retreated from some of the games that we saw previous to that. sol that is showing up and manifesting in that five-year number. and lots to do with bench marks. so, we always evaluate through that lens of the benchmark itself. so i will stop, those are my comments for fourth quarter performance but happy to address any questions. >> any questions? >> great, great to see you again. >> if i can update on one performance topic which relates to the discussion here. as normal form of business, when you're working on

establishing clear procedure, you look at how, and you do that in the context of performance. and in particular to how we think about leverage and as part of that normal course of business, we undermine a process to clearly define what leverage is, and how to flows through in our performance measurement in the materials that you see here. the end result and we'll talk about what we've implemented. but the end performance what we reported in june of last year. actually our performance for five years, should be higher than what we reported to you in june and over ten years, three bids higher based on this very clear definition of leverage.

so i want today share that with you because it's been a robust process. and we're in a strong position going forward to make sure that everything is calculated consistently with the leverage definition. again i wanted to be clear. the annual report is coming up at another agenda item. >> i wanted to be clear that the change.

>> which number shall be higher? >> the dollar or performance? >> the return, annual eyesed return over five years is at the total fund level, is higher than what we reported. >> total fund? >> correct. >> that's the number? >> right now, there is no total fund leverage? >> correct. >> so if we looked at one year, they would be identical, it's longer period of time. >> thank you, that explains it, thank you. >> any further questions? or comments? okay. >> thank you. >> thank you very much, we'll have public comment please. >> we have no in-person public comment on this item. reminder to any callers please press star-3 to be added to the queue. moderator do we have any

callers on the line. >> madam secretary, there are no callers on the mine. >> thank you, hearing no calls public comment is now closed. >> madam secretary, item number 9. >> discussion item, chief investment officers report. >> commissioners we've covered performance so i will not cover that section. i will touch on the conversation we had last week. again i appreciate the robust dialogue that we had on strategic allocation. we appreciate the questions and got good feedback from the committee. we're working to provide for informational purposes for all that will provide context on the decision points that lead

us to the recommendation for i think what we were calling, a deed. but we will be voting on that and bring it as an action item in april. but based on the questions, we're doing some more work to provide you more information so you see how they meet all the objectives that we had through strategic allocation process. more to come on that but wanted let you know. on now turning to terminated and close investments, first terminated investment advent capitol. approved the termination of advent capitol management llc on february 29, 2024. the investment was part of the spers portfolio. it did not make it into the printed materials that you have.

we invested 10 million in fund 4. classified as a real estate investment within the real assets for the pole and our sixth investment with fortress. also invested in the fortress japan 5 under the delegated authority. we invested 57.5 million in opportunity 5 which closed on march 1, 2020. classified as a real estate investment within the real assets portfolio. finally, sustainable asset fund 4 under committed 80 to sustainable asset 4 of which 57.55 closed on december 27, 2023.

the remaineding 22.4 million closed on march 12, 2024. this is an infrastructure investment wnl the real asset portfolio. >> question. those funding items that you just mentioned are they going to show up in the minutes but you didn't put them in the written report that we see? >> we will get them into the minutes and we can update the materials with it. >> with the policy change there, we should not look for it in your report? >> we can get the text added and make sure that it's in the minutes for to you approve next month. >> that's the way it was done, maybe there was a reason to change. >> there is no change, it's just the matter that these came

in within the last 24 hours but they will be reflected for the record in materials. >> any other further questions or comments? thank you and we'll have public comment. no we're not, sorry. >> we no in-person public comment on this item. a reminder to the callers, please press star-3 to be added to the queue. moderator, do we have any callers on the line? >> madam secretary, there are no callers on the line. >> hearing no calls, public comment is now closed. >> sorry about that t i looked at the wrong notes. number 10. >> action item approval of spers annual report. >> i want to say a word before this.

