>> president heldfond you may begin the meeting of april 10, 2024, at this time. >> okay, madam secretary do you want to call the roll? >> yes, commissioner connor. >> present. >> commissioner gandhi. >> present. >> commissioner driscoll. >> present. >> president heldfond. >> present. >> commissioner tomas. >> commissioner engardio. >> present. >> thank you, we have a quorum.

>> call item number 2. >> item number 2, communications, we welcome the public's participation during public comment. there will be an opportunity for general public comment at this meeting and there will be an opportunity to comment on each discussion or action item on the agenda. each comment is limited to 22 minutes. public comment will be taken in-person and remotely by call in. for each item, the board will take public comment for people attending the meeting remotely. comments or opportunities to speak during the public comment period are available by phone calling 415-655-0001, excess code 26611, 4307349 then pound and pound again. when calling you'll hear the meeting discussions, when your

item of interest comes up, press star-3 to be added to comment line. best is to speak from a quiet location and turn down the radio or computer. please note that city policies along with federal state and local call discriminate conduct and will not be tolerated. more over public comment is permitted only on matters under the jurisdiction of this body. and we thank you for joining us. >> next, item please. >> item number 3, general public comment. a reminder that general public comment is limited to two minutes. do we have any public comment? go ahead, yes. step to the podium. >> speaker: my name is john, i'm going to be using the data from the summary slide from today's allocation. i will recommend today's

portfolio versus the current actuals not against the current target because you have to implement from the actuals. in doing so, the changes will seem much larger than in the executive summary because they're far away from the starters. i'm merely highlighting the large size. first, as noted in the executive summary, deload is a target from the current target. but from the current actual, 9.8 points as of 3:31. these are decreased by 15.5 points from current actual. as far as over weight and real assets actual 12.5 above target 10.1 as of 331 from years of excellent returns. removes all of those actuals plus more. two liquid and public credit and intermediate access.

second, also noted in the executive summary, deload is a target by 5 points but actual allocations increase by 1 point, 8 points from the current actual. global equity ten-year projected return is quite low, both market assumptions, from a constraint 33 percent. -- ~>> 30 seconds remaining. >> speaker: these are highly public asset, much better stress liquidity and not much than the 9 percent target. so perhaps they may perform better than a bear market but may be more exposing to risk. just trying to highlight the size of changes. good luck. >> thank you, for your comments.

thank you for your comments. callers if you have not already done so, please press star-3 to be added to the queue. moderator, do we have any callers on the line? >> na --madam secretary, there are no callers on the line. >> hearing no more comments, item is closed. >> next item. >> action item minutes of last retirement meeting. >> commissioners. >> i move to approve the minutes of march 13, 2024 retirement board meeting. >> public comment. >> do we have any public

comment on this item? in-person, moderaters do we have any callers on the line? >> madam secretary, there are no callers on the line. >> hearing no callers, public comment is now closed. >> it's been moved and seconded. all those in favor, say aye. >> motion passes. >> next item please. >> item number 5, consent calendar. >> before we go into starting to get into business, i would like to make a couple of comments. one is thanking my fellow board members for all the attendance, the attendance has definitely improved over this number of months and, i know that it helps our staff and our management that we can get, they can comeport the business. and second i would like to recognize our fellow board

member leona bridges for the award that you received, which is posted on our website and are you going to cover annual report? any mention? you all have, i just i will mention, you have the annual report on your desk. and i'm, i think we all can say it's also a part of another administration that was with commissioner safai, he was the president then. so this is a shared accomplishment. and i think we should all be very proud of this and our ceo is arranging to have this delivered in the context of getting this first head out of our shell and taken a higher profile in what we're doing. it's all going to be delivered to the supervisors.

supervisors, you don't get two though. and that's it. and we'll break for lunch when it's appropriate somewhere in the middle and eat during the presentation. so the let's call the next item. the consent calendar has been called, is there a motion? >> so moved. >> second. >> public comment please. >> do we have any in-person public comment on this item? seeing none, moderator 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. >> good, it's been moved and seconded, all those in favor say aye. >> aye. >> those opposed? motion carries. next item please. >> item number 6, action item surplus transfer of 7 million

savings. >> commissioners, as board secretary indicated this is an action item. this is a formalization of something we discussed when you approved our budget which is that we have, a saving of 7 million dollars from last year's budget which we would like to be able to apply towards relocation expenses and cost associated with moving to a new location. in order to make that happen we spoke with the controller who indicated that it would be best to have the board of supervisors direct the controller to allow for that surplus transfer to use that money. so i am before you today, to get your approval for me to go to the board of supervisors so that they can approve a resolution to construct the

controller to make this change. if all of those things, then the 7 million dollars that we included in this year's budget can come out of the budget because we will use the savings from the prior year and do not need incremental funds. this is following the formal process to use money towards relocation expenses of which you had approved as part of the budget. >> thank you. >> i just would ask fellow board members, supervisor engardio, do you have any questions on this since this is been presented to your body? >> no, i assume, i assume in this role i can vote on this and then i'll vote again in the next role. >> but i just want to make sure that you feel comfortable, if anybody asked you a question you can call. >> got it, yep. >> great. any questions? comments? if not, i welcome chair of the motion please.

>> i move to adopt this recommendation to direct the board of supervisors to approve us utilizing the 7 million dollars of saving to this year's budget, thank you. >> i second it. >> okay, public comment, please. >> do we have any in-person public comment on this item? seeing none, 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. >> it's been moved and seconded, all those in favor say aye. >> aye. >> those opposed? motion passes. next item, please. >> item number 7, discussion item, chief executive officer's report. >> i will turn it over to karen in a moment to go through the member services dashboard which will be a nice lead to the next

agenda item which is a are view of our process run disability. but first i want to highlight a few items with respect to the calendar. one, we will be postponing the april operations oversight committee meeting. the planned set of topics there was going to be an update on the quality assurance program and updating operations related to the move just giving the process to work through the city that has been delayed a bit and we want to be official with the board member's time or the committee's member time. so we can postpone and have a more comprehensive meeting. we do have in may, and i see a meeting scheduled. it's the morning of the board meeting, make sure that is on your calendar. looking forward to that discussion and then in june, we'll have a relatively busy agenda. so i want to make sure that you want to plan one of the topics

that you'll be discussing which is the next item of our liability study subject to the approval today, then we'll be making changes on the ips, that is in the queue for june. secondly, i was going to talk a little bit about conference and training, thank you president heldfond, one thing i was going to mention is congratulations to commissioner bridges. i was honored to sit on the panel at the nas conference and be there when commissioner bridges received the award.

congratulations, commissioner bridges. >> you have the operations division. as you can see, i don't know if you are familiar with this from the past, but you're beginning to see a pattern that the beginning of the year in january, there is always an up tick in benefits related questions, inquiries because people are thinking about the beginning of the year. it's slacks off and then with respect to the retirement year, beginning around march, through the end of year, we have a significant up stick in member services request for retirement counseling, for general information sessions, you'll

see an increase in attendance at the webinars because people are thinking about it and they want to understand their benefits. towards that end, i can tell you that we are almost totally booked through the end of the fiscal year. we are going to start to do group counseling sessions for those who are seeking retirement counseling which is something that we have been doing since the pandemic. what that means is you'll have group session where you'll get the general information and obviously to the extent a member wants to retire and they have individual questions, then we can take those. but in order to handle the volume of people that we get during the time of year and because we are already booked, we're already beginning to set or prepare to set group sessions going forward. i'm happy to, we're going to be talking about disability so i will not get into the details

here and i'll be happy to answer any questions you may have. >> comment, you can comment back. i'm assuming in all our discussion, regarding the facilities and moves that is process of up ticking in-person meetings and will be beneficial to the members in the new location as opposed to this location. is that a fair assumption? >> yes, and no. to the extent that we're doing more on line webinars, that will not make a difference. but the new facilities will have individual counseling rooms, we'll have more conference rooms to handle group session, when they return to live, but, none of the kfrntion rooms are going to handle a 100 or more people most will be done online. but what you have not mentioned is that you had approved and the board of supervisors had

also approved an increase in staff. and the increase in staff is helping us to provide benefits and hopefully we'll be able to start doing more in-person counseling sessions in the future. once the staff are on board and we move and we have the facilities to facilitate that. >> great, thank you. >> that's, okay. any further questions? of staff? comments? we're going to have public comment, please. >> thank you, do we have any in-person public comment on this item? seeing none, a reminder any callers to press star-3 to be added to the queue. moderator are there any callers. >> madam secretary, there are no callers on the line.

>> thank you, hearing no calls public comment is closed. >> discussion item, next item. >> item number 8 discussion item, overview of disability application process. >> it's been a number of years since we've gone over the process for disability applications. we have a number of new board members, we thought that this be a good time to talk about how that process works. we currently have about 409 applications pending, under the charter you can apply for industrial disability which is service related and it's for safety. or you can file for an ordinary disability retirement which is for miscellaneous staff and for any reason whether or not, it does not have to be job relate asked also available to safety members. we also, when they're eligible

and they apply, many of our members are also eligible for service retirement. and under the charter, they are permitted to apply for service retirement, receive a benefit while they're disability application is pending. and because we have some members, we call it a stip. if they file a stipulation, versus somebody who filed for disability retirement and they have no other benefit available to them, we do in fact prioritize those who have no benefit. we try to move everything as fast as we can, but we would like our members to have some benefit, many of them are without any at all so we always prioritize somebody who has an ordinary disability retirement. you can see in the memo right now, right now, we have 409

cases pending. 186 of our safety members are receiving a retirement allowance and 113 of the miss leanous members, so it's the other case that's we prioritize, if we can, it's just seeing the process, sometimes that does not work. when they file for disability, it's important to understand, because you as commissioners get some complaints, it's the member who decides when they're going to retire. disability is, i'm sorry, retirement whether it's disability related or service related is voluntary. so the member decides when they're going to retire. in order for them to proof at a hearing that they're entitled to their retirement, they have to provide medical evidence that they were able to do their job all the way through retirement. and that's important because

not just that they have to show the hearing officer that they're continuously disabled but we have situations wherefore whatever it is, a member must decide to keep postponing their retirement date. we don't start to collect their records until they retire. this is not the system but this is the member that is saying, for whatever reason i'm not going retire until a later date, so we delay getting their medical records until they're actually retired and they're off payroll. so sometimes there seems to be a delay there. once, they are off payroll, and they're actually retired, we collect, we begin to collect medical records. and that is usually, usually we can get those within four to five months. sometimes, there is a delay we will always follow-up until we

get the medical records but there is nothing that staff can do until we get all the medical records and in that case, they're ready to go to the city attorney's office. compare that with other retirement systems, where somebody cannot even file an application without providing the retirement system with all of their medical records already, so when they file the application, they're saying, this is what i think will proof that i am disabled. and then that starts the clock kicking and that's what we're talking about here these time lines, so we can see that there is a delay that is not related to anything that we did but we're waiting for medical records to be received. once they're received, our staff, makes sure that we've got what we need, we remove sometimes we get information that we don't need, that we shouldn't have. we move that and destroy it once those cases are ready to remove, we call that medical

ready and upload them to a secure site and they move to a queue for the city attorney's office to review them. that could be thousands and thousands and thousands of pages. and it takes sometimes but i will say that, since the city attorney's staff has increased in the last few years, the process has moved much more quickly. the average time is 5 and a half months to review them. they're looking at the cases, they're reviewing them, they're comparing them with the standard of review, in some cases, they might need another medical examination. but na entire process averages about 5 and a half months. there are case that's take longer than that, i absolutely concede. once the attorney's office is ready to go to a hearing, because all cases under a charter have to go to a hearing. they file what they call a declaration of readiness and

then first step in turn, contacts the member and their attorneys if they have one, and that ask them if they're ready to proceed. we have now about 75 cases that we're waiting to hear from the other side that they're ready to proceed. we follow-up, some of those cases, sit around for a fair bit because again, there may be reasons for the member not to want to go to a hearing. once they're ready, when we get the declaration of readiness from both sides, we set a hearing, we try to set those immediately, they average about 5 weeks, can be a little bit longer. but we don't have any problem, once the case is ready to go to set a mutually agreeable hearing date, and after the hearing, we get a 45 days?

