just mr christianson and augmented by what he just said? >> yes. >> second. >> clerk: there is a motion that has been seconded to approve this matter with conditions. recognizing the plan stated april 13th posted here. 2018. and adding findings acknowledging the private agreement. [roll call] that motion passes unanimously 5-0. commissioners cat that will place us under a discretionary review calendar. item 20 has been continued to july 19th. placing us on item 29 fricke -- 21 for case number 16. at 521 loss almost drive. discretionary review.

>> good evening, commissioners. i'm here from the planning department. presenting the d.r. 4521 las palmas. this is an abbreviated yard for a project which is located on the south side of the drive between burl web drive at bella vista way in the westwood highlands neighborhood within the rh one zoning district. the proposal includes a third story addition and a second store -- second-floor remodel which includes replacement of the existing second window sunroom. with a walled addition with dark. the third floor addition is setk 12 feet from the existing rear and includes the additional footprint of the addition. the requester is the adjacent neighbor at 517. the department was advised that the requester will not attend today it was just hearing due to a conflict at a court proceedi

proceeding. so i will read some of her issues -- -- issues into the record. we did receive three items of public comment in opposition after package. whicwhich i had to pass forward. let's see. the d.r. requester indicates that unfortunately she was a native -- unable to attend the hearing today and she would like me to convey to the commission that her inability to attend in no way indicates an eight munition and her opposition to the project. she also wanted to note she was contacted by the architecture team for the project sponsor yesterday. but it was such short notice and she did not have time to meet with them in general. her d.r. concerns are at the proposed height of the addition. it is at a scale with the herat door site -- height of surrounding homes and that the

depth of the second level of the property is already at a sale of the surrounding buildings in the neighborhood. closing off the existing solarium and extension of the second floor. it would exacerbate and add scale as surrounding -- as compared to surrounding homes. additionally, the third story would negatively impact privacy light and views. the initial architecture of the project was relieved and the new architect was engaged after the d.r. request. the residential design team and the senior managers and the project coordination meeting review to the original proposal and had subsequent modifications. the project sponsor has amended the plans to address those modifications and finally, they have advised staff in the section drawing in the packet is incorrect.

all the rest of the plans reflect the comments. the department recommends that the commission does not take d.r. and approves the project as proposed. that concludes my presentation. ok. we do not have a d.r. requester. >> rate. >> do we hear people in support of the d.r.? >> we should. >> anyone here in support of the d.r. request please come up and comment. seeing there is no one, i guess that is close. so we now will talk to the project sponsor. >> thank you. i have copies of sheet a nine here that have been corrected to show the third floor deck copy. it reflects the previous design that has been amended.

i apologize for the error. good afternoon commissioners. i would like to begin by trying to put this proposed project on this discretionary review in perspective. the proposal is an extension to an existing third story. the proposed addition adds merely 158 inches to the height of the existing structure. the proposed addition is set back over 12 feet from the existing rear wall of the building. the project site is on a steep downslope which extends from mount davidson to half a mile

from monterey boulevard reporting exit -- magnificent views of the bay at the homes below including those on the avenue. this view is enjoyed by all neighbors on the south side of the dried. in addition to those above. these attributes of the local environment is something that has existed for some time. presumably before and since the current residents made their decisions to live there and purchase their homes. the request for discretionary review by margaret murray, the owner's next-door neighbor, was filed in may 26 of last year and was based on previous drawings authored by others. significant changes to the design has been made since then in response to requests by the owners and the planning department. we have not received any further comments on these changes from ms. miss mary as she has consistently refused all attempts at negotiation. however, in response to the

claims enumerated in the application for discretionary review, i would like to point out that regarding scale and form, there are numerous adjacent homes of similar height and depth to that which we are proposing. i.e. number is 527, 501, for 75 and 471. this is all in close proximity. regarding privacy, this is not really a reasonable expectation for anyone on the north side of the section of melrose avenue due to the topography. she confirms this in her own submittal to the commission by asserting that, and i quote, we have to leave our drapes close because we have no privacy. our proposal will not change that. nor will it exacerbate the condition. we look at the section i have here.

