that are north of 45%. that difference of 15%, if the public equity goes down by 20%, it is -- it is we outperform by 3%. and that 20% decline is on -- is on 30% of our portfolio. it's a 6% hit. it's not across the entire $26 billion trust. so the headline number of the public equity is doing is obviously can be very upsetting when the market is going down. but we hold up relatively well. and -- in addition to that, it's not just public equity but our private equity portfolio is 75% in technology and biotech -- life sciences. that's a really good position to

be in in this kind of market. in real estate, we have a 5% of our book of our real estate book is in -- is in hotels. that's a really low weight. that equals 50 basis points of plan assets. that's a really low weight. and except for the mortgage investments that we'll talk about which we think that are an absolute return and the energy investments in our natural resources portfolio, which are going to take a very long time to come back, you really need much higher demand and much less supply to begin to get a good return out of that. that's a really long-dated story to come back. i'm not sure how much it's going to come back. but except for that one part of our por portfolio, i don't view

anything as structurally broken. >> well, the other thing that -- to consider in the numbers that bill presented is that these are indices. and if you look at the composition of s an s&p 500, 50s health care and health care and the amazons and the ne netflix d google. and they are benefitting from this type of environment. so we have to be very cautious if we do go defensive that we might not participate on the other side of the economy that is benefitting. >> i was going to say -- >> go ahead. >> brian, i'm not sure if you had the opportunity to review it but yesterday afternoon i sent what the cost is to buy 5% and 10% and 20% between may

15-june 30th. so assuming that the key sensitivity point is what will our fiscal year return look like on june 30th. so to avoid a large loss between now and fiscal year-end. the cost of buying 5% out of the money puts on an $8 billion public equity portfolio is $172 million. so that's 2.16% of public equity and it is about 66 basis points of plan assets. so if the markets didn't fall more than 5% between now and the end of the year is our return would be reduced by 66% over the next month and a half. over a 10% out of the money put costs $100 million. so that's 39 basis points, the plan assets. and 20% out is $32 million.

so that's only 12 basis points. those are options for the board to consider. the -- we would still -- you know, say in the 20% option, the cost is really at $32 million. but that does mean that we're protected against the loss between now and the end of -- just six and a half weeks from now. the market would have to decline more than 20.4% for that to be a profitable trade. >> i will just say this, you know, and then i'm truly done. i would rather give up some on the s&p side to protect us from the downside. and i don't know that that means buying puts, but maybe it means a higher percentage to cash than treasuries. so i strongly encourage you all

when this meeting is over as priority number one to think about what you need to do to protect the pensions from this ever changing economy. and especially between now and the fiscal year-end. because a long-term return is important to get through each fiscal year. and i wish that we could invest in a vacuum without the politics of everybody who just likes pension systems but we're in an interesting point in time and so my message is very strongly to please consider a defensive position and i'll turn it back to the chair. >> could i just make two more quick comments, brian. i totally the short-term

sensitivities and that's why we have the asset allocation that we do. it's to protect us from a large loss because the impact of politics and the potential for the glaring eye of the media and the funded status and the sustainability of a public pension plan. that's why we have the asset allocation and the approach to manager selection and the emphasis on manager selection that we do. it's to protect us from the downside. the modeling that ana and i did a year or so ago shows that in punishing markets that we should be comfortably ato a top perfor.

our -- we all know that our returns in the last five years have been really good. they're in the top 5%, 6%. the lesser known story of that is that our risk adjusted returns i believe that are in the top 1%. and our and our downside protection -- so our ratio, i don't recall exactly what it is but i believe that is in the top 5% relative to our peers. and it's an approach through asset allocation and through manager selection. but i hear you about considering to do more.

>> any board members with questions before i start. >> yes, thank you. bill, thank you very much for your commentary and i do agree with you it's a very difficult process and i thank you and your team for being very committed to looking at the various models throughout the process. and my question is that i look at the various sectors and our asset allocation that we have thus far and i would like to know on absolute return, how you think that we'll do during this crisis as well as our exposure to china. if you could comment on both of those for me, it would be great. >> sure, i'll comment on china real quick. china has held up quite well here during this pandemic.

and the beta returns are fine. and in public equity the weighted averages and the access returns are 8% or 9%. and our returns in china are stellar, and they're outperforming as a whole i think by 4% or 5%. our private equity return portfolios are very good. and tanya and ana and kurt are welcome to chime in if they have more exact numbers. so regarding china, i recognize that it's a political hot button, it's a political bull's eye. and it's also a great place for entrepreneurialism. it's a great place for innovation. and a rising standard of living for middle class. there's just so many ways to

make money in china. we talk about in health care, well, health care in china, you can make money in clinics and in medical equipment and in dentistry and in biotech. and in many segments of their economy that there's really good ways to make money. now that's different shade between the politics and how to make money. so our china investments have done really, really well. our private credit investments in asia and in asia have outperformed our private credit returns as a whole. and in absolute return, our china investments have totally kicked it. it's i think that it might be -- one of our two best performing managers is our long/short china equity manager. turning to absolute return, this

portfolio was doing great through the end of february. it was outperforming bonds. it had less volatility than bonds and it had a ton less volatility than stocks. and it had captured only 11% of the equity return in months during the equity market decline. it was showing a great deal of independence from both the stock market and the bond market. and you look at its monthly returns and it's just these small little movements, mostly up i think 33 months and five down months. and that was better than the stock market and a lot better than the bond market. which was about half and half up and down. and so it was totally doing exactly what it was designed to do and in march that all fell apart. we'll talk about it during david's -- during david's

update. it's principally around our credit exposure. and in particular they're in the mortgage market and our mortgage investments fundamentally look so strong. but they're not in market prices and we're not reflected in the march crisis. they were in the february crisis when the equity market was down 7%, our absolute return port foal you was down 31 basis points. it did great. but in march investors began to fear a depression and priced in a depression. and it's reflected in the pricing of our mortgage investments which fell by -- between 50% and 90%. we ultimately think that is money good. we think that we get all of that money back.

>> okay. we'll talk more about this, but i think that the key is liquidity management and i'm looking forward to the presentation further in the board meeting where we talk about the management of the portfolio. that will be the key during the pandemic crisis. >> yes. >> absolutely, leona. and as bill mentioned, and our allocation and why we are confident that we will -- we will -- certainly short term, by the end of q2 will be in good hands in -- in solid returns. but also why longer term it makes sense is because we have a large allocation to liquid asset classes. as a result it's imperative to monitor liquidity and we are doing -- and monitoring -- we have almost 4% in cash right now

which is the highest that we've ever seen. and we monitor it very closely. and it's not now, but in june we plan to present an even more liquidity stress that we are gearing towards. we hope that it won't be experiencing it, but we want to plan for that. in fact, it's our responsibility to plan for that and we're doing it. >> thank you, president driscoll. >> next board member. >> tanya and ana. thank you. >> other board members with questions? hearing no other board members i will make some questions and observations. an attempt to clarify certain

parts. but, bill, you mentioned the 7.4% and you said "have to earn." and i would say it's not a "have to earn" issue, except by the board adopting it as allocation, we told our stakeholders and sponsors that we can earn 7.4%. that's why it's an objective. that's one. and two, this item was put on the calendar as tactical. not strategic. and the asset allocation mix gives you the range to go down to 20% public equity. you have the discretion to do that now. as a tactical decision. >> so i believe -- i thought that the minimum was 25%. >> absolutelactually 25%. >> yeah,