30-45 days, we get a decision. so the process as you can hear can be as short as a year, it can be longer, it's definitely shrinking. but i'm happy to answer any questions. i know i moved through that pretty quickly. >> i have a question. we do listen to public comment and we've had a reoccurring public comment person that was on compares us to other place sxz the time it takes to process. is this all what is normative in terms of what you've been explaining it? it sounds like, is it in that box so to speak?

what i would say, on average. >> that's what i'm looking at. >> we are within the time frame of other plans. but what i do want to stress is that other plans start their clock so to speak once they get the application with all the medical records. traditionally, that's not what happened here. because you can file the application and in fact when you do file the application, there are no medical records, so the period of time from filing to getting the medical records is a period of time, and when the time starts, you can add at least six months, right at the beginning. >> but that's determined by the applicant? that when they decide, when they make a decision that's when the clock would start. >> they make the decision when to retire. >> right.

>> the clock will start once we get the medical records, because we don't collect medical records until they have retired. >> and when they do send the medical records, we destroy it? >> absolutely. >> we don't keep that? >> no if it's not relevant to the claim, it goes into the bin and destroyed. >> thank you. any questions? comments? >> without trying to dissect this break down of the data, i've been trying to understand the break down the 409 cases, some cases will never go to a hearing, we know that. how many is another count? it's not about the timeline, the question is how many cases are awaiting the hearing both sides have agreed to proceed, working backwards from that point and time to then determine is the number of

people we have assigned to this work, which includes the city attorneys, is the, the pace, it's the time to complete at least on the parts that we control, is it improving or not? that's partly a service question, and you complained about people who are going to get a check, they're okay, they prioritize once they get a check. but i'm trying to figure out how much staff are added. is it improved the service for this semi unique area or not? or do we need to add more to staff? >> you know, commissioner, this is an on going question. we look at it all the time. i can tell you that we have improved significantly. that backlog was reduced significantly. we still have a backlog but it

was reduced significantly. they move through the cases pretty quickly and do not contest cases which may have been contested in the past when perhaps that may not have been the best decision. not to second guess on this first side, we have more staff who are looking at these documents and we call, we call it scrubbing, i'm not sure that's the best name for it. but scrub the documents as bastas they can or because we have more staff they're following up more quickly when somebody comes out in the queue and we see that we don't have medical records and we follow-up in cases where we now have the staff. if we see that the medical records fast enough. so i think that things are moving faster.

there are definitely areas we can improve, we have i think about 50 cases that we, that are just plain sitting and have been for many years. so we, need to figure out a process of bringing them before you and perhaps dismissing them without prejudice so at least at that point, you'll have, you know, 340 pending cases rather than the 490. we're trying to get more realistic but very long winded answer to your question, is yes, service has improved. >> has improved so to try to turn that into a goal what is the acceptable level of pace? for example, that 409 case can go up or down because we don't control who retires or who gets hired, which is an indicator who uses this method. so we're trying to find a way and apply a number of resources. some months there is 7 years

and this month, there is what? 12? i'm trying to figure out if there is a need to improve and what is a real affective way. because it then goes back to our cost. so i'll just stop with that observation as oppose today tear this apart. but thanks for all this data. again, have we become more affective or not, because the trend that your previous ceo started with covid, the goal was to see if we can improve this part of the process. thank you for this report. >> is that completes your report? >> it does. >> just a question. thank you for the report this is very informative. one part that i was having a hard time following along, is there a common element that

causes them to extend out? is it or do they have something in common that causes them to be extremely long? >> the 51 case that's are truly i'm going to differ to cecelia. >> i would say that the biggest cause of delay is that we don't get the medical records, the doctors are not responding. so from our end, once they come to the city attorney's office that's when the medical records are all in and we're turning them around very quickly at this point. so i think that the delay is earlier when we're waiting for records. >> and that's what is causing, maybe i miss heard but i heard years in some cases? >> yes, and there is not one factor that we're not talking about. many of the safety case nz

particular have pending workers' compensation cases. and in many of those cases, it's not advantagous for our member to go to our hearing before the workmen's comp. case is complete, that's sometimes a factor. >> thank you. >> any further questions or comments? >> okay, do you want to call public comment, please? >> thank you, do we have any in-person public comment on this item? seeing none, 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. >> thank you for this report. i mean, this is going to get sort of, this is our business, right? and it's been a while since the board has had any kind of report like this. it's, it's a true testament

that we're doing work in the committee that we're in the committee structure. but anyhow. next item please. >> item number 9, action item adoption of new strategic asset allocations. >> commissioners as wilshire begins to set up, i'll begin some comments, we've had a lot of discussions leading up to this meeting today, on asset allocation and today, we will present the recommended portfolio and look for your approval of that strategic asset allocation. as you know, at the last ic meetings wilshire and staff presented a variety of portfolio and a recommended portfolio and i think we engaged in a pretty good dialogue in that meeting. i did receive some feedback

from the board and i'm very appreciative of that in trying to understand the context and other portfolio that were presented and how we reached our decision. so we worked with wilshire and provided some supplemental materials to frame the recommended portfolio and how we reached that decision, sent that out but we've also incorporated that in today's material. so wilshire will walk through that and give you an opportunity to ask any questions you have about how we reached the decision and the recommendation relative to our strategic objectives risk and liquidity needs. with your approval today, the next steps would be then for the team to make the recommended changes to the investment policy statement. and that would happen in june and then from there, we would go forward and begin the implementation moving towards the asset allocation. so what we're looking for today

is approval and guidance from the board to say yes, this is the direction we want to head and then we will come back and cement that into our ips and start to make the changes so. that's the broad background, i'll now turn it over to the wilshire team to walk through the presentation and want again thank wilshire and for all the work we've had a lot of discussion. it's not only all the work leading up to the recommended strategic allocation but there is going to be a lot of work on how we implement that and how we measure the implementation of that. thank you for the work thus far and i will turn it over to wilshire. >> thank you very much, allison, tom with wilshire advisors, we're joined virtually by my colleague ali who regretfully is dealing with some sick ses in the family and

with us here virtually. as allison pointed out, this is part of the, i'll say an extended asset allocation process with a lot of great back and forth and education on things like how do we look at-risk in portfolios how can we minimize leverage a look at capital markets and asset classes as we move forward. and now we're looking at reviews of specific portfolios and broadly this supplemental information is what we think is a very important process for any type of decision making is not just to focus on one specific portfolio but to make sure that we understand what the range of port fellows look like and what are the trade offs associated with different

portfolios before linking them to the objectives of the portfolio, whether that's specific risk and return objectives, our liquidity engagement which is critical, we'll talk more about that as we move forward here and things like draw downs, so some of the new metrics that we've introduced in this asset liability discussion. so if we nrif forward to page 2, you'll see the specific steps that have been taken. some of those that we just described from here for the formal adoption, and will be taking about implementation as well as one of the earlier public commenters noted. there is a substantial amount of work that goes from moving the portfolio from where it currently sits to where the new targets lie. and we want to be very brewed enter in diligent about

planning that process out. so we'll talk quite a bit about that a little bit later in this presentation. on slide 3, our sort of some next steps that are coming down the line, kind of related to that work stream. in may, we'll look at a review of liquidity in the portfolio and moving from, not just the opportunitier target but the actual portfolio and what you're pacing on what assets may look like as we move forward. and then in june, changes to the investment policy statement that will formalize the new targets, new ranges to manage the risk around the targets and how we will benchmark the portfolio which as you know is a critical component for evaluating the efficiency and the implementation for portfolio result relative to the approved strategic target.

with that, on slight 4, i'll turn it over to ali to walk through some of the risk principles that we looked at for the various candidate portfolio. >> thanks, tom. can you hear me okay? >> we sure can. >> great, and again apologies that i am not there in person although we have moved through the pandemic, illness continues to hit in different forms, our family was hit again in a mild but out of an abundance of caution, i decided to stay away today. managing the through this process. slide 4 is really meant to reenforce the process that we use to build the set of candidate portfolio what is driven by risk principals that

we evaluated based on items that have been described in your investment believes and investment policy statement. so hopefully none of these should be new, they have been mentioned throughout the education topics that we've gone through that tom highlighted on the timeline but just to reiterate first, from a liquidity stand point, when talking with staff one of the key concept was inkressing the portfolio, given the allocation of private market which is assets and in terms of trying to set a threshold, the metrics that we arrived at using wilshire liquidity model was somewhere along the lines ensuring that we have 3 years of liquidity and based off your capitol situation, that resulted in a about 9 percent

target. so any candidate portfolio that relate inside greater than 9 percent in a stretched environment, we thought would be suitable so that was step one from liquidity stand point. step two in terms of reducing volatility. and traditionally, traditional investors have focused on metric and standard deviation, measures all outcomes, in terms of the distribution of those outcomes to the outcome and upside. and what we thought about doing was, you know, maintain that concept of reducing the risk but focus more on those down side risk which can be much more impactful in impairing the health of the portfolio. through the education websinger touched on new metric which focuses on the risk and evaluate portfolio to ensure that we have a material decrease in the type of down

side risk exposed to the portfolio so that was point 2. point 3 is about using our factor model to look at portfolios that examine exposure to both gross and inflation shocks. and the focus was on the growth side because we are in a different environment than we were three years ago when you last reviewed the strategic asset allocation. the utilities of many asset classes in terms of the ability to generate return has xaid dramatically particularly on fixed income side, i think, the mention in the past that there is now a income con ponent to fix income given where interest rates are and being able to lean into that environment to maintain a portfolio that gets you to your desired rate of return but reduces the amount of exposure to the amendment you have to any type of negative growth shocks. so all of those candidate for

portfolio were made with reducing exposure. and minimizing the risk of any type of reduction in your status or idealy also reducing the risk of increasing contributions was a parcel with the examination of all candidate portfolios. if you put two slide 5, we then apply those concepts and you see those lists in the strategic allocation objectives. and if you look across all the portfolios that were discussed, all see that all of those, differing agrees, did meet the thresholds in terms of desired. and you'll see, my colleague, chris will kind of walk through how some of those metrics were

achieved when we get to some of the actual raw data. again just to reenforce that point all were suitable in terms of meet ing the long threshold. the next steps for us in terms of evaluating these portfolio that lead to a qualitative portfolio, and if you move to slide 6, this was a part that we discusses last month in terms of trying to nail down looking at a, b, c, and d, ultimately where do we come to recommend portfolio d. and a lot that's to do with the fact that when we combine those and feed those into an optimizer, we can evaluate in a frontier of risk and return efficiency. but it's imperative that

additional analysis is evaluated to look at the implement ability of the potential portfolios, the public comment that we heard earlier, i think addressed that point and it's an important one. and something that was part of how we arrived our decision. it's not just feeding numbers and have it spit out a solution, it's the nuance that goes along with evaluating the portfolios and you can see those listed on page 6 and three main considerations, first was, the allocation to private markets. we know that reduction in private market is not controlled by staff, that takes time and some of that is out of the control of the staff. so we want to be cognizant of that. initially, our constraints looked at portfolio with a private equity floor of 18 percent, just to kind of give

that much breath to the optimizer, but after speaking with staff and looking at what is achievable over a three to five-year period, we thought it to be more reasonable to look at a portfolio with a 20 percent for private equity. so you'll note that portfolio afc both had a target of 18 percent, portfolios being the target of 20 percent. so that was one, one cap for those kind of portfolio that had, that more implement al target. point 2 is the point of time sensitivity to markets that feed into this process. so we used our end of year capitol assumptions which as we discussed, favor this rotation out of growth into income given the interest rate environment.

