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

staff we'll obviously as part of our consideration the resources necessary to carry forward any recommendation we bring so if in a staff person not on board b with direct investment we'll not bring that forward as recommendation to the board i'll again say i approve that mandate last month we're in an active recruitment i want to as a request for information to give us more information upon of to make a recommendation for you to leave it open so we can show you whether or not we can bring someone on board to make the board understand and feel for comfortable with potentially a hybrid approach and commissioner for the entire board i think if the board with declare an unequal position that fund to

fund and that's what we're going to do at times zero gateway day one the path we're going to do follow as planned we'll contribute them. >> relocating which we refer to several times as 1/3rd of one head count applied to their hedge fund that's an administrator and like. because it is entirely outsourced to their hedge fund consultant it is not fund to fund but they run programs a to z that consultant so if the board declares its position that fund to fund or the entire thing outsources there will be a way to approve if the board were to declare that we may want to

starter with fund to fund depends upon where a thanksgiving things are coming august but in the longer than term once we have resources in house i totally understand that i want that, too i want people here to count them we're not going to make direct investment we have that and you have that in place so but if you were to they're we are interested in that that's our long term goal we need it in place we can recruit and some candidates will not that point of view and we'll have to the patient and prove themselves that is a successful model towards a hybrid or a direct

approach >> may i make a motion. >> commissioner driscoll and i recommend against it not everyone has addressed it so we have the wisdom of all 7 commissioners input. >> yes i'd ask commissioner stansbury not to make the motion now until all the commissioners have an opportunity to speak to the rfp then we extend that courtesy of the calendar item to every person the only person that hadn't said where they're at is me i think we should start with fund to fund we don't have

the staff to do in house and the officers are right not asking us almost asking us to declare our position which troubling it is the right and he's chosen not to that's the absolute right to put on calendar and asking question us so why wouldn't you ask that question direct mr. coker. >> commissioner i'd like to have certainty that we will recruit successfully for this position to critical hire and that in the absence of that we'll have a fund inform to fund solution at this time i'd like to survey the entire landscape of the investment opportunities increasing fund to fund managers are the world's are converging between fund to

fund managers and the hedge fund consultants what used to be the one and 10-month-old for hedge funds managers excuse me. hedge funds manager is now pretty much close to zero and 75 points and it is happening because most plans move to direct about 80 percent over and over more indirectly so thankful changed hair business model to survive to be more like consultants i'd like to survey the land of investment opportunities and so we recruit. >> we've also heard a majority of board there are not enough resources we're asking for the opportunity you approve that as part of budget the opportunity to bring on the resources to build the boards conversations

we could have potentially a hybrid or vushl a direct investment program. >> who else wants to comment on the article. >> many phone calls and meetings so i'll start with fund to fund and hybrid part of the controls haven't found out what the results are some of the major providers made the contributions they're not only more transparent but the industry is opening up they've learned it is wise in terms of alignment of interests to help their clients transition 33 it saves money but builds up the

clients confidence that is what path they're going down why we decide. >> i think commissioner makras makes a good point is that you should tell us what you want what you're dream team envision is and at the end of the day at the end of the program what do you want to you want both do you want only going direct i look at other models inside that group as i pointed out tonight bridge we continue with the fund to fund they provide value so, now a little bit different because we're too big to get into a small cap to get into smaller deals in venture capital but i'd like to know what you want to get to at the very end i

think that gives me nor insight if you don't believe in the model fund to fund i see a changing also and fees are going down and more and more huge transparency now in fund to fund and direct that wasn't there so if you let us know that will be helpful. >> we want you to approve this so we have the opportunity on either model and provide us the ability to recruit the types of resources that we believe we need to come to a conclusion alu you saw our recommendation to build a direct investment i'm not sure that's necessarily has changed but we've heard what the

board said and we're going out to gather information and asking for the opportunity to bring in staff and hire those folks that will make everyone comfortable. >> so jay you'll answer the question or - >> yeah. i am yeah. i am long term a direct program for a reason one is multiple sets of eyes and second is to question the consultant is a little bit beyond their normal comfortable level my experience most of the time with consultants they're to bring managers the same old hateer ben and the managers that are behind them