we should be proud of that annual report and i hope a lot of our constituents at least read the summaries. and i thank staff for all the hard work that went into that annual report, i applaud you. with that, let's turn it over? are you doing that >> thank you for the comment, i appreciate that. this is an action item for your approval. i want to thank half the staff at sfers that had input into the results that you see before you. there is a lot of detail with the report and we've taken an opportunity in the transmittal letter to really highlight a

lot of successes and things that we've accomplished over the last year. so i hope you've had an opportunity to read on that on services and investments and on dc, again all the accomplishments. also, and on going effort to make sure that we communicate regularly with the board and with stakeholders, i put together what we're calling the state of the plan podcast. so it's a recording that highlights many things here from the annual report, some things from our actualarial status. put that together, you all should have received an email with that and we're looking within the next couple of days to post that on our website. so that any stakeholder shall they get information as oppose today prince read through the annual report they can do so. >> you're going to send an

email, will it have the podcast link? >> the email that was sent out, is the actual file. once we post it, we can send the link. >> great. >> i would like to spread that out personally. at this time, it's time for the over the last come of viewers, i've been very focused on and i think we all have to some extent that we that sfers comes out of its whole and starts to spread the record on what we're doing. this is the best time to do it when it's a shining report. except for aj's picture.

>> i welcome a motion. >> move to submit the annual report. >> second. >> okay, public comment. >> we have no interest in public comment. moderaters do we have any callers on the line? >> madam secretary there are no callers on the line. >> thank you, hearing no calls, public comment is now closed. >> thank you, it's been moved and seconded, all those in favor say aye. >> aye. >> those opposed, motion passes. thank you very much. next item please. >> item number 1 discussion item review of governorance survey results?

>> good afternoon, members of the board nice to see all of you. as our role of governorance consultant we've been asked to do a governorance report and board members were very helpful in providing detailed responses to a number of questions that we asked for purposes of report. we have provided you with a separate report that has the detailed responses, this presentation is intended to sort of summarize them and provide you with some take aways and provide an opportunity for us to discuss any of the comments that you would like to or, or topics that you would like to use this occasion to address. it's titled as a presentation

by votes your ceo, cio and me. so i will take the lead with starting the conversation but we're both here to comment and respond to questions as you may have them. now can i advance the slides from here? okay, thank you. so, we had six trustees who responded, six out of seven responded. we've had some transitions just to know this is a point in time set of responses from q4 last year. as i noted we have provided you with a verbatim responses. we've discern a few teachable moments from the comments. there were a few things that we said that made your counsel and

i actually, cecelia thought that would be a good to reiterate and then i offer some governorance observations. we have nine substance i have question, the tenth questions was with the tenure on the board. there was two that just joined and two two to five years and two quite a bit longer, so that was interesting. the first substance i have question beyond that was to asking each of to identify three to five most affective aspects of the board's committee strick tour and operations. because typically intended to be a good component of good

governorance. and the take aways here or my take away, you may have more take away. my take away was that trustees were supportive of the activities and engagement. those some identified continued work to do for sure. the second question was focusing then on areas of improvement to three to five areas of improvement that you saw were warranted with respect to your committees. and their trustee focused on the fact that committees are a place for the work of the board should occur which is not repeated. so once you've gone through the detailed discussions, presentations, communications, klix at a committee level and make a recommendation, it's not

that you don't get more input from others that are in the committee, you do but it's typically intended to be, to have gone through the most serious setting in the committee process and not just be a repeat to the board. trustees also commented on the need for all committee members to attend meetings and be prepared at meeting. so there is a level of frustration by some trustees of that not happening. so that would be a good area for desired improvement for the next year. the third question asked if any of the responders had served board chair or committee chair. and it was nice to see that all had, that you do share your leadership responsibilities on this board well across each of you. next slide please.

the response there in terms of the positive was they appreciate the structure of the meeting and they appreciate that there is an open mindedness and, there is of your board and your committees. so then we turn to the areas of improvement on the same topic and there there was a lot of divergents as to the result you're of the board with some expressing, giving yourself very high marks in this area and others being more critical.