but we also know that assumptions change, from period to period. and particularly over this resent market, evolution, we've seen a dramatic change and assumptions over the resent economic regime. and we didn't want to lean too heavily into a single point of time so that layer was a consideration in terms of what are the trades that would have to be made in terms of implementation this portfolio given that time estimate. and you can see some of those on the next point which is the flexibility to reallocate within public assets. so we use public assets to provide a lever to offset the exposure that we have in private markets to concepts and areas like road income and diversification. you can certainly experienced with that, in terms of your

staff having weighted a equity as oppose today private he quits to ensure that you have a level of exposure to growth assets that is in line to w the asset allocation, that's a concept that wilshire is a big fan of. so when we looked across the candidate portfolio, it would have required some potentially large moves so you can see two examples there, where if either portfolio and a b, were selected to get to your market exposure that would require selling half of the current public a questionity book to achieve that target. where as portfolio c and d will require less selling just about 25 percent. so from an implementation thought that would favor portfolio c and d in terms of

not moving too quickly to offset growth exposure but being more cognizant. so when we combine all consideration portfolio d was the one that stood out in terms of meeting the qualitative consideration. that reinforces the layer that went into the process. but i'll pass it over to chris to touch on some of the quantitative metrics that also fed into this. >> thank you, ali. if we turn to slide 7, what we've got here is a series of figures across the four portfolio that are being put in front of the as well as strategic allocation. and we highlighted ranking them against one another. not to say that any of these were bad, green being more favorable but it does give you an indication to understand the

ranking among the different portfolios here. so if we look across the first line of expected return, we can see that your current allocation has an expected return of 7.5 percent. and as we move to the right, the nalt tiff are less than the 7.5 percent with portfolio d having the highest return at 7.4 percent. looking at all the risk metrics as we move to the next group of numbers, you can see that by all the risk measures that we're looking at which is standard deviation, cr which ali touched on a little bit earlier, the growth or factor exposure and liquidity score are all ranked. so we moved through those goals that ali touched on a little bit earlier. these are pieces that we wanted improve with the different portfolio that we're putting in front of the board which we have, a and b are shaded in the

growner colors, that's where we're leaning into that income oriented capitol assumption. and then as we move into portfolio c and d, those are kind of in the middle of the more liquid portfolio and target asset allocations. if we go down to the implementation, what that means is if we look at the portfolios a and b, that requires the most turnover in your current portfolio, those are highlighted in red so that would be a change in growth assets of about 5 billion dollars. and when we look at the capitol preservation or income, that would be an increase of 8 billion dollars where if we look at portfolio c and d, we're looking at about half of those numbers in decrease and growth assets and increase in the capitol preservation. if we move to the next slide, what does that really mean in terms of once you implement

that portfolio how does it i am fact you? --impact you. so if we look at ten years out into the future, what does that mean? and we have a optimistic and pessimistic where the median is and optimistic would be that 20 percentile, so that you would be have the top 25 percent solutions represented by the number and pessimistic is the 75th percentile. in your current strategic asset allocation, the median is obviously the best here shaded in green, so you have just under 1.2 billion dollars in cxz. and if we move to portfolio d, that's close to that number, it's about 35 million dollars at just 1.2 in contributions which varying agrees of levels of optimistic and piss mystic between the other alternative

portfolios. if we go down to the actuaryial numbers, where if we move to portfolio d which is the recommendation that we're making today, we're just over 98 percent. and you'll notice as we move into the portfolio a and b which again have lower expected returns, they're going to have tighter distributions, you're going to see that those numbers do rain in the distribution a little bit more. but the optimistic is as good. and one of the reasons we like portfolio d is it's really good across the board, it does not stand out as being the best in any factor or category here, but it's not necessarily the red, where the lowest value. it will only fairway number that we like to see. with that, i will turn it over to tom to talk a little bit more about the recommended

portfolio. >> thanks chris and we've touched on all of these, so sil not spend a lot of time on the specifics. but on slide 9, you can see that the recommended policy there on the far right hand side with the column headed in red, in terms of the rational behind that, you can see that it does reduce the allocation to growth oriented assets while keeping the expected return above your targeted objective. and that's a risk management exercise protecting on the down side and reducing the portfolio vulnerability to economic down side economic shocks. critickly it increases the liquidity in the portfolio by introducing a 11 percent strategic allocation to cash and also increasing the public credit allocation which includes a substantial portion

of fixed income. chris touched on some of the modeling, the portfolio shows higher maintain the ratio and again protecting on the down side. and then finally from a qualitative perspective, ali touched on that, we do it's a qualitative portfolio and that's the rational why we're recommending portfolio d as compared to the other candidate portfolios. let me stop there before we dig a little bit more into iment mrimentation and see if there are any questions from the commissioners. >> yes, i have a few questions before you proceed. i just want to understand a couple of things. i'm glad that you with staff

refpd this recommendation. i think ally mentioned last time that you all wilshire used a volatility that was based on economics. the question then, is when you got down to the total standard deviation for the total, any of the candidates for that matter, were you still using that number or going back to the tradition number, the numbers where you use in the past. that volatility number? >> commissioner, we are consistent in using the economic volatility expectation for the role of risk for the whole portfolio. as opposed to realized risk. we're using the higher expectation economic risk across the board, candidate portfolio.

>> so it was used for all the classes? >> yes, yes, our expectation for volatility and particularly pertinent in private assets which have an artificial smooth component for the realized risk that was consistent for all the portfolios. >> okay, maybe i didn't understand the explanation. >> i will not comment on how it was done before but there is absolutely a reasonable point, there is a significant difference between realized volatility and private markets and private equity and the expectations that we're using what we call economic volatility. >> with the con straint that it may not of made a change.

but not just one asset class because of the recommendations. different subject, the current target numbers that you're showing here, they are using the ways that we adopted, i think in 19-20. but you're using expected returns and/or different volatility numbers. >> that's correct. >> so it's not no surprise that that would be something different to the efficient frontier based on what we did. >> back then. >> yes, back then, i would tell you it has the highest degree of probability that you're recommending now. we're used to changing every two to three years. that's what i'm trying to understand about this. that's why i was coming back to

what has it been the board's preference, yet alone the real down side, how much is the most that we would lose? and we were pulled for that almost four years ago. that's the change i'm trying to understand, how much risk to take. >> and i would link the two questions together. in modeling, the private asset classes, when we simulate the returns, then you're getting the true economic risk of the investment. so you're seeing what is rapped by that cr on what you can lose given our modeling of risk. >> okay. >> but we'll come back at another point and time.

i'm ask you to educate me on that subject, that's one. >> let me ask this, the phrase was objectives were set out, who set out the objectives? and i don't know what i don't mean what they should be. >> ali, it sounded like you wanted to chime in? >> yes, just so i'm clear on the question, and if i have not addressed the question properly. those objectives were items when we reviewed the goals and policy statement looking for indicators of the risks that were expressed that were

important to manage throughout the process and that we should be cognizant of in terms of making sure that those were part of the process. so everything in there that you see listed in certainly paraphrase but taken from investment believes and goals and policy statement. so that was part of the process and of course in november when we did the education on risk to it identify what we had to come up with and asked for feedback from the board if there was anything missing. did that answer the question. >> i'll say no. but i will tell you when they adopt an asset allocation, that is one way of accepting how much risk we'll accept. what is the maximum possible loss in the rainsinger the 95%

range. and it's couple other issues but this thing how you believe it was set out. you were reaching for something to do which is wise, i'm just not sure how. i'll stop on that point in time, that's enough questions for now. thank you. >> thank you, commissioners. and i would just comment too and totally agree, the adopted portfolio at the end of the day, this factors in and reflects the risk tolerance of the board that is the case. the approach that we took here is to try to qualify those risks in ways that speak to liquidity drawn down, the really metrics that you guys have the ability to express of you versus, us having done this for the better part of last 15 years.

it's my experience that it's very difficult for a board to express the right standard deviation that they would want in the portfolio. with that comes so much other factors that are expressed in a better way through the metrics. i want today reiterate that you're correct and that adopted portfolio does not capture. >> and ali, i'll add on and it's a related point to commissioner comment about the environment being different back in 2020 versus, the current environment. all of that plays into how much risk do you have to take to meet your return objectives. and those answers are very different as we sit here today as they would have been back in 2020, because of the interest rate environment. >> i want it say the tricky

part is converting them into dollar to understand how much dollars they have to maintain. the refk are mathematically clear. i'm not able to do it quickly in my head. this is a daily task that staff runs. i'm trying to convert on how it really means. i think you did it in session 2 and this calls for allocation. they were willing, we're willing to give up return to have that advantage and i'm just trying to figure out to then take it out to contributions and you mentioned contribution volatility but i'm not going to ask about that today. thank you. >> thank you. >> thank you, and so maybe with that, i can touch on the last couple of slides here which are

meant to discuss implementation which is something that is obviously going to be pretty critical here. particularly given where the actual portfolio stands relative to all the portfolio and your current strategic target. so first on slide 10, i want to talk about the implementation. i'm a big big fan of attribution. the amount of active management in the portfolio and how that does relative to policy benchmark and evaluation itself. so first and for most, you know, we want to highlight that benchmark is going to be critical as it relates to this

liability study. we will continue to evaluate the asset allocation so in your performance material, you're seeing relative to the board allocation, that to us is that benchmark of record and we want to make sure that it continues to be evaluated and you'll know when we're going to start to do that. that is going to be a critical piece of it. but we also want to evaluate the implementation of moving towards that portfolio and being cognizant that it should be done with a manner with market considerations liquidity consideration and costs. we don't want to put staff in a tradition to put through a portfolio if we're going through transaction costs go up. so we want to make sure that they have a proper breath.

one of the way that's we're going to do that is, through the use of interim policy targets, to the mild stone that we want to hit as we move towards that policy portfolio. and this is not foreign to you guys. your implementation of 2020 a ls included the use of policy targets and continues to be supportive of that and continuing that process so that would be a continued. and as you mentioned the last bullet there, we're going to look at the asset allocation but also introducing the bench marks into performance material to allow that inside in terms of how the portfolio is moving across multiple dimensions as it goes through that objective. slide 11, this is the last slide of discussion is the approach in terms of how we get

to that long strategic target and we're calling it an implementation glide path. so those would be the private markets. i know the, the staff is going to be given a presentation on equity and fixed income coming up here. and you'll see some examples but when we don't want to move quickly, using a five-year window to ensure that we can get there through our prudent period the liquidity is going to touch on the overall pacing that will be part of towards allocation, but we want to be practical, the private markets and be practical in a different way with the private markets. we already touched on the points of current market--that should be obvious. in terms of the next steps,

staff will work on deciding what these interim policy targets will be. again making sure that the staff has the ability to trade opportunity --and assuming that everything gets approved in june, our plan is to start evaluating our portfolio but also those interim policy targets following the june ips adoption. so you'll have the ability to evaluate not only the decision to choose the candidate portfolio but how staff is moving towards those mild stones over that period of time. so more to come on that topic, certainly. but with that, i'll stop and ask for any questions on the implementation section here or the overall presentation.

>> this is a request then since we're going to be work withing this going on as changes are being made particularly, that's candidate d requires. please included the sharp and sartino for those that want to get a snap of what is going on, that would be a useful ratio and we're used to getting it so i'm not making it up. secondly, maybe we'll ask our cio to poll the board in the immediate pass make pickup of the board, we expressed a loss tolerance of 18 percent in one year. whether or not we maintain that or understand what this means and what we're adopting today what our tolerance is for loss as opposed to just accepting

the asset allocation as a proxy for our tolerances, it's another useful number for us to talk about risk not just in terms of poll tilt but losing money. those are requests, they're not going to be met, let me know. >> and i would say, in the, excuse me, the prior presentation in the box and whisker box, we did provide 11, 2, 5 and 10 year simulated numbers to show the 75th and 95th per zen percentile. >> i did spend time in the whisker that's a new tool to understand. i know you were getting the data to us as well as analyzing. i'll go back and look at it that way, i went back and looked at the last couple of steps, last couple of that asset allocation that were

adopted to see what are we changing, you're doing a little different but focusing on the samele major strategic question that the board adopts so staff knows what to go out and do. thank you. >> would it be helpful to spend a minute on how much you're willing to lose, and what port goal d means in terms of that down side risk versus the other options you have before you. it's not the exact number but it is, what you're willing do, you would be exposing a portfolio to. >> any answer is yes, but does the board want to understand that at that level?