>> could you speak in the microphone please, we can't hear you. >> sorry. this up here is the deck that is proposed. this is the area of the addition that you can see this as the existing consist -- configuration and you of the addition is mostly concluded by the existing structure. the change in the privacy issues are negligible. if not nonexistent. if you look from -- this is a picture taken from the location on the roof where the proposed deck back the furthest south extent of the proposed deck would be. you can see the roofs here of the homes on melrose avenue below pack all you can see is the roof. you can't even see the back of

the house, much less the backyard. the view, the existing view from the existing deck is where this photo was taken from. you can see their rear yard. that is an existing situation. we are not exacerbating either. regarding light the only increase in shade of the addition is the roof of the adjacent building and a somewhat shade to the light over ms. miss murray's home. our design includes the light while adjacent to hers in order to mitigate that impact. the views -- >> president hillis: thank you, your time is up. you will have a two minute rebuttal. >> can i have my two minutes now? >> so if there is any public comment in support of the

project, please come up now. no. ok. >> president hillis: you have to do within the five minutes or this two minute rebuttal. >> since the d.r. requester is not here to rebut, and there is no one to comment, i think you can come up and give your two minute rebuttal. >> i have one more thing to say about the views. there is negligible effect of the views. this is a submittal by the neighbor below who scent in a comment to the commission and you can see this is the view from her backyard. this is the existing building and the proposed structure would be something like this. above the existing building. it is almost negligible.

i just think it is absurd to claim that there would be a significant or unusual impact to privacy calculate, or views. thank you. >> there is still a minute while on the clock if you want to come up and say something. >> hello commissioners. i am frank and this is my wife stephanie. we are the owners at 521. we have been living there for 15 plus years. i am an educator here in the city for that central unified school district. my wife works for a nonprofit. we have three grown kids. two boys pack and a girl who share a small bedroom. the boys have a bunk bed while our 6-year-old daughter is still

in a cot bed. with all careers, we cannot afford a bigger house. throughout this whole process, we have always been sensitive to our surrounding neighbors. we went to the homes of our neighbors and we spoke to them and i personally offered our addition. they were supportive of our plans. at that time pack they shared that she had thoughts of doing the same addition. >> i'm really sorry. your time is up. >> but we have modified in, you know, all plans several times and made numerous concessions. >> thank you. ok. commissioner moore?

>> commissioner moore: i consider that the project in front of us to be very reasonable. it is a family with three children. nothing was excessive about this square foot addition. i just simply would say not to take the approval as proposed. it is as simple as that. >> there is nothing further. there is a motion that has been seconded to not take d.r. and take the project as proposed. [roll call] >> that motion passes unanimously 4-0. that will place us on item 22. at 66,321st avenue. this is also a discretionary review. >> i am here again. this is a project that is on 21st avenue on the west side of 21st between balboa and the

two neighborhood in the outer richmond. the scope of work as a two story horizontal addition at the rear with legal rooms down at the ground floor including a bedro bedroom, full bath, and lower down. an extension of the upper dan at office and addition of a roof deck on the second floor. finally caught a spiral stair in the rear yard as a permitted obstruction. for a previous design request, the project sponsor has pulled in the guardrail 4 feet from the south property line either proposed second floor roof deck to be flush with the building extension. the d.r. requester is a neighbor to the north of the subject property and claims the extent will come close enough to the roof of her tree to damage it. the project sponsor hired a certified arborist to study the proposal and found no evidence that the extension would damage the tree. the residential advisory team reviewed the project on june

14th and found the project is compatible with that and the case does not just -- demonstrate an exceptional or extraordinary circumstance. in terms of public comments. staff has received 12 comments in support of the d.r. at -- a petition signed by neighbors and a letter signed by the neighbors. [please stand by]