some trustees expressing a desire to sort of see how things go with resent changes. and other trustees wishing there were more engagements as two topics before you. next slide. here we asked what three to five topics are included on board agenda that may be more affective addressed either by committee for presentation with a recommendation. more delegation to your committees perhaps.

and the answer here, make sure i got this right. can we go back one, please. so i will tell what 7 is, some expressing that is the response. the next one please. i think i have a number. okay, trustees would like to hear, oh no. >> mine is missing. >> so it is missing. it's lovely when you see some things missing. resent changes the board is

authorized. so again some varying views and now we turn with 8. and this one had to do deal with delegation what types of topic that are currently on your agendas could be effectively addressed by your staff. of committee but not necessarily having board act on those things. and here it seems that the trust ees wanted to hear about that topic. so that seems to be something that warrants other discussion.

if you're seeing more resent delegation. if there are other ways where you delegate and provide oversight monitoring or not. number 9, was asking that you provide additional recommendation you may have to your fellow board members to enhance all of your ability to provide oversight so that engaging or starting a conversation for, welcoming a conversation of the board on that topic. here, we got a lot of enthusiastic responses about the idea of having a planning retreat or a strategic retreat with a top notch instructor. and so i know that idea is in the works and perhaps allison can speak with you about that

after i finish my presentation. i mentioned teachable moments, wishing there were more discussions off line or outside of board meetings. the comment that we want to make, as a public entity, you know you're subject to the brown act and subject to sunshine ordinance, the sunshine ordinance in san francisco so there really are limits on what you're able to discuss at least as a quorum outside of these public meetings. you can discuss anything that you would like with your ceo and as well as your council and advisors. that does not create a violation of open meaning laws and i'll be happy to differ or ask your council if she would like to.

in terms of public entities in california. can hear that a lot that people would like to be able to zoom in. and be more efficient that way. that is not where california law has gone since the pandemic has been declared as over. as you all know, we are, the board is required to be here there is some exceptions for just cause that you could, that some boards implement that they comply to doing that.

>> and before one, if i can. >> there would be a quorum if you're communicating through technology so you don't all have coffee with the same person and have that person tell each other what they're thinking about. if any of those rules are loosened up in the future. >> i think there is a pend to go your bill that can potential lea lou more committee meetings.

but it's premature to anticipate that. knowing that the rigorous discussion is functional for the board. the expectation is that not that you will agree on everything that you will see eye to eye and having some level of disagreement so they can get to the best decision is, is helpful, within that context. noting know that every trustee remains fiduciary responsibility. next slide please. okay, so some governorance observations as we enter this new year, we're a couple of months in now.

continuing, we recommend that you continue to focus on topics that are pertain to go rule and members. and agenda setting process that staff goes through in consultation with the president, is critical that you're agendize what is important to keep your eye on, making decisions on. responsibilities that you have collectively. so when there are comments whether people are attending meetings or committed, that is on each of you to make sure that you're showing up. retaining familiarity. this is important because you

do have a very robust policies. however, if people aren't reviewing them and, keeping reminding themselves or continuing to educate themselves on those terms, they become sta*il. they become unfamiliar so that's one reason why you have your governorance committee meetings. but even those who are not on the governorance committee, it behooves all of to be familiar with terms and policy. that is where your staff is also following and expecting to identify the framework which you're educating. and continue to go educate yourself.

you have your education session here those are very important and so for this upcoming year, i just, encourage you to continue with that good work to staying educated. next slide please. oh, and that's it, thank you for your time. do you have questions? comments or other topics on which you would like? allison or myself to comment. >> any other questions or comments? commissioners. >> yeah, i'll say something. thanks for doing the survey. one, thank you for reminding us about the rules are for the meetings, it's important to follow the rules for a bunch of reasons.