>> first of all, i appreciate commissioner driscoll's comments, i have not really thinking but down side risk has a lot that impact a lot of areas as well. >> if we do back to slide 7, you can see that your current asset allocation has a 19 percent. we're talking the lowest and so if you look at the lowest point of those and compare that to our alternative portfolio.

where they have the higher number around negative 15 percent and portfolio c and d which have a little bit more growth exposure have a little bit higher, the so the higher the growth factor the lower that number could be because you're taking more economic growth risks and therefore those are more volatile markets and they could draw down a little bit more. >> one point of clarification, so we use a 90%, those are average loss of the worse ten percent. will you abouts to point out that these are kind of worse case an nal so each of those numbers that you see there are the average based on a one-year time frame. so, you know, commissioner just mentioned an 18 percent level,

you know, all of these candidate portfolio bring that number down the 18 percent asset. which is on asset allocation which got 19 percent over an average. >> okay, so i can say, d falls within our tolerance within the 18 percent loss limit. and that, those numbers, that average that is based on the 95% probability range? >> 98. >> 98 percentile. >> what? >> 90 percentile, the bottom 10. >> is the distribution 98 percent or 100 percent?

>> the full distribution would be the full 100 percent. >> it would be percent. >> the 1 --it would be 1100? --100. >> yes. >> the last was 95 percent. >> so you feel comfortable? >> yes, now that i understand. thank you. >> i move to staff recommendation to adopt asset

allocation candidate d, as well as the there is no proposed plan for shifting, rebalancing the asset classes but that is to come. >> thank you, do we have any in-person public comment? please step up to the podium. >> they said shifting 30.1 percent of your actual assets, on. i understand why, i think you should actually show.

>> i've come to a conclusion, the key thing is going to be the implementation, the key thing is staff. and you have to be lucky--[background buzzing on audio] it's a really really good. so that would be the board changes, i only recognize two people, commissioner bridges and commissioner driscoll bring their live expertise. whatever you vote on, staff will implement it.

>> 30 seconds remaining. >> i don't think is prepared for commission. really keep long he equity in the market. 2022, you lost that and public activity. you really layout what you're going to lose in another 2008. >> thank you for your comments. >> thank you for positive comments. >> moderator do we have any callers on the line? >> madam secretary, there are no callers on the line. >> thank you, hearing no callers public comment is now closed.

>> okay, it's been moved and seconded, all those in favor, actually, i'll tell you what, we're going to do a voice vote. roll call vote. >> thank you. commissioner o'connor? >> aye. >> commissioner gandhi. >> aye. >> commissioner driscoll. >> aye. >> president heldfond? >> aye. >> mr. thomas? >> aye. >> commissioner engardio. >> aye. >> commissioner bridges. >> aye. >> we have 7 ayes, motion passes. >> okay, we'll take a break here for 15 minutes and i appreciate wilshire. you always give a great presentation. i hope everybody is okay with your family. >> thank you, i appreciate it.

>> i'll see >> quorum is present. >> will you call the item please. >> item number 10, discussion item public fixed income and public equity annual updates. >> commissioners the public investment team and i are pleased to present to you the updates for equity and fixed income. if you're all very well versed, is to provide oversight and monitoring of our investment. so our objective is to provide you the information and the content to be able to fulfill your duty. so we'll highlight our strategy, performance and exposure and initiative. and what i hope that you'll walk away with today is that, the team and their approach to investing continues to involve.

we've taken a keen focus on emphasizing portfolio construction and risk management and combine that with their great identity great managers. so with that, i will turn it over to curt to provide some more introductory comments. >> thank you, allison has stolen most of my thunder, but we're please today have equity portfolio. what may not be clear is the combinations of these assets represent over a third at the portfolio as of the end of 2023 and given the discussion that you just had eventually they will represent more than half of the overall plan. this is holistic, composition

and initiatives. we're joined by peter grant. as you may recall, we hired merser last year, and while they're not presenting, they're available to offer any comments or answer any questions that you may have. just a little bit word of wanger, there is a lot of material, a lot of it is representative i --indicative of the time that this team spends a lot of time thinking of these things and as allyson already noted to us, not everything will make sense we did our best to have the take away, please please ask any questions this is your time to dive into our very important

portfolio. my comment left side focus on the evolution, some board members are aware but others will be helpful context. talk a little bit about performance though i don't want to steal too much thunder from alo and hans. so in terms of the evolution of the portfolio, you're probably aware of this, there is been considerable change within the portfolio both in terms of their relative size as percentage of the plan, as well as the composition within. in terms of size, i joined first in 2018 in particular markets have been the primary sources of funding if you will, we've expanded our efforts in

the return area, private credit area and private equity. and they've been a source of equity. and i joined in 2018 , we had approximately 45% of the plan invested in public equity. in 2023, we had just 21 percent. with fixed income, we had about 16 percent. and at the end of 2023, we had 5 percent. those are going to change. now i don't raise these because our investment is--in the investment, i point it out because liquidity and managing liquidity has been a factor and how we manage these portfolio in the last two to three years. with respect to come pe significance, --competition.

it's been a long view of powers that there are access returns to be earned in private markets. as a group, you see that we don't have a lot, and we'll touch on these on some of the presentations. in fixes inside we have, we have bank loans, high yield structural credit. and result of that, our public credit portfolio has far less sensitivity to interest rates. further, rather than having static allocation to the sector, emerging debt, high field bank loans, we have our core to be invested what we call sector managers. in public equity, we've evolved a way and this is years ago, to

what we call very diversified style constraints where we had two managers in every style box that you can think of. and it evolved a portfolio to invest some of it that focus on particular themes, most of these are aware that includes biotechnology or innovation as we describe it in china and i'll talk about these in just a moment. and in terms, we've focused on strategies which are highly diversified. those represent some of the changes that we have occured over the last couple of years. but this approach both in income and private equity is not without risk. what we've chosen to yield, it means that we're taking greater credit risks and in equity we

have over weight, so again, i think most of you are aware of these philosophies in sort of orientation but i just wanted to remind you of these and i think the board has introduced that well over the last couple of years. with that as a backdrop, i'm going to return to performance and steal a little bit of thunder, we sat here because 2022 is an extraordinary difficult year in the equity market. and you recall that the fed raised interest rates by a magnitude within 12 months, is the greatest. but if you combine that with political and tensions between shine a and u.s. and covid policy, our portfolio sold off, and we were not o loan there, a

60-40 was down almost 17% in 2022, its third worse performance. so a year ago, i'm a little nervous about presenting that. our treasury in 202 was down 9 percent, public credit was down 11. and in public equity not only do we have a group orientation, but you may recall we have a low carbon net zero ambition as a plan and we've done a lot over the years to reduce our carbon foot print which is great. however, we're maturely under weight, you may remember, up. point being 2022 was a difficult year. but i'm pleased to say that 2023 was almost a mere image. in 2023, the markets and i'm generalizing were impacted by two primary factors.

interest rates continue to raise rates until 2023. the market started to be influenced examine continues today by speculation of whether or not the fed is done. and the third quaert the speculation was that the fed may continue to raise interest rate as a consequence but in november, the rhetoric eder--rhetoric, and--so that's one thing that influence markets. and the other thing that we'll talk about this later was the rise of and these are separate albeit related phenomena was the mag nificent 7, and the rise of artificial intelligence. and i think you heard about and a half the mag nificent seven,

apple, microsoft and tesla and we'll talk more about it. but what is remarkable, the mark up of those companies is greater than the combined market of canada and u.k. and japan which is remarkable and had a great influence over the markets in 2022. we'll talk about our performance, we're pleased with our performance because we don't have all our eggs in that market. we performed well. 23 treasuries are up 4 percent or 4.2 percent. and now public equity is up 24 percent. and gil, a lo and han will dive into performance. and i'll talk about initiative before i hand it over to the teams here. i mentioned our experience in 2022, we spent a good portion

of our 2023 reevaluating our themes and approaches and underline managers and working closely with our colleagues, at maqita sorry that was horrible, at merser, in public equity in particular. in public equity, we had a tough year in 2022 and what it caused to reevaluate some of our themes and approaches. certain styles, oar we will many so we'll evolving and will evolve our portfolio and try to

mitigate some of the risk that's comes. in the early days of that kind of consideration but what will relate is revising of certain exposure and in the introduction of new strategies in 2023. quickly i mentioned our themes in public equity, biotechnology innovation and technology and china. we'll talk about bio tech and technology a little bit later. in the biotech sector, we remain instructive, very very active mna market for reasons that we'll describe. very instructive, evaluations will and expenses have been rationalized. and we're seeing remarkable innovations in the areas of

artificial intelligence and payments and that sort of thing. so i'll turn to china and i know we're going to discuss china at greater length at a investment committee next month. but i would say our outlook here, is cautious. as most of you our thee seize around china revolves around the fact that it's the world's largest economy and still remains one of the fastest growing economy which in turn has lead to rising incomes and fueling demand and global leader in innovation and that's what attracted us to invest in china. but it's indeniable that the risk right side greater than when we first began invested, first in increased regulations, we saw smft chinese, we witnessed unfortunately experienced some of the chinese

regulators actions in the large technology, our internet space, gaining or full profit education where regulations were changed overnight and equities would sell off. and whethers chatter whether some companies will be restricted, so there are heightened risks there and we don't want to diminish the geo political intentions. so in light of these risks, we're evolving these approach, both in terms of the magnitude what we invested but also how we get that in exposure. so we have reduced our exposure to china in our public equity portfolio and some are shown in the presentation. today our weight in china is about 6 percent as opposed to

11 percent but we'll reduce it to a market rate which is about 3 percent. we're going to change our approach to exposure in china in public equity. and what i mean by that, we're going to move from what i characterize a top down approach to one that is more bottom up. top down meaning we have staff with decisions to invest. our view today is rather than having static, a better way to invest there is a little bit more dynamically and let some of our managers opportunistickly, invest in a more tack tical way. notably, as we made reductions in our exposure to direct managers, managers that primarily focused on china, we've seen an increase in our exposure with some of our managers who invest more dynamically. something to do with value a

sxz china being very compelling. we've lowered our staff, our dedicated managers, actually we've seen a slight up tech from our more dynamic managers. that's evidence how we want to get exposure which is in a more dynamic basis as oppose today static. so i'll paws there, a--pause there, happy to answer any questions beforehanding over to the team. >> thank you, that was a lot but content. but you didn't mention one thing that i was hoping that you can give us clarity. early on, you mention the fun goal of having a car bohr footprint and how that impacted performance over a defined period of time, can you give us a little more clarity on did

that, priority or that goal have a negative impact on our performance? over the long run? and if so can you give us more details on that? >> sure, commissioner driscoll asked that. and we need to crunch that data. our zero ambition is plan wide. but also is coincidence, technology and even china, we're naturally going to be under way energy. so our carbon footprint is really how we design our portfolio and we have taken specific steps to work with couple of strategies that themselves are low carbon. and anecdotely, i know it hurt us, but over the longer run it hasn't, but we'll come back with you with some specific data there or about.

i think it's been added to the energy but not in this particular period in 2022. >> thank you, i appreciate that. the two component that i'm concerned about is first if there is a side affect, so you've got to go light somewhere or if this was intentionally. >> it's a good question. it's a combination of both, we're intentionally over weight, which is we're going to over weight in industry and energy. but couple providers that intentionally have a carbon footprint that is lower than our benchmark. so it's a combination of where we've chosen to lean and to in intentional actions that we've taken to lower that carbon intensity. >> if i may, and we'll crunch the numbers.

there is multiple way to see look at how energy exposure impacts performance. the other important point is what energy often does is it performs when those other areas are not performing and that's what we saw last year. and there is often that, seeing it today, when markets are changes on rates and inflation areas are up. so having tools in the tool kit to diversify, they can be. and over the long term, benefit too. >> and i appreciate that, and i think you rearraigned the second area, emphasis on long term on what cyclical where carbon sort of strategies would

out perform. but we're thinking in the long frame. i'm not interested as year to year we may have a blip where it out performs, but if that's a substantiative negative impact, we want to know. >> i appreciate the question. we'll crunch some numbers. our experience in 2022, was jarring and yes, we have certain tilts and over weights that and under weights that worked against us. so we have to rationalize is, do we have too much? in certain areas and we have to rethink our sizing we have not come into xlaoutions but anyway, i'll appreciate the question and come back to you. >> question. i don't doubt you and your team's ability to emphasize the security selection when you're hiring a manager. all the all the money is

managed externally. >> all of it. and the question since we just approved what will be a significant increase in our fixed income portfolio, more work for you, that's what we do, give you more work to do. but this issue of currency play, maybe there is another significant in the fixed income as it is in the equity. but if you're, if you're, you and your team are good in selection building, that's what you want to emphasize. but the issue about the themes, one is the geographic one which is currency intensive, do you plan to improve that or even pay attention to it. the dollar does not always keep going perpetually. >> i understand what you're asking, what we want to do, is we want to diminish or mitigate unintended, that could be currency, it could be style, it

could be sectors or et cetera, so the way we're thinking about it is we have to focus on manager's stock selection ability. but if they're really great at the certain market, does that in turn, i don't expect us to, i don't i think we'll have currently--or head--but we're going to be much more sensitive to those type of risk that's are embedded in the portfolio that are not immediately obvious through stock picking. >> i'm glad you're going to do that. what we'll do with messererer's help. the concept to connect to it is not this simple but you look at at the up down ratio. you know, you look at both, they have to do well at both. >> absolutely.

