>> clerk: president casciato, we may now begin the retirement board meeting of october 13 at this time. this meeting is being held virtually with all members and staff participating today via teleconference. this will ensure the safety of the sfers board, sfers staff, and members of the public. while this technology allows us to hold these meetings via teleconference, it may not be as seamlessly as we would like them to be. a reminder to board members and

staff to mute microphones when not speaking to minimize background noise. president casciato? >> okay. thank you very much. roll call, please. >> clerk: thank you. [roll call] >> clerk: president casciato? >> yes. can you call the next item, communications? >> clerk: yes. item 2, communications.

to protect the employees of sfers and the public, this meeting is being held remotely. board members will attend this meeting through video conference and participate in the meeting to the same extent as if they were physically present. public comment will be available on each item on this rand. each speaker will be allowed two minutes to speak. comments or opportunities to speak during public comment hearings are available by phone by calling 415-655-0001, access code 146-491-7791, then pound and pound again. when connected, you will hear the meeting discussions, but you will be muted and in listening mode only. when your item of interest comes up, press star, three to be added to the speaker line. best practices are to call from

a quiet location, speak clearly and slowly, and turn down your television or radio. president casciato? >> okay. thank you very much. are there any other communications? director huish? >> clerk: public comment? >> public comment, too. >> clerk: thank you. callers -- >> i just want to see if there's any other communications. >> no, no further questions required communication. >> okay. thank you very much. okay. go ahead. >> clerk: thank you. callers, if you have not already done so, please press star, three to be entered into the queue. for those already on hold, please wait until the system indicates you have been unmuted before you begin your comments. moderator, are there any callers on the line? >> operator: madam secretary, there are no callers on the line. >> clerk: thank you. public comment is closed.

president casciato? >> next item, please. >> clerk: thank you. item 3 is a resolution to allow the board to meet via teleconference for the next month. >> good morning, commissioners. this is a resolution for board commissioners to be allowed to participate via teleconference remotely expired at the end of september [indiscernible] to extend this, the ability for board members to participate in public meetings remotely, and in this item, we have details of what the state legislature passed. it's assembly bill 361, and just at a very high level, what it requires is in order to

continue -- for boards to continue to allow board participation remotely, at least every 30 days or monthly, the body, in this case, the retirement board, must approve a resolution, and you'll see the resolution is based on both state and local executive orders as well as public health orders, and it requires the board each month to justify why it would continue to allow board member participation in public meetings remotely. and so we have prepared this standard resolution. the city attorney has reviewed both the materials as well as the resolution, and as you see, it requires that both the president of the retirement board and the executive director sign off on this resolution monday -- monthly,

rather, and so i would recommend that the board approve this resolution. darlene will circulate the resolution after she signs it for president casciato's signature and my signature, we will do it again both for the public health orders that are both state and local -- >> so moved. >> okay. there's a motion. i need a second. >> second. >> there's a second by commissioner bridges. public comment. >> clerk: members of the public, please press star, three to enter the queue if you have not already done so. moderator, are there any public callers on the line?

moderator, do we have any public callers on the line? >> operator: madam secretary, there are no callers on the line. >> clerk: thank you. public comment is now closed. president casciato? >> next item, please. >> clerk: roll call vote? >> oh, yes, roll call, please. [roll call]

>> clerk: thank you. we have five ayes. motion passes. president casciato? >> okay. item number 4 is next, and we need public comment before going into closed session. >> clerk: item number 4 is closed session. moderator, do we have any callers on the line? >> operator: madam secretary -- >> clerk: moderator, can you repeat that? i'm sorry. i did not hear you. >> operator: madam secretary, there is one caller on the line. >> clerk: thank you. caller, please state your name. your two minutes begin when you

speak. >> hello, trustees. this is fred sanchez with protect our benefits. i know this is a very difficult decision and times, and protect our benefits just want to remind you that we're on the record as strongly in favor of chief investment officer separate from the executive director. the system works great now. it's not broke. try not to fix it. we just have to be creative in how to get the proper funding to do this. thank you very much. >> clerk: thank you for your call. moderator, are there any further calls? >> operator: there are no further calls. >> clerk: thank you. public comment is now closed.