>> where project owners state, quote, based on commission report, there is no risk to trees in out lying plan. our initial commission report, we had a mistake. we had commentary from ellen shea that confirms in both measurements the trees are not at risk, end of quote. arborists did not state there are no risks, instead, she stated her findings are from scientific studies where there are many risks in construction damages. an arborist uses their education to reduce these risks. in d.r. response project owner states that they forgot to include the landing. arborist states landing is included in 4-3-18 report where arborist even added an additional 1 feet to landing for concrete forming and

pouring. arborist states mistakes are due to incorrect measurement personally performed by project owners. for project owners to state to us there is no risk is irresponsible and harmful to the welfare of the public. we can only conclude these repeated mistakes are project owner's attempt to shift these risks and liability onto us. it is well settled and arborists conclusion, if site plan is accurate, then at least 25% of trees' roots would be lost and this will be serious injury to trees. in closing, i would like to note in memory of dr. bazer that last month, a free fell onto her -- tree fell onto her car and she died. yes, there are root damage where there are talks about construction damages. therefore, i am duty bound in

requesting for commissioners to take d.r. and do not issue building permit until these serious issues are resolved between project owner and i. thank you. >> president hillis: thank you. is there anybody who'd like to comment in support of the d.r. requester? [inaudible] >> good evening. i was asked to read a letter from dr. fong who could not make it today. dear commissioners. my name is dr. fong, and dr. basner is our friend who was

killed by an uprooted tree on june 11, 2018. we, the neighbors, in the richmond district, do not want another tragedy to happen. we are neither for or against the proposed project at 663 21st avenue but do request commissioners to take d.r. and do not issue the building permit until project sponsor and adjacent neighbor resolve the project excavations to the critical roots for the safety and welfare of our neighbors. thank you. and this is a letter from the neighbor's contractor. my name is david galloway. i am a contractor specializing in trenching, pipes, and tree roots, consulting with terrence mcmann, construction designer at 655 21st avenue. on thursday, june 28, 2018, the neighbors asked if i would measure the distance of

excavation from neighboring redwood trees. permission was given to enter 659's back yard. reviewing the site plans for construction at 663, we measured a distance of 15 and 16 feet. excavation at this extent will remove a good quarter of tree's roots, which is very dangerous for the trees and neighboring properties. green builder david galloway. thank you. >> president hillis: all right. any additional public comment in support of the d.r.? project sponsor? >> hi. >> hi. thank you for your long day. we proposed this remodel. we're a growing family. we had a second kid in the process of in the time it's taken us to put this all

together. we're hoping to stay in the city, and we're hoping to build in our space. we've reached out to the neighbors, we've set the plan in place, we've hired an architect. as you've heard, this d.r. is about the health of two trees that are on our property line and us building closer to them, and we're aligned on the issue that we want to make sure this tree is safe. it's in our best interest that this tree doesn't fall over in five years from infection on our house, as well. so we're in alignment. there is confusion across the stacks of arborists, if you will. so i want to address just what anna has mentioned, but before getting into that, i did want to get into prior to submitting our plans to the city, we sent our post plans to both our neighbors to the north and south. to the south, we actually made extensive changes over many months to address our concerns and change their plans and adjust accordingly, and there

is an approval letter from them stating this. and in the process, to our neighbor to the north with anna, the d.r. requester, it was a little unclear what she wanted us to do with the actual tree. we weren't sure if she wanted us to cut it down or not damage it. there was a lot of back and forth as you saw from some of her materials as we tried to work with her to try to figure that out. realizing none of us were the tree experts, we reached out to multiple arborists and eventually commissioned a tree report from a professional tree arborist -- or commissioned -- i don't know the exact -- you know what i'm trying to say who we were referred to by three different arborists in the city. she has 18 years experience, ten years specifically focused on protecting trees through construction zones. her report did basically state there are no -- her report is included in there, obviously, and we have a couple of things that she said, her overall

report basically indicates that she doesn't see concern with the trees being harmed at the depth we are, so we really do want this report to be the source of truth in trying to understand where anna has been getting her sources, there has never been something sent our way that we could help counteract it. so we're hoping that this unbiased party, ellen's report can help support our factual source of trees here. i do want to clear up some confusion before yielding the floor. around the measurement miscalculations, the initial person she mentioned that we reached out to was very early on in this process and more of an estimate because we didn't realize we'd be getting this far. i casually mentioned to an arborist, we're building 15 feet out, would you be concerned? her answer was i would not be concerned. you'll be fine.