>> so the whole issue, since this thing is significant. you have to double some of the things. >> so these security selections you're fighting, make sure they get the country allocations too, please. >> and that's part of it. we've taken a top down on china, our view today is let's put more in the decision of our manager who can more nimbly allocate. >> i've taken more time from the team than i intended, i'm going to call up the team. >> income portfolio.

joined us from cambridge within our public equity portfolio. but i said this before, he is not a baseball fan but he turned out to be an in fielder, ultimately took over the management of portfolio of 2020. dennis joined as a management assistant where he moved into investment group in public equity and he's been moved with our portfolio since 2018. >> thank you, and good afternoon, board members. i would like to start today's discussion with a brief layout of the various topics that we're going to be going over today. first, a reminder of the role that public fixed income plays within the overall portfolio

and why we have this allocation. we then will look at evolution of public fixed income which will provide some context where we've been and how we got to where we are today. and then talk about resent macro economic events in our environment selection. and treasury and how their actions have impacted resent departments across sectors. we'll do an in depth review of the performance of first income portfolio. and then look at characteristics and exposures how is our portfolio positions across sensitivities to fixed factors. they will review our compliance within those guidelines. i'll then provide an update in

our liquidity. and then i'll touch on initiative that the team is working on. so moving into page 4, some of the key points that we tried to stress throughout this presentation and that we would like to leave the board with are listed on the stage. first, the role that they play within the portfolio to provide will i--liquidity and income and diversification. i would like to you take away the side 6.9 billion and allocation just over 5 percent as far as assets. on the performance side, the hide line number is that this portfolio returns 7 and a half in 2023 out pfpg its benchmark by about 20 basis points. and this was focused on portfolio construction and risk

and portfolio remains in compliance with the guidelines. lastly some of the initiatives that we're going to be covering are going to be covered on this page. but on page 6, i want to begin with level setting, i'm cognizant that there are in new board members here today and just as a reminder that they play within the overall plan, there are four function that's it hits. liquidity providers, it provides income relevant in today's environment. it provides diversification and a store of capitol preservation. and the way that we do this, is we divide the portfolio under two deposits. our first composite is our treasuries portfolio, the idea here is to provide capitol preservation and act as a mriem airy source of liquidity. our second is what we call

public credit or liquid credit. and they will be here to take on some credit risks and generate additional viewed on top of treasuries and also to act as a second source of liquidity upon the plan. you can see that the public fixed income represented over three quarters of this plan. as interest rates came down over the decades, the pension fund diversified into other clauses, we increased our allocation to alternatives and correspondly, the fixed came down to where it is today. as you heard in the prior presentation from wilshire, that number is projected to go

up. moving on to page 9, here we zoomed in on the most resent 8 years, and we focused on two underlying composite. i'll call out our allocation to public credit. 8 years ago, we were sitting at 4 billion and that number has come down where we're sitting at 1.1 billion. and next is asset, 2 percent of planned assets. and just above our allocation to physical treasuries in shaded light blue. synthetic treasuries and the board will remember that we added capability to see take this on by our futures back in 2018 and added additional to

total return swaps. we took off the synthetic in the middle of last year which we'll get to in just a couple of minutes. page 10 provides a snap shot and i'll start off by first describing the middle column of our page. it points out to our income portfolio and you can see our split is 40-60 dedicated treasuries and our credit sleeves. this is in contrast to our benchmark which is a weight of 55 treasuries and--so we're--under way treasuries if you move from the middle panel to the right panel, we can see that they also included cash at the picture. cash at the sitting at 500 million dollars representing

over 1 percent of planned assets. and by including cash which today as a comparable use and finance liquidity metrics relative to treasuries, you can see that it gets closer to the reference. if you look at the far left column, now we're looking' public credit portfolio, this is zooming in under one sleeve. and could touch from this. but our majority of the last few years, within our portfolio have been evolving the core of this portfolio towards multi sector managers. and you can see that multi sector managers are represented in yellow, today at over 50 percent of our portfolio. you see this retirement page 11. the various colors on the page represent specific manager allocations and beginning in 2020 is when we start today allocate fixed strategies and you can see that that portion

of allocation has increased overtime. as we sit today, we have three credit strategies in the portfolio. taking a step back and walk through some macro economic factors that have impacted resent department. i'll take a specific look at the actions of the federal reserve and treasury and the federal reserve really controls the the federal funds rate which is the overnight lending rate for financial institutions and this within financial is really seen as a benchmark upon other rates on credit spectrums are based off. and the federal reserve is said to have a dual mandates. it's two things that it's looking to optimize is inflation and unemployment. let's take a look at the first factor inflation on page 13.

we're here we're looking at a one-year change of basket of goods. how expensive things are relative to 12 months prior. and you can see we had a by spike in 2022 driven by pandemic, influx of stimulus bun and inflation shoot up. we'll see the reaction to that uncontrolled inflation. but i want thing i want to leave you on page 13, that inflation has come down to about 3 percent. not quite at the 2 percent long term target that the federal reserve is targeting but much closer relative to where we were 12 months prior. the second mandate of the fed is unemployment. right here we're looking at a long term picture. there seems to be a resistant level roughly at 4 percent and fairly close to that number today.

so if we look across the mandate, the feds seemingly have inflation at a better stage than it was in the past and unemployment was at a healthy level. so on page 15, we can see the actions of the fed. in 2022, we saw a massive increase in the federal funds rate that is depicted in the far right and was in response of inflation. as inflation began to come down, that was the far most line, and leveling off and we've seen the fomc take more of a dependent view. on page 13 to fund the u.s. government by issuing debt. on page 16 we're looking at the graph cal representation of those funding that different matures which we call, and

we've defikted three different snap shots on page 16. beginning at the bottom, we can see back in 2021 and this is going back to our zero interest policy where you were not earning much by investing. well the course of over 2022, we saw a massive increase in interest rates what i'll call out is the increase in interest rates on the short tend of the curve that is the 1 to 6 momma tours was more than increase but you can think of 10 to 30 year, and this lead to a if he nom that steel new covered version where you can earn more by investing in the shortened. we saw an increase of that inversion over the course of 2023 as use on the shortened increases even further. i hope that will put into context some of the performance that we've seen over the course of 2023. with the increase and interest rates, we saw that, markets

within fixed income that had higher interest rates, we're talking about daouration, these lagged relative to less daouration heavy sectors. so we've got two pictures on taij 17, performance in 2023 and right panel the fourth quarter performance. couple of things i'll call out, under performance relative to other credit markets and the rally in the fourth quarter that pushed from negative back into positive territory. moving to our green bars, we're looking at ininvestment grade sectors. relative to high yield under p.ed. we saw a continuation of that theme wnt high yield sector. i've listed the single b and simple cs you can see out performance by the triple c

segment in 2023, again point to go strong performance among the lower equity parts of the market. lever loans also had a strong year runinger roughly 13 percent and markets between 9 and 13 percent as well. a good year for them. so with that, we'll move into a discussion around the performance of portfolios. page 19 but additional details are available on page 20 and 21. a couple of things i'll call out, i said our performing out performed by 20 weighs basis. this out performing was due to an over eat to our credit sleeve which i showed in the prior page and offseting under way to treasuries. looking at our two underlying sub portfolios, our credit

portfolio returned 10.2 percent under performing by about 80 basis points. and if you were to double click, you can see that a lot of the under performance were under driven around interest rate positions. additionally higher positions in markets where lower quality fixed quality also hurt us. on the positive side, we were helped by our under weight from a duration perspective and emerging market debt. portfolio 4.2 percent in line with the benchmark. so talking about the positioning of the portfolio. before i get into i'll provide

a quick layout. we're looking at our fixed income portfolio. in the bottom panel assuming in only the credit portion. so beginning with the bottom panel in green, we can see the exposures across various fixed income sectors for our benchmark. our benchmark is a third investment grade and third high yield and third debt. they have under weigh, off benchmarks to u.s. treasuries which help to improve the quality of this leave a little bit. as well as bank loan which have no duration sensitivity and secure ties markets. moving from the bottom panel to the top panel, you can see that we are under way treasuries relative to our 55-45 policy benchmark within policy fix income. on page 24, we've taken a look

how we've positioned from a geographic stand point. our panel has a credit to north american credit. in the top panel we can see a heavy buy towards the exposure. of course our treasury allocation is 1100 percent u.s. --100 percent u.s. on page 25 we're looking at a view of our portfolio across various buckets. one thing i'll call out in our credit section, is that we have a shorter, to the shorter duration. >> sorry, to interrupt you, i had a question. >> go ahead. >> i noticed with middle east and africa, there is a higher percentage there than other areas. do you happen to know the distribution? is it centered around certain markets or countries?