president casciato? >> okay. we'll have everybody go to log out and then log in to 4-a, closed session, 4-a. thank you very much. >> bridges, present. >> driscoll. >> present. mr. ghandi. not arrived. commissioner held fond. >> present. >> commissioner safai. commissioner stansbury is not attending. >> is there any commissioner to make a motion regarding the closed session whether toditiono disclose or not. >> i move we do not disclose items from session a or b from

the closed session. >> second. >> commissioner bridges and commissioner driscoll seconded. any discussion? if not call the roll, please. >> public comment? >> public comment go ahead. members of the comment who wish to comment on this item should call 415-655-0001. access code (146)491-7791. pound pound. if you have not done so please press star 3 to line up to speak. the prompt will indicate you have raised your hand. wait until you are unmuted to begin your comments. state your name and make your comment. you will have two minutes to comment. do we have callers on the line? >> there are no callers on the line.

>> public comment is closed. >> thank you very much. item 5, please. roll call vote. >> roll call vote now. >> bridges. >> aye. >> driscoll. >> aye. >> ghandi. absent. heldfond. >> aye. >> president casciato. >> aye. >> four eyes, motion passes. -- four ayes. motion passes. >> item 5. general public comment. >> are there any caller on the

line? >> i can read an e-mail received from john simpson. at your september meeting. >> mr. harris did you want to read the e-mail? >> can you please read it for the record, please. >> e-mail from john simpson. september 1st meeting the executive director told you to give a self-evaluation. that is no evaluation. when it comes to answering questions how you are investing our money, give yourself a failing grade. when it comes to investing because in the past 10 years you have not outperformed a passive investment on the sec500. b minus. at the september meeting a

member sent you a letter to read in public comment. you refused to listen to the contents of the letter because it contained more than 150 words. it took the executive director a longer time to count the words than it was read. i hope next year i can give you a better evaluation. 46 year member. callers if you have not done so press star 3 to be added to the q. those on hold wait until you have been unmuted. do we have callers on the line? >> madam secretary. there is one caller on the line. >> thank you.

police say your name. your two minutes begin when you speak. >> commissioner cassie o this the mic. san francisco police officers calling to ask for assistance on behalf every tired police sergeant joncmcmahon. he received industrial disability retirement in 2019. not qualified for service retirement. received the minimum 50%. the matter was referred to workers' compensation appeals board. in august of this year he received a much larger award. in or to get that upgraded award, the matter has to go on your calendar. i have twice in writing

requested in august and september that the matter go on calendar. i sept a cover letter and supporting documents. i am asking for help and assistance in bringing jon mcman's request to the board. thank you. >> thank you for your call. do we have any further callers? >> madam secretary. no more callers. >> public comment is now closed. president cass casciato. >> we may have a quorum problem in less than an hour. let's hit as many action items as we can. 6. >> 6 action item approval of the minutes of the cent 8, 2021

retirement board meeting. >> move to approve adoption. >> second. >> moved and seconded. any public comment? >> press star 3 to be added to the queue. any caller on the line? >> madam secretary, there are no caller on the line. >> public comment is closed. >> roll call, please. i will entertain a motion to approve. we have a motion. >> roll call vote. sorry. >> driscoll. >> aye. >> ghandi. >> aye. >> heldfond. >> aye. >> president casciato. >> aye. >> we have five ayes.

motion passes. jay, what action items do we want to make sure we get through today? we need to do consent calendar item 7. we have item 9, which is a recommendation for action. then i believe that is the only two remaining action items. >> item 7 then. >> item 7. consent calendar. >> move to accept. >> second. >> moved and seconded. any public comment? >> press star 3 to be added to the queue. moderator, any callers on the

line? >> madam secretary, no callers on the line. >> publish comment is closed. president casciato. >> roll call, please. >> bridges. >> aye. >> driscoll. >> aye. >> ghandi. >> aye, heldfond. >> aye. >> president c asciato. >> aye. >> motion passes. >> item 9. >> action item. recommendation to transition sfers current investment in a passive russell 1,000 value strategy to an active esg-enhanced strategy managed by

black rock. >> since march that it become a net zero omitter by 2050, staff has been mind full to achieve this ambition. concurrent this is ongoing managementful our public equity portfolio. we discussed many times, data returns aren't enough to meet expected returns we have to earn alpha. during the annual equity update in april we cited initiatives two were to work on the passive strategy. despite the focus on active strategies, passive strategies continue to play an important role in the equity portfolio to provide low cost exposure to the

