loading on pension fund it is part of a formula. >> any other questions. >> let's go back to the commissioner. >> those are questions we're asking them to consider the final score should be done slightly in different was why not do it differently. >> why don't you put thought into that and see whatever shows up minimal from anyone. >> professor. >> thank you let me go in the order that the rfp that will be the easy to follow the introduction is fine page 3 under point c the

performance benchmark duties the first believability to provide the implementation i'd like to have with and without leverage since we all know that hedge fund have more leverage so without leverage and with leverage to see the effect that will be the make sense so that is on page 3 moving on to page 4 for d. >> can i have a question. >> that's not practical is it hannah. >> that was going to be the question talking about the the evidence will then show of fund to fund or the underlying hedge fund. >> the question flying would be the best because of individual managers i think it or you should adjust for risk it has a 2 to 1 leverage i want o an

apples to apples comparison so with and without leverage. >> it will be challenging depended on the strategy because of the derivatives i think it will be easy to get that but for credit manager you can add that and be part of the evaluation. >> that's what i'm suggesting with and without leverage .2 c adjusted for leverage. >> moving on to part d the clients rings and duty it is the summary quarterly reporting and the next believability to cooperated with the custodial bank to analyze the holdings and transaction i like to know what

the companies assets are what the securities are you think to analyze the performance as well as the translation if we are to learn about this have felt arena you have to know what they hold you can't learn minute without knowing the security so part d add analysis of holdings and transactions so that's part d moving on to trading that's fine the confusion that i have for this just to clarify there are two different classes one a fund to fund manager we'll hire a manager to do fund to fund and the others hire a consultant to

do direct those are the two areas i'm confused on where the rfps go they have to go to staff respectfully to our consultants if you want to get involved they can forward to the general consultants but it is very, very xhufts fund to that fund managers send the rfps to robert shaw and leslie and hedge funds to mr. shaw only and all to mr. coker we don't know there's a controversy about your own hedge fund that are not disclosed this is going to be a mess. >> maui that is let's just do to the chief investment officer

and to the achieve and managing director unless i want to be involved. >> i'm going to propose we submits the electronic version to mr. corker that's the normal process he'll described to whoever. >> that takes care of that moving on to page 8 this will be evaluation and selection criteria here are the minimum qualifications i'm looking at .5 it says at least one key professional member of team must have been 3 years of experiences years i'd like 3 professionals rather than 1 professional that's i'll acknowledged part 4 and part 5 to have quote at

least 3 key professional members must be have a minimum of 3 i'll suggest for that moving on to the next page page 9 part d the desired qualifications at the top that says at least too clients of temple or greater we're 20 billions i'm to have more clients with more assets obviously we're $200 billion but 5 clients that's nothing i'd like to have 5 clients with $10 billion assets for part b for number one change 2 to 5 i want 5 cloys with assets of billion dollars. >> i'll suggest we'll get the

folks that have the 5 clients they'll meet the hurdle and request q quest for - but your memo includes folks that we've met with here we'll make the definition they'll have 5 clients. >> so you you're saying keep it the way it is but incorporate it. >> okay. that's a reasonable enough. >> excuse me. so we're going leaving it to 2 and we're leaving it another $10 billion. >> so let me ask tell you there's a selection committee i'm reading on page 9 part c

they'll evaluate the criteria who are the members of the committee is commissioner. >> commissioner just a minute we don't disclose the identity because of the selection process. >> let me tell you my views. >> i'll tell you generally, the true facts we're going to try to get 2 folks from the outside that have experience in expertise in selecting and evaluating hedge funds and potentially have a consultant. >> let me give you my general feeling on that in terms of from the outside good from the outside particularly those who have public funds that is a public funds that has experience it is really, really important obviously we want to enhance

staffs expertise and san francisco has not had excellence we want we're in agreement with that. >> will the retirement board interview the semifinal lift. >> no we will have the opportunity to interview the recommendation for one or two firms or managers also you'll have the opportunity as we make the recommendation to interview and say who to recommend. >> moving on since we're on page 17 appendix the rfp questions number 6 a lot of actors all the world is a stage will be a fiduciary to the system. >> every single manager is a