it's always contradictory to be following the rules and yet there is demand for transparency and the word that appears in the survey is to discuss, to discuss, it's a huge problem to discuss when all we seem to take our time through q & a, there is very little discussion between the board members almost about every topic either here or the rules about be careful when you say when you're off site. so there is a contradiction as well as trying to understand each other, that's why i bring up the issue of discussion. because discussion that almost occured last week is about the discussion about how much risk. it was not much of a discussion, no offense to any people, we're all here. but some were not able to be here. and yet the discussion was zero on what to do with the

beneficiaries. so these observations, remember the rules, all of those good things, so it's a challenge to do some of these things when there is no discussion, let alone all the problemss that are affecting discussion. >> absolutely. >> any other comments? hearing none. >> public comment? >> thank you, we have no in-person public comment on this item. moderator, do we have any callers on the line? >> madam secretary, we have no public speakers on the line. >> having no public comment, public comment is closed.

item number 12, discussion. secondly on the ford calendar we will be rescheduling the may dcc and governorance meeting due to variety schedule conflicts. the rescheduling is under way and we will follow-up with the dates shortly. also i want to remind everybody that next month's meeting has a lot of important topics. and then finally, reiterating what we heard in the prior agenda item from ashley, was that we do continue to include the training calendar.

there are a lot of great conferences that ask the class specific or fund specific but a lot of good opportunities to get broad training and just as an example last week, i was on the committee to do the planning for the national is sem bleed and the topic were very broad it was everything from how to integrate technology to running a plan to geo politics to economics and another real trustee level topic, that wuz a great but there are a lot of other great ones here. and particular particularly for our new members there is design for on boarding.

if you have any questions, please reach out to me and we're happy to provide guidance. >> i have a question, we're going to get to the ic addressing some of the things that we've chattered about? we'll have market discussion on investment topics in may, yeah. >> any questions? >> this is a point i was going to bring up later, only because the last item looking to whether to retreat, the question is whether it's going to be a half day or day and a half, training and education. we are tar getting half day retreat. we will have to coordinate with all the commissioners on

schedule and get a date on the calendar and work onseting the agenda for that. i think to your point to make sure that there is no conflict any of these trainings in the report that folks are interested in, it would be helpful so we can schedule our retreat around us. >> my read to the survey, a half day will not do it. but again, you can only go with what the day went to. am i the only one that feels this way. >> i don't think that's the case that we don't feel that way, i think what it is, basically it's the difficulty of scheduling the sfers is

crammed as it is and what they're doing and it gets broader and years go by. i feel it a lot and those that are notice something that we have to balance and go through. i would not go as far as to say people don't care. >> i think people care but how do they make it? >> that's true. that's true. i feel comfortable, i feel very comfortable that our ceo, and the team are focused on this item as being part of what they're going to do. and they're going to lead us to it.

so i feel comfortable in saying to them, you figure it out, how you can do it and give us some options and we'll do it. and whether it's a half day or full day, i don't know. it will happen. >> we'll see. >> okay. >> yeah. any other questions or comments? okay. public comment please. >> thank you, we have no in-person public comment. moderator are there any callers on the line? >> madam secretary, there are no callers on the line. >> hearing no callers, public comment is now closed. >> next item please. >> item 13, discussion item deferred compensation committee report. >> thank you, madam secretary and to our president board, we

did hold our deferred compensation committee meeting on april 21. what will be coming to the board in the next item is the approval, seeking approval from the board to approve the real estate fund managed by principal with fdcp die if heser fied. --diversified. so this will be coming in the next section of this meeting and i would ask for the board to really look at the item and approve it because we are seeking approval for today. that's the main item in this report that i would like you to focus on. and other than that, i would like to thank for all the hard work that they've done and also

to our consultant and all the reports and all the data that you presented to us to come to this conclusion for this recommendation today. so thank you very much. >> any questions? no? okay, madam secretary, public comment. >> we have no in-person public comment on this item. moderator do we have any callers on the line? >> madam secretary, there are no callers on the line. >> hearing no calls, public comment is now closed. >> next item. >> item number 14, action item, diversified real asset fund recommendation. >> thank you, i live in your district, so i can call you