or very much contributed rather flat across the region? >> there is no single country that stands out, but it's soverne debt of these countries. >> thank you. >> on page 25, we're looking at a picture from a duration stand point. and as i mention thed, we have a biased duration part of the market. and this carries through as we look at our overall quick income portfolio. at page 26 we're looking at again at our quality distributions and the bottom panel, you can see our credit portfolio has an over weight to the higher quality segment of quality. as we do from the bottom panel, we can see that under weight

the highest quality segment and this is being driven by under weight to treasuries relative to public credit. page 27, before we jump in, i'll just level set a little bit. the top panel, we're looking at security, so it's a respective of these portfolios. there is a couple of lines, the lines in green represent our private credit portfolio. the lines in purple represent our overall portfolio and its benchmark. the dash lines are the benchmarks. and what i'll point out is our credit portfolio is out rooting by about 70 basis points. that plays directly to the purple line where public fixed income basis as well. the bottom panel looks at our credit quality overtime. and what i would like the board

to take away here, is that the advantage that we saw at the top of the page is not coming from a quality perspective, we're closed to almost on top of our benchmark from our quality perspective. on page 28, we're looking at the sensitivity to various risks factors. first the top half we're looking at duration which is a mention is a measure of sensitivity. and i'll point out that our portfolio consistently have a lower duration relative to our benchmarks. and this, this under weight from a duration perspective is being driven by a couple of factors. firstly, some of the strategies and areas that we have decided in bank loan sxz securized credit are lower daouration

relative to the rest of our portfolio and our benchmark. we've also made a decision to market debt which is higher duration sector of fixed income. the second thing that is driving our under weight is also our manager's positions relative to their benchmark. so there is two things driving this under weight and duration. it's a similar story when we move to the bottom part of the page. takes into spread duration, looks at credit spreads sensitivity. and our portfolio has a lower sensitivity to credit spreads relative to its benchmark. moving now to the investment guideline section of our presentation. our key take away is our portfolio within remain within the guidelines. within private credit we have c

factors. secondly how different are we from a stand poult and how do we place across are we fill filling the role that this place? we're just about two years under way, so we're taking less credit ced risk. we're one notch higher so we're better quality. and we have remain within the bands within our public credit portfolio. treasury portfolio, we look at duration, and we remain right on top of our benchmark across all of those metrics. as i mentioned earlier, one of the key funk is a provider of

liquidity. we look at two scenarios outlined in liquidity stress test. scenario one, reflects the no-go stress test under which the plan would need roughly 750,000 over a two-month time frame from our asset clause. and i'll point out to the board that this scenario one was very similar to the actual experience events in march of 2020 as the pandemic was beginning to hit. so scenario 2 looks at a deeper more pro tractive situation over a 12-month time frame. what i want to point out to the board is we have a game plan on which to execute to rate that liquidity in situation where we need to. and the summary of this is

shown on bottom of page 22, scenario two reflects a fairly reduction but again going back to the point, we have a game plan to hit those where we have a plan to raise that liquidity. in interest of time i'll present pages 33 and 34 as presented and move on to page 35. over the course of 2023, the public fix income team has continued to work closely with andrew and blake. due to the understanding we have our income managers, more details are listed on page 36 and 37. i'm going to talk about a couple of initiatives that we've been working on and that we will continue to work on

going forward. so on page 39 just a review of some of the work that we've been doing over the last months or longer. i want to stress that this is a constant process. we work closely with our asset allocation team, cao, romano, with kurt and given, we're constantly evaluating relative metrics when deciding where the liquidity from and where to deploy excess liquidity when we have. and work closely with bullshaeer and i'm excited to show the board a couple of those in a couple of pages. we've also worked with in terms of reviewing the role that fixed income plays in the

overall plan. and there is a couple of changes that i'm going to preview. le we've worked with merser, our after class consultant in terms of reviewing the higher yielding multi sector credit space. and we've also worked with messererer in terms of approaching strategies and researching potentially used strategies. as we move to future initiatives they're listed at a high level over here, board as recently approved and updated allocation to credit and treasuries and cash going forward to manage we'll continue to manage all of these holistically. we plan to work on improving our risk and monitoring system. on the back of our work with wilshire, reviewing the role that fixed income plays in the overall plan, we plan to come

to the board to establish a new benchmark for our public credit portfolio and on the back of that, we plan to present a plan to bring it to more in line with the new benchmark that we're proposing. and we also have a number of manager research numbers on the agenda that tie into some of those initiatives. so, on page 41, we have here, well, we actually listed the four options, the board approved option d. so we'll be working with the team to bring overtime from where it is today of 5 percent to the target approved by the board of 20 percent. i mentioned our risk and monitoring system. over the last number of months the board has approved wilshire we've been working diligently to uphold all the holdings in

our portfolio into wilshire's monitoring. we're able to look at anti error risk which i highlighted at the right of the page at roughly 200 basis points. we're able to decompose that risk. how much is coming from how different our manager's benchmark right side to our benchmark to how live our manager's portfolios are to their benchmark. so decomposing how much we're taking from a sector. examine we plan to continue fine tuning and remining this risk and monitoring system over the course of next year. on page 43, i mentioned off the work, given the total level there are liquidity and risk considerations, we're planning to come to the board with a benchmark. today it's one-third investment

grade one-third high yield and one-third emerging market debt. we plan to propose a 50/50 and yie field corporate credit. you can see the statistics on a, on a forward looking basis on page 33 in the bolt in the middle, moving to our benchmark, we will see a 7 basis point decrease in terms of expected return. so a little bit of decrease in terms of perspective return but from a volatility, it's much lower for our 50/50 benchmark. what is not reflected is liquidity and given that this is an emphasis that our level, will show that our construction has bert liquidity metrics relative to our existing benchmarks.

we're up to page 44, additional initiatives contingent on the approval of our 50/50 benchmark, we plan to restructure or portfolio. and we have a number of items on various stages across our research agenda including looking at higher credit strategies, our approach to emerging market debt, our approach to structure credit and our approach to our treasury allocation as well. so just to review before i pause and offer up an opportunity to kurt or allison to provide comments, i want to restress smft points that i made at the start of my presentation in the term of role that income plays instead provide liquidity, income, diversification and capitol preservation.

the portfolio sits of 1.9 billion of assets, the portfolio return 7 and a half in 2023, we continue to manage the portfolio with a focus on portfolio construction and risk and we have a number of upcoming initiatives that we're excited to update the board next year. with that i'll open the floor to my colleagues for additional colleagues and if not, with questions for the board. questions? >> question? in the liquid credit portfolio, there is nine managers, i think four of them are multi sector managers or two or three of them? >> three. >> thank you. and they had discretion to move the money within the sectors? okay, so the question to you then, my understanding is you have the authority to move money among managers not just

to pull off cash but make an active bet, yes? >> that's correct. >> okay, so i assume the benchmark will reflect that let alone the performance numbers, will they reflect when you have made that increase? okay, that's a loaded question, i don't expect the answer today. and i'll explain why then. everything is with me, almost everything is worth measuring. but i'm going to lead to the next issue that is touched on here on pages 20 and 21. the you show the, you show the two portfolio and then you show them with the leverage return. it's a smart decision you stopped it for a while but you still have the authority to do it and hopefully, you will do it so well that we will want to do more. but there is the active

decision. i'm not sure the process that you have to do it but how the decision is made to buy this or that whether you have the authority to do it or the managing director or the ceo can decide to buy, borrow and buy. >> na is something that i've focused on, we want to put into place a process that is founded in the data and in the market and fofters discussion and then we know why we made a decision and we know how to we measure that decision. so if we have to raise liquidity, we have a plan for six months, the individual asset classes will make a decision as to where to pull that money from and which managers and then we will have

a discussion and i will understand the rational behind the decisions and then our performance will be a reflection of those decisions where we pull the money from. so we are, continue to enhance our processes around the decisions and we'll continue to enhance the bench marks that we use at a risk system that we use so we can aggregate a performance among again, that serve allocation and a managers and the selections. so those are all things that we have enhanced and continue to enhance with our tool kit. >> it looks like is it thes till a work in process going on. that's one. two, will the decision to buy or sell or hold be done at your level or the managing director committee level? or, at the senior investment officer level? >> so practically, i think the

way it works is that the investment team in this case, will take fixed income who is charged with overseeing fixed income will make a recommendation and work with kurt and that will come to you for approval. and we have in many cases a six-month plan for where we make changes. and i'm improving that, but we may have ad hoc decisions and that will come to me as for a review. what i'm looking for is the team to convey the rational and the risk of that decision and i will sign off. >> okay, will the power of recommendations is what i'm focusing on him, that's 1. two, the securities that may be purchased are sold, it's usually some sort of an index

for the ag, or there certain sub sectors that can be emphasized? >> i'm not sure what you're asking. the decisions that the managers make? >> no no no, in the total portfolio leverage part. >> i see. >> that's a staff decision, not a manager decision. >> correct, so whether we have leverage and level is a staff decision, if we want to have leverage done we work with a external manager to implement that leverage. the decision around lever in particular again, we're enhancing the proceedings and procedure with that, and with that, i will work with ana and mds from all the asset classes based on the market. >> i'm trying to focus if the decision is to buy something is he going to decide what to buy

in this fixed income area? i buy for treasuries or something else? >> in the case of leverage? >> yes. >> that is a discussion among the team with input from fixed income and our allocation team in terms of which securities may offer the best ultimately, that rational has been presented and approved by al son. >> well this is a little beyond the fixed update but the same skills are going to be involved that's why i asked it now. in terms of leverage is still allowed which just earned zero at this time, thank you. >> thank you.

>> thanks alo for a come prehensive presentation. just a question on the benchmark, you're going to reestablish a new benchmark, work with wilshire, i guess, right? >> i think wilshire in their material today referenced. >> so that's what we're talking about, is that, when you, the asset allocation that was just discussed is a 50/50. >> that's why, i'm going back to that presentation. >> so, so, you know, we work with, at the classes and

assumptions and work with messererer. so when we make that recommendation, they both have to agree with it. >> and i think this exercise is a great example of how the investment team is evolving. so, we need to look from the bottoms up and bottoms down so we work with merser and a lo and team think about individual managers, we've also got to think top down what to we want fix income to accomplish? what will be coming and proposing to you has been, i would say a 9-month process of a lot of dialogue with wilshire and messererer to come wup an optimal solutions.

on asset class. >> yeah, i can see a lot of work that's gone into this and i appreciate and i appreciate all the data points that the team has presented. i'm looking forward to seeing the evolution and the data coming forth from both consultants so thank you. >> any other questions? all right. >> thank you. duration and the data coming forth from both consultants so thank you. >> any other questions? all right. >> thank you. okay, we're going to turn to patrick and han.

patrick joined news may 2020 and ray joined us 60 hours ago, on monday. we're thrilled to have ray, he has eight years of investment experience. he was with advise and franklin tamleton both under grand and grad from berkeley, we're glad to have him. i'll turn it over to you. >> business school to be the chancellor. >> i had not seen that but go bears.

>> yeah, i want to thank you every one, regarding ray, he started this week, we thought it would be great for him to get a asset class review. thank you for the help with that. i'll turn to public equity. it's going to follow the fixed income. we'll focus on the portfolio evolution performance, portfolio characteristics and exposures. just some quick highlights, a reminder the role of the equity portfolio is to provide long term growth capitol and liquidity. it's 10.8 zillion, this representative 33.1 of the total plan. 2023 was a great year, we had strong absolute and relative performance.

we had two and a half percent access return on the portfolio. going forward we're going to work with merser to upgrade the portfolio in construction and provide more details on that later. as you mentioned the long term growth, we had a great year last year. the 5-10 year numbers are in line with the benchmark, 2023 was great but 2022 and 2021 were a bit challenging for us. we'll talk about that later. 30-year return, ba'ath our benchmark at 7.4 percent. the second role for particular equity is a source of he liquidity to fund other asset class sxz meet our pension publication. public equity has raised 6.8 billion in net cash over last 9

years. and reraised --we raised a billion dollars. i'll now discuss the portfolio evolution. here you can see, the target allocation to public equity has come materially over the last few years as we've increased our allocation to alternative within public equity we've improved diversification, over the last few years, we've included em, global and opportunistic which as a reminder includes tech and biotech and china. this is our allocation to the scenes over the last five and ten years, you can see an increase allocation to the u.s. this is driven by tech and bio tech. we added china, initially in 2017 at the time, it was not part of the benchmark and you can see the allocation really

went up in 2018. over the last couple of years, we reduced the allocation to china. next, we'll focus on the contribution to risk of these major portfolio themes. most notably, you'll see that our contribution from u.s. has gone up as we increase the exposure to tech and biotech. we reduced our exposure as mentioned and also the weight of china in the index has gone up. here we show two measures of risk. percentage of holdings in our portfolio that differ from the benchmark. the second is tracking error ri is relative versus the benchmark. as we have evolved both of these measures have gone up overtime. but we will note that over the last year, they've come down,

as we take down our china exposure. next we'll talk about the market environment. this is fraud equity markets and we'll later provide a good context for our individuals for specific portfolio later. as we noted earlier, the broad equity markets rebound. other top performers were india and china. sorry, india and mexico, china is always on my head. i can't get rid of it. [laughter] india and mexico out performed, that was driven by the mag nificent 7, the lagers

utilities lagged as well. the theme, you can see tech is up 7%. the snp was up 26 percent. i'll high lie energy for you. that was down 1.3 percent. if you recall, energy sold out extremely in 2020 because of covid, nobody was flying or driving. it had a really good rebound in 2021 and when russia invaded ukraine in 2022, we had a massive disruption of oil and energy surged and that's over the last three years energy has

out performed. but if we looked over the long term last five years, it's under performed. >> thank you, and then just on that, i noticed earlier, you mentioned mexico was one of them. >> yeah. >> was there a correlation with regard to energy. if you don't know the answer. >> we'll go into that, but in the previous slide, i didn't highlight it specifically, but i was going to highlight when we talk more about countries. india and mexico are benefiting from the concerns about the china. so diversification, investor die diversification. so we're seeing a lot of foreign direct investment go into both india and mexico right now. with india low cost benefiting,

sometimes the manufacturing so does the last mile, a lot may start in china and finish off in india. but in mexico it's french suring, we want to have supply chains that are closer to the united states. there is also some macro benefit. >> i believe mexico is the largest importer into the u.s. overtaking china. >> but not necessarily the energy component, that's a big component. >> a small component but the big driver is diversification away from china. >> thank you. >> i would think, we'll go to that. like i said mag nificent seven that's drove.

i want to highlight it here. there is a lot on that chart. let's focus on the circle. mag nificent 7, their stock performance in 2023 alone was up 76 percent. if you disorder the mag nificent 7, it was up only 8 percent. and i also want to highlight the chart on the top right. this was driven by strong fundamental it was not just height and extension. earnings was up 31 percent. the rest of the s m.p. was down 4 percent.