i would be concerned if you're disturbing established roots, but if you're not, you're fine. once we hired ellen, we measured the first time -- honestly, i want to bring my husband, who's no longer here. he had to go -- to the edge of our proposed building site, forgetting about the five by five concrete pad for the staircase. it was not to mislead anyone, it is not to be malicious, it was here's where we're going to be. we've since cleared that up. ellen redid the report. in both cases, she determined the tree would be fine in either one. and then in regards to the petition she had signed, you know, our intention is to protect the trees and keep them safe. we've spent a lot of effort here trying to show that, and we think, you know, we want what anna wants and what our neighbors want, and that is to keep the trees safe, and we

think that neighbors were maybe misguided in shigning this opposition and not seeing this report. and i'm happy to answer questions if you have them. >> president hillis: okay. let's finish this up. is there any public comment in support of the project sponsor? seeing none, d.r. sponsor, you'll have a two minute rebuttal, and then, project sponsor, you'll have a two-minute rebuttal. >> former san francisco zoning commissioner walter passmore once said there are no 100% in the tree business. if you get ten arborists, you will get 12 different opinions. here, we have at opinions from at least four arborists and three contractors whose

opinions are consistent and project excavation, from shrinking rear yard, this will damage tree's roots. [inaudible] >> -- and where these commentaries are not conducive in breaking resolution about project excavation damages to tree roots, but rather, this case is about the agency's regard for the public safety and welfare, the rightful role in the review and decision-making process that are guaranteed by state law, the general plan, and the planning codes. there by, these laws require the planning department to engage as partnered with the public in evaluating shared expertise, disclosing agency's analysis, checking for accuracy, detecting omissions,

discovering public concerns, and soliciting counter proposals. in this case as outlined in d.r., project is lacking and is not in compliance with governing laws where project will have a devastating impact on our redwood trees root zone which lay impact of projects where these critical roots will be irrepairablely destroyed. this will cause respect repairable harm to redwood trees. >> president hillis: thank you very much. project sponsor, you've got a two-minute rebuttal. thank you. >> okay. thank you. >> i guess i would just like to have you guys take a look at

the report, and i'd love to answer any questions about it. a lot of the material she's brought up with trees falling over in danwood. she's mentioned contacting a park ranger in redwood city. none of those people have been on our property nor has she prepared or given us any sort of official reports from any arborists she talks about. we've spent close to $1,000 working with ellen as we would have to if this were a protected tree in the city. this isn't a protected tree and we've still gone to all these lengths to do this and we haven't received any official reports or written information from any of the arborists she's talking about. so i'd just like -- i guess i'd like that noted that -- that's it. >> president hillis: all right. thank you. so we'll close this portion of the hearing and open it up to commissioner questions, comments, motions. commissioner moore? >> commissioner moore: i mean, it is obviously -- it doesn't take much to say that we all love trees.

we appreciate their enhancing our living environment, individual environment and qualities. however, this is a d-r -- d.r. that deals with building and planning issues that are particularcally the parameters of things that we are looking at, and the health or survival of trees is not particularly a d.r. thing per se. the building expansion is within its proper rules and guidelines. it's a compliance expansion, which is reasonable. the issue of health and safety regarding the potential future impact on the tree, i do not think can be a d.r. issue because it falls outside our own expertise to believe or judge on the accuracy and completeness of the various tree observers here. and i would have to ask mr. -- miss jonckheer to give us some