supervisor engardio. thank you to your service to district 4 and now retirement board. and how it fits with the larger sfers organization. welcome. darlene, thank you, you already pulled it up. we have a few items for the board today which is this first item which is the diversified recommendation. talon is the investment consultant and they periodically conduct an evaluation to ensure an optimal and competitive line up. as part of the most resent eic they were made to the die ferd committee in november of last year. the committee then directed staff to conduct a search for a diversified fund and to replace

the existing real estate fund. at february, dcc meeting last month, staff and cal made a recommendation to select real asset strategy, cit. this is the white label fund and it will be called the diversified real assets fund. it was approved and forwarded as chair bridges had noted and that's why we're here today. i will now let at thatlon review the process with the full board along with rational how the traoet was chosen for this fund. >> great, i'll jump in, there is a lot of materials i was going to hit the highlights and make sure that we touch on the supportive rational but happy to answer any questions as we go through. so the first page captures the recommendation but i see ms.

harmenino, we follow this process for all the churches we've done in the past and all of our clients really. really looking to create a profile of what we're looking for and as already mentioned, we're looking for a candidate that is much more diversified but still retains a lot of same return goals as the current fund. so something that across the broad of array of inflationary sensitive securities. we did that quantitative as well as qualitative, we presented 7 candidates and narrowed it down to 3. the three final is, we thought all were great candidates but had pros and cons on either side and really narrowed it down to state street and i was going to touch on the supporting rational now. two sides, so slide 5 of the

hard copy, just gives a quick break down from just a qualitative and quantitative measure. i'll turn to the streets one. it had the nicest bonds so 80% in equity, and that was the bond allocation, very diversified across all the different types of real assets and very strong relative returns and risk adjusted metrics, it had the lowest fiat 22 basis points. and it's low because they use underlying index funds. so state street is the manager and they implement using index funds. the other candidates were slightly more expensive. penco was much lower returns but lower standards deviation

and cohen and sterns was more harvey he quit. in terms of what is in the fund page 16, just gives you a couple of snapshots. on stage stroet within the organizational team rob is the pm, he started the product back in 2013 and has been managing ever since. so great consistency from a strategy perspective, you'll see in the middle column, that's how they allocate to the index funds examine you can see the different constituents, 25% commodities and 25% global natural resources. theses are, i think like material companies and things, public traded companies that go out and natural resources. 20% global infrastructure so

think utilities and other types of infrastructures, railroads et cetera. 20% tips and then finally 10% u.s. rates. they have made some slight changes and they do that overtime. they have lowered the duration but the bottom line they've been an affective manager for a very long time and have done so in a competitive marketplace and you'll see that performed in the pages in the back.

dealt with other issues, meaning other opportunities in the market how to invest. that's half the reason we're doing this replacement. >> okay. >> this is an action item. >> yes, this is an action item. commissioners we're asking the retirement board to approve the elimination of our current real estate fund and replace it with a new fund managed by state street called the diversity real asset fund. it was approved and vetted by the committee and now it's in the board for approval so we may incorporate it in our line up. >> okay, there's the motion.

>> it's two changes in one. i move that we replace this real estate managed by principal to an sfp real asset managed by state street. >> okay. great. >> any public comment? >> we have no in-person public comment on this item. mod erator, do we have any public comments on the line? >> madam secretary, there are no public callers on the queue. >> no callers, public comment is closed. >> all in favor. >> aye. >> aye. >> any opposed? next item please. >> item 16, this is our monthly activity report, given that we have a new face, i want to

provide how this report is structured. thank you for pulling it up. i'll go through this quickly, because i know most of you are old hands at this. the first page is at a glance. this includes our brokerage account which is administered through be schab. you can see our investment performance against the bench marks as well as the total aum which is about 5 billion with a b and these are 100 percent voluntary assets. unlike where they're mandated, these are voluntary assets for the income that city employees want to put away and have a more comfortable retirement.