>> russell the market out performed value in the last year. value includes a lot of energy that under performed, you can see in the one year, the russell 3 growth was 1 percent. value was only up 11 percent. they're comparable but growth has out performed value. that's really, china growth big tech has been way down about concerns about regulations examine common prosperity. this is the chart that i was referring to about the different countries. u.s. out performed and then india and mexico as i mentioned, really benefiting

from diversification and also supply chains away from the china. less than one percent. as i said last year, china weighed on the market, very very strong if you recall, you can see here in 2020, early in covid, the china covid policy was very positive and china out performed in 2020. but since, they have weighed on economy and returns. they were slow to get vaccinations. the last few years has really

been a struggle for china. >> next we'll go into performance, this is more specific performance as i mentioned earlier, that was the market performance. in the interest of time i'm going to skip some slides, let's go to slide 31. here you see the performance versus the benchmark over the last ten calendar years. good absolute return and performance in 2023. the last, it's a significant rebound. that's paws we were over weight growth and under weight energy. the energy was the only sector that was up. also some relative performance, refounded all some loads in the

previous years and under weight on our relative performance in 2021. slide 2022, we're seeing our annual eyesed performance. --annualized performance. last year really really strong returns both absolute and relative. the three-year component was really challenging, that included the two challenges years where the energy out performed. but over the five and ten years, we're in line with the benchmark and over the long period, we out performed the benchmark. we're moving out some of the slides. let's skip this slide and go to slide 25, this is attribution

and total affects. the green indicates a over weight and red under weight. u.s. under weight has been positive in the last year. it has been a tractor in the tlaft three and five years. as i mentioned energy was a detract or for us in 2021 and 2022. china was a big detractor in the last year but it has been a contributor due to our strong stocks selection. that's been added over the last one and five years. next, i will revaout performance of our various things that we've been mentioning a few times. over weight khien a over weight biotech, tech invasion and also highlight our active extension strategies. this is our china composite. this is our china strategies,

they were first introduced to our portfolio in 2017. in aggregate, they out performed and across the time period but under performed the broader market, our overall public equity benchmark of ima. this is worth, this is china strategies were 308 million and we significantly reduced it, we raised about 350 million from these strategies just last year in cash. haver our dedicated managers. when we first dedicated the managers, they were not part of the index so we could not get exposure anywhere else. but now we can get exposure and

you know, our system managers can trade much more quickly and be a little more tactical. they've out performed our benchmark except for the three years. in aggregate, our bio tech exposure is 1.1 billion dollars. next we'll discuss the innovation performance, in calendar year 2023. there was a lot of excitement around artificial intelligence. relative has been disappointed. staff remains--our total to

tech and innovations was about 900 million at the end of the year. next, it's not a theme by wanted to highlight active extension strategies because really compliment the themes before of dedicated fundamental, these are somewhat --systematic. they trade much more frequently they're much more nimble, in aggregate we had about 3.2 billion at the end of the year. these are long short managers, beta 1 and they've been additive over the long time period. next i'll discuss our portfolio. to the broader equity markets as mentioned by our benchmarks.

just mentioned a few times, our over weight u.s. we expect u.s. to continue to be the leader of innovation. we're over weight emerging market, we expect structural growth and uncorrelated returns. there is a lot of market, there is opportunities for active managers to add alpha. under way european and japan and geo political tensions continue to be an issue in europe and we historically had a lot of governorance concerns in japan. so we're comfortable right now maintaining those under weight in japan and europe. the next few slides, i'll skip--to our different regions and countries.

let's go to slide 36. this is our reg and country attribution. you can see the over weight to high gross stocks. but it has been negative or the last three and five years. and as i mentioned, an issue with that stock selection where we under weight and they out performed in 21 and 2022. we're under weight development, that includes europe and japan. the under weight has been positive in terms of that allocation. we're over weight china, this has been negative over the last one and three years but it has been positive over the last four years.

next, we'll discuss sector exposure. dis rupgt all sectors, we're seeing proliferation of data, a i and robotic driving innovation. decrease in cost in capitol driving innovation in biotech, biotech or fueling and fueling acquisition with smaller tech companies. fda was so busy with covid, there was a backlog with approval, approving more novel treatments. we're seeing aging demographic, this will increase more prodly. --broadly. this has been positive in the most resent year. over the long term hats been additive. public equity average car upon

intensity, decreased 62% compared to fiscal year 2017. weighted average, carbon intensity, it's 43 percent lower than our benchmark. and net zero and mission goals set by countries and companies that are weighing on energy more broadly. you know, we're under weight energy because we have an ambition to be carbon neutral. we have some lower emission strategies and a sustainability global strategy and over weight tech and biotech that results personally in under weight to energy. but a lot of our core managers, fundamental managers tend to be under weight energy because

of all of these structural. versus having a strong structural over weight to energy. here are some details on exposure, i'll skip this. this is our sector one. as i said, we are over weight. allocation has been positive. energy under weight allocation and stock selection has been positive over one year, the negative or the five year, long run including the five-year. the healthcare has been negative over the last year. this is driven by slok selection. we will know in the resent

one-year bio tech has been positive. awe mentioned earlier, tech is disrupting all industries and in the previous innovation it creates equity values overtime. in terms of the biotech opportunity, we're seeing an innovation in this sector. this is supported by attracted evaluation. more than 30% of biotech companies are trading more two times cash. pharma is facing patent and they will need to require novel to replace those going off

patent. and i'll now turn it over to patrick to quickly go over investment guidelines and liquidity. >> thank you, here are the public equity guidelines that staff monitors and maintains in accordance to our policy guidelines. the top table contains our portfolio exposure range guidelines along with their actual values as of december 31, 2023 and the range. before the type in compliance with the guidance, the bottom table those our will i liquidity con staints. to for instance, tier one is where assets can be liquid ated. the key take away is the

portfolio is very liquid in less than 12 months, that's that tier one and three. and equity compliance with the guidelines and on the next slide, the table here correspondent to the risk guidelines for 5, for 5 risk parameters that the board approved in january of 2023 for these five parameters, they're all within compliance. if we shift to talking about liquidity in the next two slides. so the public equity portfolio has been a source of he liquidity for the plan. here we show how our liquidity with the blue bar representation the latest--representing the latest. in less than 3 months and 4

billion or 37 percent of the asset in less than one month. with a significant portion of that bucket being liquid within few days. in the next month, we'll talk about the history and portfolio. the portfolio has been a significant. and has to provide 6.4 billion dollars in total cash since 2014 to fund other asset classes and to pay pension benefits with close to 1 billion dollars being provided in 2023. so that concludes the summary on compliance and liquidity. i'll touch briefly about some of our initiatives this mirrors closely to what alo and dennis were showing before. here we show some of the initiative that we partner with the team on, especially around

due diligence and score cords. the next slide we can skip this is just our due diligence process that we partner with our gs team on across the process. but now i'm turn back to han to conclude on our initiatives. >> thank you. patrick highlighted some of that in terms of how we introduced last year, some limits for sectors and countries were in compliance.

wooer looking to proof portfolio construction. we want to increase the stock selection rather than just factors. and we'll under write all existing strategies. we'll continue to engage voting frox he's and exploring more strategies and including sustainability strategies. in this last chart is an illustration of our current work with merser. as i mentioned, i want to

increase our contribution to risk from stock selection and reduce the other factors like country style and sector. that concludes my remarks. if you have any questions, let me know. >> commissioners? >> i have a question on just the china strategy overall. with so much movement lately with the allocated, have you done kind of analysis of how how the returns of average out since our investment starting whenever the starting date would be to now and how is that? >> as i said over the five years, we added this strategies in 2017. and since inception they've

been additive. >> including? >> with the last year. >> the last year? >> the last couple of years has been challenging. if you look at the index, that's been a detractor. and i also note with our global active extensive strategies, they can short. so that's also contributing to the positive overall affect over the longer term. and this will be highlighted in the investment committee of china. >> one other point, i want to illustrate is. we have emerging markets active strategy which is performed exceptional well, if you see the data here.

just as i mentioned, we're reducing ours. so this is evidence of us of a best way to invest going forward. >> thank you. go ahead joe. >> rather than factors. factors growth and inflation were mentioned or emphasized which factors do you plan on focusing on or changing or defocusing on? >> specifically style, sector and currency. and country, sorry. factors, that term is thrown around a lot it means a lot of things to many people, but style and sector.

>> and that is similar or different? there is a reference here to, where is it? >> perhaps i can. >> the biases are our quilts into biotech technology, particularly in china which lead us to have sector beds and it exacerbates our growth. >> just to preview is we'll

introduce strategies to compliment, strategies, it will probably result in a reduction of what we have, the sizing of some of those tiltsle. --tilts. so it's a combination of things. >> we've already made some progress with our reduction and dedicated china strategies. that country has significantly come down in total absolute exposure, significantly come down over the last couple of years. >> i guess it's a silver lining as we're actively raising capitol. it's great we're up 24 percent and we're able to raise a billion. it affords us an opportunity to begin to make some of these decisions. so the portfolio even in the last quarter has made some

steps towards this evolution. >> yeah, i do not expect, your biases to payoff every year, i'm more concerned about how you developed them. developing that performance and say, if we're going to apply extra money here. >> understood. >> this is a significant change for addition, so we'll just stop with that, thank you. >> more work will continue to be done. we're not trying to eliminate any of our sematic, what we're trying to do is balance the benefit that we can get from leaning into some of things that we'll under evaluate with our ability to find good managers who can add value. if we make very beds, we can make money in manager fees and they're we're trying to balance that out and allow our team

skill set with what is going to drive returns in the long term. >> bright idea but you still have to get the right person to execute for them. >> right. >> commissioners? >> excellent presentation and a good detailed snap shot of why it's so good. >> thank you for your patience, thank you for listening. we think about this stuff 100 percent, 24 hours a day and trying to translate to you is a bit of a challenge thank you for the questions. >> thank you, examine quebec. >> welcome. go bears. >> thank you. >> thank you.