so i want to go to the next generation of talk to the managers that's the second reason the third when there's an issue with an manager i want to be able to go down the hall to my staff and ask what itself issue and the resolution have information to do that down the hall rather than having to make a call and leave a message with some ottawa other location around the country those are some of the several reasons why i see value in having in house management okay that said there are a couple of very good fund of hedge fund managers there's a couple in particular that are very good and will see list out managers you know

someone is spinning out and manager their own firm and the hedge fund manager knows i know those are a couple of rock stars at the firm i'm going to fund them one hundred or $250 million on day one we're a very snarling small part of the $250 million i did not know that's that's possible on day one but down the road there's a place for a fund of hedge fund manager even in a direct approach just like we have. >> i have absolutely no problem in recommending going ahead and voting yes on this recommendation. >> i'm gathering theirs

consensus between staff and the things herb recommended with negligence and gross negligence not being changed is that accurate. >> that's correct. >> i think everything else we're okay. >> let's role to commissioner driscoll comment and putting more wealthy on items two and three commissioner driscoll you asked for more weigh would you like to say where you'll list it from so we can see the staff. >> hedge funds managers were item with only 25 percent and part two 25 and 3 are 25 and when and 5 the rest. >> keep the weights to the next

number i assume we're going to try to - i assume we're not going to go for 6 hedge fund managers but a smaller group when you're trying to separate the best from the best items two and three will equal 80 percent item one the issue is 10 percent. >> so you're going up thirty are you splitting them half-and-half to equal. >> the numbers will go - 10 40 40 and make those ten percent the performance will come out in the others as eliminate performances. >> i'm proud of you i'd love to have you for government the

reason why i want to forecast future performance. >> but performance will show up in the portfolio instruction not only for the methodology i'm not trying to break it down. >> my only issue the 10, 40, 40 and zero the one thing i'll point out that is in number one it personnel and that's a big one so what i prefer is 20, 35 35 and 10. >> yeah, the second screen is not the primary screen you're going to do operational due diligence that flushes those issues out it wouldn't be changed this is for the primary screen. >> but later on we'll give a performance records based on the waiting in the rfp.

>> i think i want to see the opportunity to eliminate performance. >> if we pass that performance is back in. >> yes. it's back in. >> the keywords so we're looking at i want to (inaudible) (inaudible). >> what's our recommendation again. >> i believe it's rfp remains the same. >> right. >> but. >> you went 10, 35 35. >> 20 any public comment? 35, 35 and tennessee. >> for the secondary your separating our finalist. >> commissioners the rfp did not currently specify what the waiting is at the second stage selection and evaluation. >> i understand. >> i think we're all good now,

now i'll throw out a few things i'd like to us to go to page 8 qualifications on item number 2 you're recommending year benchmark through 2010 i'm lured to go back to 2007 and 8 so have someone in the hedge fund business to improve the craft walk me why we shouldn't do that. >> those are minimum qualifications not desirable i'm very interested in looking at many of the long term track records it is possible commissioner that there are newer firms with more experience

predating 2010 they can't carry the track record with them they're a part of the legacy firm so that's why we limited it to 5 years but we are - an important part of this is risk reduction and better performance in down market more info let's data and simply we participated to be sensitive to performance in down market that's the reason why if you wish to and desirable qualifications to include 7 and 8 year track record. >> i'll take the demand i didn't. >> (laughter). >> okay seven years. >> i said 8 years. >> okay. >> cia ask a question about

that. >> theirs situations i thinking of you listed out of your firm move to created our own firm and we never had an 8 year you know we couldn't through you in the midst so i understand what mr. corker sosa saying you have a team they leave for the rfp you want to include them why not give them the leeway you can wait those issues of longevity in the rfp but i wouldn't want to take out a rock star team. >> i don't believe we do we left the 10 in for a minimum and go back to 8 we're not closing the door only saying we desire to see the longer than term in 2008 and 9. >> i'd like to go to page 9

sdieshd qualifications most if it's true that most of those hedge funds guys don't have a - i don't believe that's true. >> they definitely have. >> so why in the document do you say they have to apply for it if the main industry has it the main group why are rebegging we'll accept an application for no policy meeting that criteria. >> commissioner i recall back in my first 10 year in san francisco that was many public market rfp we had a couple of public markets managers that didn't have e n o insurance or had $5 million so we included