fiduciary to the system i'll also like to add under warranties does our firm warrant that will take a standing in compliance. >> we're not subject to that. >> i'm well aware that the risk applies for corporate planning but we try to harmonize. >> we can ask that question. >> not going to comply with the risks but with the risks of standards. >> just for the risk that deals with corporate pension plans and obviously we're a public pension plan so obviously not covered by the arresting religious law so i wanted the arise coverage the mitigation i brought this up the standard the litigation where is that stated in the rfp arrest -

negligence or non-negligence and respectfully ask the board to vote we try to negotiate negligence as a standard it's a benchmark we get gross. >> let me clarify this is being televised the standard for adversely most of our securities manager is negligent for the hedge fund it is. >> that's not correct. >> that's not correct. >> gross negligence is the standard for the gross publicly. >> i said it was an industry standard we work with naacp the

national association with attorneys but probably 57 percent of our contracts currently have the negligence and the rest are gross negligence it's a business decision do we want to do business with them if they don't change the standard. >> i learned something today, i don't want to defend negligent so, anyway we can leave that for later. >> can i get a contract i'd like to see a contract i'd really like to see a contract. >> we have is contract with the public and we are saving the trees but make sure we get those to you. >> all right. this covers most i see victor chomg at the bit.

>> thank you when you go through the proposal that you receive i imagine some maybe more qualified than others it's the purpose to evaluate the proposals and their qualifications. >> right experience or. >> is that possible one firm might have infiltrate two years ever experience or another 7 or 8 and . >> yes. >> my experience when you really tighten the standards for a proposal it limits the number of applicants that you have and the purpose of the rfp to evaluate receipt of possible consultants from or for fund to

fund manager; is that correct. >> that's correct. >> if we narrow the provisions if the contract will rereceive a smaller pool of applicant. >> yes. >> is it unfair in terms of the submission to the rfp i quite frankly don't care if they can't fourth two different ways they're not qualified to be our consultant i'll leave that up to you but in terms of the other modifications i think this is important to cast a wide net and evaluate everything later if people don't have the qualifications they'll be eliminates that's the process but if we sabotage this from the beginning and limit the number of applicants i'll vote we leave

everything as is unless the board thinks their material changes but everything limits the probably applicants for this process. >> commissioner bridges. >> i know staff recommend the direct approach did you discuss direct fund to fund only in a hybrid the way i read this now it could be four possibilities matt haney direct with the consultant fund to fund without a consultant fund to fund with a consultant or going back to the hybrid reason i bring this up are we asking staff to get ready to make a series of recommendations

we've not make up what we want to do we haven't decided which package i'm getting confused. >> the purpose of the rfp to gather information evaluate proposals and come back with a recommendation i believe there are 3 options we'll not need to hire a consulted to engage a fund inform fund manager so we're going to hire a consultant to do direct investment hiring a fund to fund manager or the combination of dividing up the percentage and saying that so much will be funded to fund and the rest direct that requires us to hire. >> hedge fund managers or manager and a consultant and you're right the boiling

point is whatever the board approvals as the strategy and if we present a hybrid approach it will be the board deciding whether they agree with the hybrid approach or go completely fund to fund that's the tipping point in which the board makes the decision. >> we've not given a definite on that. >> that result is to go figure out we can go down the line so staff has the best feel of this i mean, we should be in a condition 80 today, we he prefer fund to fund or want to do it direct and that's great direction for the staff we'll be doing a service there's a slight

standoff on the question and the rfp in my view a properly written we have not will given the definite answer at the end of the day you know i'll leave it at that. >> perhaps reading to the material we'll be educating to which model we're prefer. >> no i'm not sure i agree. >> that's the whole point of the whole model are we're going to go fund to fund or - >> we know that staff has not direction they're still a standoff on whether it is fund to fund or a direct program. >> or both. >> this is more education for us >> yeah. or both because

people are trying to get their position. >> so you don't why not start with you commissioner driscoll what's our preference we're looking at an rfp where do you put the most weigh on a fund to fund in house program or hybrid. >> i believe the direct approach is better but the key personal the internal person doing the work i have no idea if we can get them that's a better program how fast can that person move it could take one or two years in the meantime the funds are set up to work quickly i don't know who the key person