we move on to page 2. page 2 covers the number of accounts that we have. how many participants are in which solution, so we have future ready and also offer roth, we track how many are in roth as well as how many active and retiree accounts. it also tracks our group meetings and our individual sessions, these are hosted and managed by our five counselors, we have five councilors, they're employed by our record keeper voya and one of them is here today. thank you for your attendance today. that is on page 2. page 3, page 3 shows our quarterly rate, that is

guaranteed for each quarter. and you can see percentage allocation by fund to the dcp. for instance when i first joined the plan 9 years ago, they had allocation of over 25% that's a large allocation. this is good i think for retirees because they will value as a preservation vehicle. but may not be idea for those working and looking to invest for the long term. so overtime through proper communications through investment line up changes, through our staff in the field, we've been able to decrease that amount to 18% which is relatively a healthier overall investment percentage. and then, let's see, on page 4, shows our allocation across the

largest classes, he quit kit bonds as well as value and targeted funds. and targeted funds, that's right. and then page 5, please. page 5 this is an interesting one, it shows our investments and participants by demographic so those just starting out in the workforce, those who are building wealth those who are about to retire and those living in retirement. this is a page that i reference often because it shows our account balance for our dcp. it's about 115 grand and if you compare that to the number below, that's an average american balance. what is interesting from this, i tend to track it so for instance our average account balance as been as high as 150k. and the average american balance as been as low as 7 5k.

so it's interesting to see that the delta is shrink anding we want to make sure that we're doing everything that we can to continue to increase our client balance. i think over the last couple of years, given the secure act, you know, congress is really trying to push americans to save more for retirement and it's possible that that's the reason y participant balances are increasing. and then finally page 6, is a basic summary of cash flows as well as loan information as a remiepder to the board, the plan already administers a loan program where you have access to up to 50,000 of your account to take out a loan on and pay back. and whatever interest accrues on that loan, goes back to you, so it's a way for us to allow participants access to the money while at the same time,

limiting so they're not using their full nest egg for general purposes. and that concludes my quick summary on the monthly activity report. i hope you found that helpful. >> just a comment that it's nice to see that you're keeping this ship on the right track as the mother ship. >> yeah, thank you. i take my job seriously. >> well done. >> i had a question on page 5, the comparison. >> yeah. >> is there any demographic impact on this? a number of folks drawing down retirement maybe versus new folks? do we have any serve down data that may help explain the change to this? >> it's a really good point. and i think it's worth mentioning, if you compare it to our prior average of 11350,

that is significant. the only thing that i can think of we've had a large mass of retirees as you noticed, i mean from covid, a huge mass of retiree and right now we're trying to deal with mitigate this mass exodus of institutional knowledge. so while there are a lot of retirees, often times they get their broker calling and asking them to roll their dcp accounts out. they position tz a consolidation, and i noticed there is been a lot more. so retention is one of our goals for this year on how to mitigate that. that's why we've established better out reach with claire as part of our eccsf, so we can let them that's part of the family. we offer better prices. a lot of times the brokerage,

just want the assets that they can collect fees of. we want to make sure that retiree work on informed decisions. i mentioned that we're working on a webinar so we can promote them across the groups so we can have their age and reach out. that's the only thing that we can think of sort of top of mind. loans don't really account for it, loans are still part of the plan. you're paying that back. so it's really out flows and that's primarily from the retirees. do you want to share any color on that? >> no, you said it well, it may be because interest rates are higher. but i'm going through it with my parents, consolidating their previous employees to down to a simplified structure so that is going on in the industry. >> do we see younger and

mid-career participants contributing at the same or similar rates to previous cohorts? what i'm thinking of, is possibly around folks having contributions to their pension contributions or student loan contributions, things that didn't exist to the same degree of their budget 30 years ago or not. are these having an impact on folks who are in that mid-career phase that would be contributing more to this plan? >> you know those are really good comments, i would like to take it back and research that for you. i would say that offhand, ironically it appears that our employees have more money that they can put into the plan with the decrease. sometimes they say, you've been used to know, differing this much and put it in your dc plan because you have not been

seeing that money anyway. we're trying to reach people that way. also too, it's possible that everything is so expensive these days, everything costs 25% more. people are unable to contribute as much as they used to. i have an interested well and i'm happy to bring back the findings next month to share with the full board. >> yes, thank you. >> if i may add, if you look at the page data, it shows that in every age cohort our members have a higher average balance than the overall platform. so it's not a function of our demographic, is different or older or younger you can see in each of those groups, they are saving more.