guidance in terms of what you would suggest we do. we can obviously approve the project with the condition that the applicant, prior to construction, find a tree treatment plan that indeed protects herself as well as the adjoining owner because trees affect more than just the property on which they grow. so with this being a family with children, i assume it's in their interests to be safe as well as everybody else in a 360° radius. is there a precedent by which you would guide what we do? >> yes, commissioner. you could add a condition to the d.r., but, again, as you said, it's not a protected tree, and this type of issue is not covered in the residential design guidelines so that if

you do take -- i would say that you can maybe make a suggestion, but it's not exceptional or extraordinary circumstances, so i wouldn't -- we recommend that you do not take d.r. and approve the project as proposed, but you should -- you could add that comment in the record. >> commissioner moore: and then, i would assume just recommending to anybody, check your insurance clauses and check what it takes as you're expanding your home. have your insurance agent reexamine all aspects of your policy that you take all measures by which you are pretty much protecting yourself and your neighbors or your neighbors and yourself for any possibility that something could happen to these trees. my understanding of redwood trees is actually they have very vertical roots rather than horizontal spread of roots. there are redwood trees right downtown next to the -- to the permits -- trans-america

permits. they have been there for 20, 30, 40 years. they're very close on the property line. the building to the east -- actually, the spire building, was built many, many years past the point where these trees were already quite mature, and they probably sit about 3 feet of property line, and there was never even any discussion about those kinds of issues. so i just caution that we put conditions in this approval by which all -- most conservative tree protection issues are being addressed by others than ourselves, but i make a motion that we approve the project with properly formulated conditions that i cannot even express because i have never done this before regarding trees, and perhaps you could help us do that. >> president hillis: i'm comfortable -- i think people have gone kind of above and beyond. we've had trees adjacent to projects a lot, some more

significant or much more significant than this. seems like you've gone through the process, and i encourage you all to keep talking about it as construction proceeds, but i think as far as, like, the permit, i'm comfortable approving the project as is and not taking d.r. and approving the project. >> commissioner moore: are you seconding the motion, huh? >> president hillis: i wouldn't take d.r. and approve the project. >> commissioner moore: oh, okay. that's what i meant to say. >> president hillis: i'll second that. >> commissioner moore: there is just a cautionary note that we're acknowledging having heard about this tree issue, but we are approving the project as is. >> right. i think you would -- >> president hillis: you would need to take d.r. to do something like that. >> yeah. i think it would be best to not take d.r., but the comment is in the record. >> commissioner moore: particularly, the comment in the record is it's not -- it's

outside the guidelines that we normally approve a finding. >> you could acknowledge that in the discretionary review memo, simply acknowledge the tree finding. >> commissioner moore: i find that. >> commissioner richards: it's interesting enough in the four years i've been on the commission, i think we've dealt with one, besides the landmark tree on polk street, one property, it was 323 cumberland, and we did a condition, when we made the approval positive the conditional use -- we made the approve for the conditional use permit for the lot, the tree is dead, and they're cutting it down. they didn't care about the tree. here, they care about the tree, so working together, monitor the construction, and working together to make sure the tree doesn't get damaged. you agree. we don't normally have d.r.

requesters that agree on the out come, it's just the process you're disagreeing on. i believe you have a lot of credibility. you have a lot of credibility, too. you want to save the tree. so do everything you can during the construction. we'll put the finding in the record, and let's cross our fingers and make sure that the tree stays. >> clerk: commissioners, there's a motion this has been seconded -- that has been seconded to not take d.r. but adding a finding to the discretionary review action memo acknowledging the tree issue. on that motion -- [roll call] >> clerk: so moved, commissioners, that motion passes unanimously, 4-0. >> president hillis: all right. the meeting's adjourned.

. >> as a matter of -- could we push the pledge of allegiance until later, or as a matter of protocol, do we have to start with the pledge? [inaudible] >> okay. why don't we wait until we have everyone here, and then we'll do that. roll call. [roll call] >> clerk: we have a quorum.