that to say if you don't have it that was like it out of i don't know maybe a total of one hundred rfps it was rare. >> very good. >> page a little bit future down the qualifications for hedge fund managers are you okay if we add a couple of those kwvengsz the minimum of 5 or 10 custom the we're talking about doing customs liquor that we want a minimum we wouldn't want them to lower than on us following that same train of thought if we're going to have someone proposed to us and not to do business would we want them to maybe $2 billion double

what we're investing we wouldn't want all our money to go to one guy or one company we have alls rules that 20 percent of someone's money all the bump guard we should have a minimum of $2 billion in custody accounts to have a track record. >> those are interesting ideas commissioner. >> i would or want to add a minimum for public fund clients i think i believe there is a difference between a private and public. >> i'm sorry what's the proposal. >> we added a minimum of six public fund clients. >> when you sigh minimum your

tenaciously desired you're not lowering the hurdle to get through the gate but we'll give you credit if you have a minimum of 5 customer accounts. >> it is not a professed because i believe we will only hire someone or we should only hire someone that has at least 5 kilogram accounts i think we should make it a minimum of several clients. >> my clients it is on page 8 instead of page 9 that's where. >> - finding the. >> the mechanics to you. >> a minimum of 5 custom accounts and $2 billion and how many public. >> 5 public fund. >> how restrictive will that be. >> it will restrict that

significantly now if we put those under desirable this is great i like the - and i don't want - i think the mark has to be what we want we should be able to willing to do a fund to fund account if the people didn't have one fund client i'm vote no on the rfp if we're saying we're going to throw a big white net but not have experience for san francisco. >> you said one and 5 now if you were were to say two or three public clients under minimums i think that is good commissioner what we're trying to do is - >> i'll take 3. >> not make this to restrictive instead of 25 clients we get 6.

>> okay. >> i mean, if we have a minimum we have a minimum. >> if we have a minimum of two or three public clients but put the others - i like the idea. >> 3. >> pardon me. >> i'm good with 3. >> could i ask a question when we did a separate accounted are nights bridge how many did they have i want to make sure we're city of chicago. >> i cannot comment but we've been with the bridge. >> but they created a separate account did we require them to have two or three 5 i'm just curious before w a clients before us like that. >> night bridge only created

the side vehicles most recently so we've been with them six or seven unfortunately. >> we were the first one to do that? >> probably more relevant example is weather gage. >> that was a spin-off from nights bridge. >> i'm trying to fourth if he were fund one or two. >> i think that's a good, i like as a commission that it is good for one it's good for the other if we have a rule that applies to the fund to fund group and want them to have two or three accounts prior why not do it for something similar. >> i don't know but that's moving forward i'd hate to say we're going to get there by 1990 rules and not be progressive in

how we had an rfp. >> right so in that respect i'm just curious why you would want them to the consultants help us why would that be okay if they have no accounts prior you don't think - if we do fund to fund we want the groups to have 3 accounts why wouldn't we always do that. >> again i like all the ideas but just so we can evaluate the landscape. >> necessity is the mother of invention we got a lot of shares it's different we have the

private equity portfolio we devices to hire a manager again necessity is the mother of invention this is not necessary. >> it's a weather gage the fund to fund rather than going direct do we require- i think what mr. coker is asking for a fantastic team that breakdown you know can he have double line or something like that they have to have 5 years experience i was fantastic when we constrained ourselves so if we is that two or three that's a good thing lowering it to the minimum when we come to us we are going to rate it as a negative they don't have more manager experience. >> i hope you're not listening

but. >> they can take the perform if they have participation it's a double line issue again a totally different thing so let's victor i like his question. >> i'm moving on. >> rate it as minimum. >> on the selection process i'm not sure if we without putting it in here i'm not looking for the names but what we represent so what i got is panel of 5 people 2 people that work for our organization, 2 people one that works for another city agency. >> no. >> nope. >> unless he find someone that has the experience. >> let me say what i would on the selection panel i believe it

should be 2 people from our organization one person from san francisco that knows the rfp process selection process, and two people if outside that have hedge fund experience say we pull someone out of calpers and cal conspiracies i don't need to know their names that will draw an additional level of expertise we don't have now. >> i'll say the outside san francisco agency i'm fine to look for someone they need to have the selection but the selection and the evaluation of hedge fund products so i mean we could reach out no guarantee there's another city employee that has that experience or