>> public comment? >> do we have any in-person public comment in this item? go ahead and step up to the podium. >> yeah, it's this scheme atic is tough. you had a closet, not even a closet road stock as a cio for a long time. has now become a tech investor. you know to this couple, i'm not going to try to micromanage this. so i'm not going to micromanage that. there is been a big big secular trends that may be deflecting now. there is been a down trend in interest rate and now the man of the hour is alo, he's going

go from 5 percent to 10 percent. which is shocking, i'm hoping he's up to it. the other issue is whether this long term secular trend in value of growth. however, you want to call it, it's been going on since 2008. all you had to do is throw darts. i'm not allowed to ask questions. i'm trying to figure out how they're putting their stamp. you know, the word that they have evidently stock. >> 30 seconds. >> so the one thing that is priced me was technology and innovation performance. i don't understand the relative under performance.

and the three-year inception today, i don't get that as quite long and i don't know why that occured. but anyway, those are two big secular trends. and dis inflation is over by interest rates and growth versus value. and i would really like to see and understanding on how you can navigate that. >> thank you for your comments. >> moderator 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. >> okay. we'll do the next item please. >> item number 11, discussion item, chief advisor's report. >> thank you. again. i will not go through performance since we've gotten a big dose of performance with

public markets and fixed income. i do want to thank the board for your attention to what is a really in depth analysis to the questions. i know it's a lot to sit through and get through in one meeting but it's important stuff and reflects the good work of the team. so thank you for your attention. i want to point out two things on my report, one it does tie into what we did both in the strategic and talking about fixed income which is what our exposure is on treasuries and cash. i've had many meetings, talked about how we were looking at treasuries and cash together how we were under weight because we had cash. we have increased our exposure to treasuries and we have cash we're at 2.8 percent in treasuries. so even though we have not even moved to our new strategic

allocation, we've been taken the opportunity to incrass our exposures and get it closer to what our targets were. and then, i will provide an update on closed investments. first chorus capitol at the meeting on march 13, 2024. the retirement board approved in close session, an investment of 75 million to chorus capitol fund 5. the investment of 75 million was closed on march 2024. this is classified as a specialty finance within portfolio and it's the person. late break news, there was another deal that was closed it will be reflected in the minutes, it's not in your materials but i will read it into the record and that's sgp red wood fund.

retirement approved in closed session an investment of up $100 million in the red wood fund. by san francisco absolute return investors safari fund. we've invested 25 million in this closed april 1, 2024. the investment is classified as a market neutral investment within our portfolios. that is what i had on the cio report. >> okay, any public comment? >> do we have any in-house public comment on this item? seeing none, moderator do we have any callers on the line? >> madam secretary there are no callers on the line. >> thank you, public comment is now closed. >> next item please. >> item number 11. no, sorry about that. item number 12 discussion item,

sfdcp monthly report. >> you're not diane. >> good afternoon, every one my name is steve, i am the sfdcp program manager and i'll be filling in for diane today. diane will be providing a quarter report on next month's meeting but i did want to provide the board updates. i know you already had a lot to discuss today so i'll be brief with the report. the first item i wanted to mention was the sfdcp credit rate. the staple value option is the most conservative of our core investment line up. and the rate for the second quarter of 2024 was announced at the end of march. and i'm glad to report that the rate has increased to 3.20 percent which is a basis increase from the quarter rate.

the increase is mainly due to the rise in the market book ratio. i also wanted to note that over the most resent 3-month period on a market value basis, the portfolio did perform its benchmark. we'll provide the more dough tails behind the rate increase along with commentary with our investment manager. the next item i wanted to mention was the annual rmd to be dropped on april 18th. as a minder the irs requires participant to take a minimum distribution annually called the requirement on distribution on distribution rmd. for rmd participant, they send invoices reminding them for their contribution amount for 2024. also included is a custom sfdcp

flier to remind the participant on the basics of the rmds. last item is attached monthly activity report for february 2024. i did want to mention a few things from this report. total asset did increase month after month, at the end of january, sa sets and at the end of february, now stood at 5.24 billion to provide you with an updated number as the market closed on april 9th, photo total asset was 4.3 billion. we had 232 new enrollment compared to 156 in january which is a great number. this jump in enrollment is due to a large increase and the local retirement counsel or group performs. during the month of february, they were able to establish a

prescheduled times for some of the department which lead to a jump in group meetings. so that's good news on that front. so those were the main highlights i wanted to cover. if you have any questions, please let me know, otherwise thank you for your time. >> any questions? great. thank you. >> public comment, please. >> thank you, do we have any in-person public comment on this item? seeing none, 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. >> next item please. >> item 13, discussion item retirement board member good of the order. >> anybody have anything? >> i would like to mr. president, thank you. is would like to just come back and thank allison for supporting the national

association for securities excellent job on the panel along with the cio from san diego and cio from health. they gave a perspective on interest rates, really sat watching and talking about the future where the markets are for public funds. just to let you know, that spurs sperz has been a supporter and i really appreciate and the fact that spers has supported. it says a lot of mission of this organization and what we feel about the communities. so i would like to salute sfers and the entire staff. i know in the past, the staff members have supported nas and sfers as well. i just want to say thank you. >> thank you. >> anything else? we're adjourned.

>> public commenting. --public comment. >> do we have any in-house public comment. seeing none, moderator are there any callers on the line. >> madam secretary there are no callers on the line. >> thank you, hearing none, public comment is closed. >> now we're adjourned.

>> you are watching san francisco rising. [music] today's special guest is mano raju. hi. i'm chris and you are watching san francisco rising the show about restarting and rebuilding and reimagineings our city. our guest is mano raju san francisco's public defender great you could be here.

actual at this time us about yourself how you became the public defend and why it is important to provide legal representtation to people that can't afford council. >> i started in contra costa county graduated from berkeley and a liven deputy for you a number of years special jeff recruited me to san francisco the former elected public defender of san francisco and i began as a line department here and then asked me to be training direct and the managers of the felony unit the unit most serious case. after he passed away, i was appointed to be the public defend and electd and recently reelected. but you know what i think about what you know the story of public to the office i like to start with my parents. they come from a farming village in india and dad was the first

in family to finish high school. there were a couple people in his village who saw him and encouraged his parentses to pursue studies and move in the country when i think of what public defenders dot most person thing is to see our clients so than i can hopefully realize their full potential that is important to me and to our office and the cult usual of our office. >> you know the right to a public defender was developed in 1963 in gideon case ensuring the right to a public defender. we take this very seriously in our office. my vision is that anyone in our office should be representing the people represent the same way they want their love 1s to representd and people think if you have a public defender representing you in san francisco you will bet better than a private attorney. we will leave no stone unturned no motion unfiled and try to perform the highest level for

clients >> that's fantastic >> often when people think public defenders they jump to the idea of somebody defending somebody in court your office does more than courtroom representation. >> i'm an elected public dem felonieder i campaigned on that it is important we break the mold of what is public for our office on accomplish. fiercely defending is the core of what we do and that will never go, way. as the only elected public defender there is an elected da and sheriff in every county. in the state but one elected public defender. it is important our office pushed envelope and engage in the national and state wide and local policy that will impact community how public safety and our clients. we have local policy directors, state policy director. we are active in sacramento in

trying to make the law change in order to be more humane system for our clients. we are believer in advocating for community power. we have two 501c3's in bayview and fillmore that are be more magic under the umbrelast public defender's office. these are youth empowerment organizations that do programming throughout the summers. which back pack give ways to kid school sflois start the school year and believe engaging youth will prevent them from become clients. and put people on the path to thrive. we have a program, end of cycle program. culturally competent social workers going to the jails and finding out what the individual needs. we'll fight for their best legal outcome in the case. and the

position of trust the fifth amendment protects the conversations that our clients can have with us. we can use that to really encourage a trusting rep and telling us what they need and be frank and connect that individual with the substance abuse or mentor or housing or employment and educational opportunities hamp that individual needs to thrive and reach their full potential. that is another piece behalf we do. 17 units across our department and you know we take collaborating across units something we try to do every tail to meet our mission, vision and values >>. a part is ensuring recidivism does not reoccur >> of course the left thing we want to see is a client to return to be a client again. we work intentionally from the moment we start representing a client with our skilled staff and other members of our team to try to figure out what is that

future going to be for the client when they leave our care? >> now, some critics argue public defenders have a heavy case load. how is your office mechanicing this and what issues are most important to you. why we have a heavy case load. unfortunately, this is a problem across the country public defenders are not funds equal low to da offices our fund suggest 61% of the da office. and the police department has 14 time the our budget. and there is the sheriff's department and any time the entities are detaining our cloinlt in i way it is up to us to defend this is manage we are working on locally. and alsoination wide to change that. we need more staff and every wing of our office. the logo is greater than one. so we know that we need to be greater twhoon individual in the

office and use our teams effectively and strategically and skillfully and put in more hours to make sure we reveal truth and make justice happen in courtrooms. greater than one also symbolizes the fact we are collaborating with other communities organizations to try to support and help our client and move policies that will help our clients. an example of this is the pretextual stop campaign we collaborated with 110 organizations throughout the city to convince the police commission to pass the general order that stops some of the stops traffic stops for things that don't impact public safety and lead to often con41ational interactions with the police and civil yens and. we wanted to minimize that mostly the shootings we read about and the the violence of

inneraction gets in car and tragic occurrence that can happen. by collaborating we can be powerful than the sheer numbers in our organization. >> sure. so you know like cities cross the country san francisco struggling with fentanyl and homelessness how can our office contribute to help mitigate or solve those problems? >> one thing we can do, again often times with community based organizations; is to really try and figure out how we address the demand. you know. treatment on demand. again. finding people opportunity with housing or employment opportunity. you know mitigation or just any form of counciling that helps people. move in more positive direction in a way more inviting oppose to co hearsive. now we don't have enough beds for everyone who needs that

intensive treatment. contributing to staffers to get more funding for people to get treatment they need. because the reality is there will always be someone to fill the need. we work on the demand which evidence based there was fee of dealing with addiction will move in a more positive direction. >> then, finally, what else would you like residents of san francisco to know about you and your office? >> i think what i like the san francisco residents to know is how muchow important it is that the public defender be aggressive. right now we had a huge backlog of cases in san francisco. there were over a housand passed the last day. a right to a speedy try and have case passed the last day. we had to plaintiff and against the court t. is important this we have an independent public

defend 30 is willing to do that. and we got a good decision from the court of appeal and now the courts move quick and are honoring this and the effort from policy team to 850 bryant the courthouse is to draw attention to this issue it is important we have an aggressive public defender. had someone gets convicted for something they did not do it impacts their family. clients are greater than one, it is important we fierce low defend. the same time because when someone gets convicted of something they did not do they are less likely to access the j.w. they need for stability or housing and then will impability a lot of people and lead to more issues on the streets and affect public safety.

also to realize we are a public safety organization. we have social workers and take this social worker mentality or support facilitative prop and get cloinlts to a better place. when our clients get to a better place we are all safer >> thank you mr. raju. we appreciate the work. thank you for your interest in the development. you know i wanted to say if anyone wants to know more about a lot of the initiatives and unit in our department they can go to you tube we have a dairy defender series. and people should look at that to learn more about the different units. also we talked about the dibilltating impact of convictions we have a clean slate program exsponging hundreds of records every year. and people can go to our website

sfpublicdefender. org and move their live in a positive direction >> thank you very much. >> thank you >> that's it for this episode we will be back shortly for government government i'm chris manners t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t

t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t

t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t [music] since the opening on third and mission in 2010 the grove is a epicenter. tis is part of the community. we bring tourist, we bring convention ears and have a huge group of locers who live here. we are their living room and love to see them on a regular basis and seek newcomers to the city of san francisco and serve them a good dose of san francisco hospitality. we make everything in house from scratch every dape we vahand carved [indiscernible] the chicken pot pie we serve probably a hundred thousand if not more. roasted chicken, prime rib,

salad[indiscernible] coffee cake and [indiscernible] all the pies are fresh baked. the home made cookies are done, once, twice a day, depending how fast they go. we believe in goold old fashion home cooked food. we want to be a welcoming, warm hospitable place for everyone to come and hang out. respond time with friends and family, meet new people. have important conversation. relax and enjoy, rejuvenate, get restored, enjoy one another and the at mus sphere the growth. the grove is over 730 to 830, 7 days a week, breakfast, lunch and dinner.

>> good morning everyone. welcome. i'm katie lamont and with me isroxany huey and together we are leading tndc as interim co ceo. so pleased to have you with us this beautiful day to celebrate the reopening of ambassador and ritz hotel. exactly! this day has been a long time coming, and it is so wonderful to share with all you who help make it happen. as many know, tndc experienced a tragic loss with the sudden passing of our ceo. it is meaningful our first ribbon cutting without him is on the pavilion of this historic building. the bricks of the