>> president stansbury: great. we're going to be going into closed session, but before we do that, we'll be going into public comment before closed session. but seeing no >> president stansbury: why don't we call the meeting back to order. we are just coming out of closed session, and my apologies to the public for making you guys wait so long. it was a very long day. is there a motion not to disclose? [inaudible] >> president stansbury: there's a motion. is there a second? i will second it. >> for which issue? >> president stansbury: a motion not to disclose what was coming out of closed session. there's a motion and a second. seeing no -- what's that, robert? [inaudible] >> president stansbury: i'm sorry. oh, just take the vote. okay. can we take this item without objection, then?

>> yes. >> president stansbury: great. item passes. now we're going back into -- why don't we start with the pledge of allegiance. everyone here, if you'd please rise and join us for the pledge of allegiance. [pledge of allegiance] >> president stansbury: great. thank you so much. why don't we call general public comment. any members of the public that would like to address the commission under general public comment? seeing none, we will close general public comment. next item, please. >> clerk: item number 5 is an action item, approval of the minutes of june 13, 2018 meeting. >> president stansbury: okay. great. i think we can take those as submitted. we'll calltor public comment. are there any members of the public wishing to address the commission on the minutes? seeing none, we'll close public

comment. there's a move -- there's a motion and there's a second. any discussion? great. can we take this item without objection? item passes. next item, please. >> clerk: item number 6, action item on the consent calendar. >> president stansbury: great. why don't we open it up to public comment. are there any members of the public that would like to address the commission regarding the consent calendar? seeing none, we will close public comment. is there a motion? i'll make the motion. is there a second? >> second. >> president stansbury: there is a second. any discussion? seeing none, can we take this item without objection? [inaudible] >> president stansbury: great. item passes. why don't we go ahead and call -- we'll move right onto item number 7, please. >> clerk: item number 7, discussion item, the investment committee report. >> no action's taken at this committee meeting, but there's education on three subjects --

actually, two. actually, director franzel discussed his plan for an absolute return portfolio. the key points he tried to stress to us was the average wait for the various strategies that we're planning to invest in, even though they are very wide ranges, but focusing on what the average wait might be helps understand exactly where -- how the money will be allocated. we talked about leverage, remember to explain. remember to focus in the net areas, the leverage that we'll be exposed to, which is significantly less than the actual long dollar amount. we did not discuss any other invetment strategies. part two, our new management director, mr. colins, very impressive, the document he showed to the board, in this part of the meeting. those of you who had not read

it, i suggest you get it and keep it. you will start to appreciate how complicated the subject of e.s.g. is that we are going to try incorporate in all of our investments, let alone have all our managers incorporate formally in their investment process. so you'll just start to see how broad the task is and how much detail work must be done to incorporate this new -- how do i use the word? process, and how we're going to incorporate this e.s.g. into all of our investing. one person from cambridge was there discussing her involvement as well. the key thing to walk we away with during the presentations, we may have voted to do something, we are now starting to see how much work will be involved and how difficulty tricky assist -- it is in chiefing expects rate of return

and still doing it with real good social, governmental and environmental policies. it's looking at the difficulty and how it may affect our rate of return. so that's what the committee was all about -- committee meeting. >> president stansbury: thank you for the report. we'll open it up for public comment. are there any members of the public that would like to address the commission regarding this item? seeing none, we'll close public comment. any discussion or question from the board? great. thank you, commissioner driscoll. why don't we move onto item number 8. >> clerk: item number 8, action item, recommendation to commit up to $300 million to cartica's emergency fund. >> great. thank you. cart and others have -- cart and others have provided the board with some additional data and analysises as well as other

data. this strategy is also led and formed by two women, and they're recently joined by a third woman who's recently joined as their coc.i.o. so kurt, thank you very much for the additional material. >> you're welcome. you'll recall at the april 11th abort immediating. investment -- board meeting, investment recommended 300 million to the cartica investment tremendous gee. cartica was the result of an investment strategy that's announced about a year ago. however when we presented cartica to the board, the board expressed several concerns primarily based on their results -- historical results and some concern in growth and