is. >> i believe she's basically saying we don't have the team i'm not going to speak for you. >> that's how i here her position we don't have the person in house i've located the team and now found the lot we may reach where you are at and say we have people meows in house and move the people but those are the things we discuss and giving staff direction. >> we're recruiting that person. >> willing to come 0 work if it's a fund to fund only program so we 0 might be limiting the pool of folks that might be interested in coming here if it's decided on initially start

ought to be a fund to fund. >> are we're going all the way down the line. >> yeah. >> i'm happy to. >> wendy. >> i've actually are a paramount experience ♪ area dealing with other firms that have been in similar situations arrest endowments or pension funds various the strategies could work the one i have seen that has worked well and it's solidarity very have a staffer person like bill that has a lot of experienced started with a fund to fund and gradually recruited bans the terms there definitely will be

separate investments in hedge funds and i would have no problem start with the more expensive structure which is the fund to fund share to what we have search warrant the venture capital nice bridge and build the team at the same time and if you have a separate hedge fund that you have experience in and high convictions in i would be open to bringing that to the board and having us conform an investment in that that has been done i've seen it done with firms and successful it's difficult to get out of the fund to fund because if you're going to put in a large mulch of money hundreds of millions of then they're not going to want you to

loaf quickly they're to probably as they have in similar situations put restraint they want you to do it over a 2 year perpetrated firms that generally experience work their way out of a fund to fund abused of all things we've heard so i would have no problem voting for fund inform fund but we'll need the direction from the board to go direct and have a somewhat faster speed than that you're not going to be able to recruit anyone to we have to have that conviction from the board fund inform fund or direct >> first if i could respond i'll not characterization i's it

as sabotage i don't think we have the resources and staff nor the ability to guarantee those in the future we talked about how business staff is in terms of doing things there's two many espoused so to summarize i'll prefer a fund to fund commissioner bridges. >> just think it's interesting we're having this conversation with no one in mind i appreciate the enthusiasm it's on and fund to fund. >> fund to fund ca is what i said. >> commissioner. >> fund to fund. >> although i appreciate the conversation about what

direction i'm going to go fund to fund or direct it's prefuture mature to make decisions about this today we're talking about making a decision about where we invest the money net no one n in house to run the program let's say we get a world-class candidate but decide we're going to go fund inform fund alternatively what if we go direct and can't approve the world-class campaign we're only talking about the rfp if we hear something in the next couple of months there's the option to make a change in direction and bring forward suggestion to the board again, all we're talking about real estate a proposal and gathering

information we're not making an allocation decision about direct or indirect today i share the concern that the entire board has fund to fund versus direct i share that exact concern but we need to get staff in house first once we know that person's experience with either direct or fund to fund then we'll have the option to decide where we go in the future we're only talking about an option to go one way or another and that which i see has value if we limit our choices today i don't think that services the system so i'll recommend i propose that i propose we set rfp and release them and as they're written and if down the road if we get a key

person in place we'll have a better direction and if the board decided fund to fund is the best that's how we'll go but i don't think so how to make a decision on that today. >> commissioner bridges. >> would you indulge me and see commissioner driscolls point i read through it twice it appeared it's asking 4 different things so staff do you feel the way it's written i don't have s a copy will it mitigate the potential managers will think reluctant to respond to it because it's a smaller piece

pie. >> i'm encouraged with the boards decision last month people are firmed or coming out wanting to introduce themselves and i turned down all sorts of meeting awaiting this outcome my sense we're going to get a very go meaningful number of representatives replies maybe two or three possibly more this is going to be a desirable client it is san francisco a gainly city and meaningful amount of money and frankly a lot of people want to take this issue on this conversation that we've had for 9 months a lot of people want the opportunity to

set the record straight. >> i guess my other question with the rfp you had the one question and number one will you allow firms to introduce any type of flexibility you know all firms are not created equal. >> i think we're at a size we'll definitely be able to customize i think we're at a size that just about any fund of hedge funds managers that are closely working with us in terms of managers kleenex selection i this can envision i agree there is value at having an option to

see what the investment opportunities afford us but i see the opportunities. >> we'll take it as written today and commissioner makras to answer our direct question i agree with commissioner stansbury but my i'm a proponent of funds based on where we are based on staff because i feel we have the opportunity to - so given that and the infrastructure that's what i'm supporting. >> can i say one thing we don't have a staff person do you notice the schedule we're scheduled to bring back a recommendation to the board in august i'll ask you give us a chance to recruit and bring on