>> thank you, that concludes my report. >> public comment. we have no in-person, moderator are there any callers on the line? >> madam secretary, there are no callers on the line. >> thank you, hearing no calls, public comment is now closed. >> okay, next item please. >> item number 16, discussion item review of investment performance of second half of 2023. >> thank you. if you can pull up the semi annual reports that would be helpful. thank you so much. we're in the home stretch, this is our last item, it's our semi performance update, i know you already received a q4 from the pension side. it's lead by talon and for your preference it's the almost 200

page investment, investment measurement summary. and that actually gives you an under the hood look at the investments. if you have any interest, that is there for your reference. without any further ado, i would like to provide a brief update. >> yes, i would like to touch on a few slides and jump in to performance. this is the target date funds, these are managed by tro price, took over management june 30th. there was a transition month if you will from the old glide. but you can see from the last half year and last year, as you go down the page, you'll see the returns get stronger and stroerng. the absolute returns are breathtaking, up 17% for the longer dated funds for perhaps your younger dated, your younger participants.

the most conservative one is the top one, the target date retirement up almost 11%. the last half year you'll see the returns. if you look in the weeds, fixed income was a challenge area for the first three quarters bounced back nicely. tiro had a bit of over weight on credit fixed income and that was an additive, longer term funds they're exposure to real assets and emerging assets. again, very small allocations detracted up to three basis points. bottom line, it's a very attractive report particularly when you go left to right, you'll see strong out performance. page 7 takes a look at the core funds that participants have exposure.

you'll notice in the top line, the stable value, i want to highlight that. as diane mentioned one of the largest investments just under a billion, the capitol preservation. you'll see for the last year, a 2.9 percent return. this current quarter of 2024 some interest rates and stable funds catching up to money market funds. as you go down the page, everything in green, yellow, is 4th and blue is forth and you'll see smft large kept value funds for instance had a great 2022 in protecting on the down side and you'll see that strong out performance on a three-year basis that is now flowing in longer term numbers. the large kept growth you'll

see some blue in it for the three and five and that's an area that the dcc has been focused on in large cap from a committee stand point. final leon page 8, rounds out, the international equity is another one from a watchless, you'll see the three and five year returns, the three is just below and ranks in the 65th percentile. so below median but still out performing the index and again some of that is under the hood, they had a tough year in 2023 as valuations. the euro pacific growth fund, under performed other growth managers in a very robust 2023, equity environment. bottom line that continues to

be a very strong hults. across the plan. the final page is just the component funds, is actually two pages 9 and 10. you'll see most of them are out performing extremely well. there are some in pure groups but generally they're out performing their benchmark. and this is a very select narrow market funds. and again these are just in the target date funds and participants don't have direct access to them.

so i'll stop there and see if there are any questions, i'm happy to address them. >> questions, comments? there are none, thank you very much. good work. public comment, please. >> we have no in-person public comment on this item. moderator do we have any callers. >> madam secretary there are no callers on the line. >> thank you, hearing no calls public comment is now closed. >> next item. >> item 17, discussion item, retirement board member good of the order. >> commissioners, anything? >> okay, public comment. >> we have no in-person public comment. moderator are there any callers.

>> madam secretary, there are no callers on the line. >> hearing no callers, public comment is now closed. >> next item please. >> item number 18, adjournment. >> thank you, every one.

yeah. okay. good afternoon. this meeting will come to order. welcome to the april 2024 regular