assets. in addition, they questioned the firm's relationship with calpers, and the sizing of cartica with fers portfolio. staff feels that cartica is a great solution for us, a great fit, and we weren't successful in getting you guys to see the same thing was a failure on our part. so today, we want to address the board's concerns, and time permitting, we want to go through an example of a security, one of their top positions. following the meeting, we did have andrew write a separate report which is included in the material where he assesses cartica's e.s.g. practices in both the way they've managed their firm and the way they've managed their assets. what we'll do is a little bit more of a visual presentation as opposed to what we historically do in a memo driven way. but before we get into this, i want to remind the board of a couple of attributes we got into in our april meeting.

first, we look for managers that have a differentiated, innovative, investment process that we think is sustainable over time. we look for managers that have strong business platforms marked by long-term institutional investors like sfers, firms that focus on one strategy, not multidisciplines. we look for certain shared values or alignments with their investors. we don't want to own every security, otherwise we'll look like an index. we look for concentrated portfolios, and if we can find firms that have these attributes, we then look at the historical returns that we want them to be correlated or have low correlation with the other indices. that's exactly what we found with cartica.

with that said, i'll give you a brief overview or background of cartica. it was a a washington d.c. invest 789 firm founded in 2008 by former employees of the w.s.c., which aa branch of the world bank. the firm employs 35 people today and manages $3.1 billion for a select group of institutional investors including some prominent california based institutions, calpers, calstrs among them. they combine top down country selection and bottom up security selection. cartica is an activist manager, not a saber rattling that we may see on the front page among

certain firms. they engage with companies to help them improve their businesses in terms of reporting, capital market structure, and more specifically governance practices. they tend to be a top shareholder in every company that they own. this is important as we go through this. they typically own four to 7% of any one firm's outstanding shares so that they can get the firm's attention, you have to own a big portion of that company. so within our portfolio -- so a couple things, this was an r.f.p. what we were trying to do was see if we could upgrade the capablities of our emerging market managers. if approved, we're not going to add exposure to emerging markets, they will be funded by some of our existing managers. that said, we have a diverse identified group of emerging markets managers, but we also

have three dedicated china managers, and this is why cartica's so important to sfers. because of our concentration among -- of china managers, over 50% of our emerging market exposure today is in china. cartica's highest exposure is in india, brazil, and mexico. cartica's focused at the moment on industrial and consumer discretionary stocks, so by sector, by country, they're complementary to our portfolio. let's focus on their performance. there's a lot of data shown on page 12 of our memo. and here we just compared cartica's results relative to all the others that we have in

the diversified emerging market space. i'm not going to go through all of these numbers, i'm just going to have you focus on the charts on the far right where we plot cartica's peers and their returns, and we show them in two time frames, since cartica's inception, and down below we removed their first year. you'll recall they were up 89% of the first year. so we're moving it. what is telling about cartica's performance is regardless of period, they have produced higher risk-adjusted returns. page 13, we consider cartica relative to the others in our portfolio on a variety of measures, and this is important. they have the highest tracking error relative to their index. that's what we show on top. they have the lowest correlation relative to the indexes, which is important. and on the far bottom right, we show their correlation relative

to all the other managers in our portfolio. cartica has the lowest correlation relative to their peers and relative to the indices. they're an important piece of our portfolio construction. addressing the board's concerns about cartica's performance relative to their index, they're quite different relative to their index. cartica tends to focus on small and midcap companies. 75% of their portfolio is invested in such companies, while 80% of their benchmark are in large cap companies. the notice, cartica has not invested as much if any in i.t. companies, yes 30% of our benchmark is in -- yet 30% of our benchmark is in i.t. companies. as i noted before, this is true relative to the index, cartica

has not invested at the moment in china. china has been, at least up until recently, one of the best performing e.m. indexes, e.m. markets. they haven't invested in south korea, which represents 16% of the index. and it's not because there aren't good investment opportunities. remember cartica is an active investor, and the ability to apply activism or the ability to apply engagement with management in china or korea has been limited. cartica is starting to do some things here, but their exposure's relative to their benchmarks are quite different. small cap companies, no i.t., no china. i think we made these points pretty well to the board last time, so you asked that how have they done, how has their security selection been in the various countries that they invest? . what we show, this is a little bit of a complicated chart, the gray bars here show the

expected return, cartica's expected return in each of the countries, and that's simply cartica's weight multiplied by the term of the benchmark. in the blue however it's cartica's actual results in those companies. cartica's selection, if you will, across these seven markets is about 14.5% -- has added 14.5% percountry. questions about india specifically, which we show at the bottom of this page, and on page 18, in all times frames, cartica's got stock percentage in india, cartica's added significant value, over 8% annually since their inception. and you asked these questions, whether their historical selections have been disbursed. here we show the short drivers

over the last several years, there's not one particular driver year over year that has driven their returns. the returns have been over each calendar year. which leads us then to how they perform relative to the indices. what we did is we compared their results, again, the same time periods against the mcsi, emerging markets benchmark, but we also compared them to an mcsi benchmark without china, we chaired them to an mcsi without technology, we compared them to an msci, small and midindex. against all of them, cartica has superioror adjusted risk returns. >> say that again. >> what we didn't do them was show them against a variety of

emerging market indexes. what we did here, and we've done on subsequent pages is we compared the results against that index, but we also included several others, the msci emerging market, ex-china, msci emerging markets ex-i.t., msci emerging markets, small mid-cap. >> are there any other indexes that represent the emerging markets small mid-cap space? >> no. what cartica does is very special. it's concentrated, etcetera, small and mid-cap focus. there isn't a perfect proxy of what they do. but the point of this is to give them their fair shake and have you gain some perspective of what their performance looks like against a more comparable index. and against all of these

indices, they produced higher risk adjusted returns. >> how we compared in those markets where we don't have an emerging markets exposure, have we looked at some -- maybe what some of our other managers are doing as a basis of comparison? >> most of our managers in the e.m. space look a lot like the index, and that's part of what we're seeking to achieve by getting differentiated exposure. we won't go through the list of the names, but they tend to have benchmark like exposures in terms of market coop, in terms of countries, in terms of -- cap, in terms of countries, in terms of sectors. >> i don't mean to hold you up, but did we see -- i think willington was one -- we will wellington was one of the names on the chart. did you provide anything that we can see what they're doing

in the same markets? >> we do. we didn't think it was important relative to the examination of cartica. cartica is different than what we're doing with wellington. wellington has a large and midcap bias. cartica represents something very different. >> okay. thank you. if you'd like to keep going, please. >> wellington's exposures would be much more benchmark like, like country, company, active share, tracking error, etcetera. >> i've moved us to page 24, just in the interest of time. bottom right hand graph, and again, apologies for a lot of data here. what's important, again, here is this context, rolling three year periods, cartica has much lower correlation -- has low correlation relative to all of

these indices. >> here on the lower right is cartica's correlation is very different than the market as a whole. they have much more stock specific risk rather than market risk, and on the lower left, what we also like, is that cartica has meaningfully less volatility of returns than the benchmark as a whole. >> okay. i'm going to move us to page 25. i think we've demonstrated that cartica is different than the benchmark index. they provide substantial downside protection relative to the indices. their drawdowns, which are often losses from peaked trough tend to be less than that of the index, and their recovery from those drawdowns tends to

be faster. and the hall mark of a good manager ultimately, and the way to compound good results over long periods of time is to lose less and recover faster. and these are the types of textured analysis that i don't think we -- we didn't provide last time when we just look at three-year or five-year comparisons. so we talk about cartica, they manage a concentrated strategy, which we like, high, active share, unique process with high barriers to entry. there's an e.s.g. relative to what they do, and that's what staff sees in cartica. i'll pause here because we're going to go on and talk a little bit about their gross assets under managers, calpers,