public equity market the large capped which is most efficient and provided liquidity. we talked about the tension to earn high returns and provide plan wide liquidity. over the past few years we evaluated a number of strategies systematic, somewhat passive, that allow for the little bit of al take generation. -- alpha. we are still maintaining the low cost exposure in liquid strategies. second, the esg team to integrate esg considerations. this is focusing on engagement with existing managers. proxy voting and explore esg strategies. my colleagues will tell you money managers have recognized the commercial opportunity and

have been promoting esg strategies. in the public market the constraint variety. however, as we explored strategies in both areas again expanding the passive mandated strategies it is apparent that we have an opportunity to evolve passive mandate with black rock to achieve both initiative also. black rock through barklay grown investors has been larging for s since 1998. this is important for us given we have so much growth oriented this is a diversifier focusing on value investing. over the years we have interaction with the black rock team probably monthly we have come to appreciate their active

systematic strategies and commitment to esg matters an the the firm level. they have been there since 2008, earlier than their competitors. unlike most systematic managers to provide esg strategies which often are overlays or constraint based. black rock focuses on proprietary research and integrates to the alpha process with focus on climate risk. black rock is managing esg fund in a system way since 2015 which puts them many years ahead of competitors. after much diligence we recommend transition about the strategy managed to enhanced

strategy. the idea is to expand opportunity for alpha200 basis points and maintain liquidity towards net zero carbon emissions by 2050. >> thank you, curt. today we are recommending transitioning current investment with the value strategy to active esg enhanced strategy. [ inaudible ] the active strategy we recommend as part of the black rock systematic strategy. the considerations to drive the alpha. the esg fund benchmarks since

october 2015. block rock customizes. they expect returns to be filed with these strategies. black rock has been. [ inaudible ] since 1998. we recommend they continue to manage the account. transition from passive to active portfolio. the annual tracking will increase 10 basis points to 200 basis points. the version changes the guidelines. black rock's platform is managing u.s. fund since 1990. the strategy. black rock began research in 2013. they integrate insights into the strategy. the esg version in 2015. five to 20% allocation to esg

insight. the esg version 40 to 60%. provide historical returns. the return follows the esg has improved over the last several years. over the last five years esg has reached the benchmark. 50% less carbon intensive than the benchmark. carbon intensity will vary over time. can expect a portfolio less carbon intensive than the benchmark. over time the market de warbonnizes. they expect 30% less carbon on intensive than benchmark over the last several years. the emission reduction target to reduce future emissions associated productivity gains.

given the focus on climate risk the chief fund is well aligned to be a net zero by 2050. the volume active esg funds. the goal is to increase the alfha with more esg in the portfolio. the tracking will increase from 10 basis pointings do 200 basis points. lastly, we closely cooperated with the esg teams. andrew collins is on the line. over to the board for any questions. >> i want to understand what aspect of the recommendation. the current tracking for the project is zero, correct?

>> yes. >> that is fine. willing to take on 200 points to tie into the other topic in a few minutes. reasonable expectation that the 1,000 value benchmark we are hoping for alpha of 1.4? >> we expect 100 basis points or so with alpha. >> i am looking at historical returns which is no guarantee. >> no guarantee definitely. >> the trade-off return here. 200 points tracking is fine. turn to the risk management port fellow use is -- portfolio is this worth doing besides better

aspiration by 2050 to get tarbon tracking down lower. 200 is for 100 basis points of return? >> we have out performed and that is a risk we are taking on. >> the reason behind be the recommendation. thank you. >> commissioner driscoll it is important to note liquidity is the same. it is going to be separately managed account. we can liquidate within a day. >> here we expect for that incremental alpha, this is incremental more volatile than the one we have. considering the context of our overall portfolio we think it is diversified away. i can't describe as double

bottom line. we are cheating a couple things. in terms of carbon aspiration, increasing probabilities for alpha. not compromising liquidity for exposures. >> good point. value benchmark to diversify to the growth field in the rest of the portfolio. >> thank you. i see all of that. hopefully we will be able to maintain the current lower management fee. maybe that will happen as well. thank you. >> you don't want to negotiate against tom. >> block rock has a strong research team that we can

benefit from which is phenomenal. >> i agree, commissioner bridges. i appreciate their strategies. >> they are known for that. a lot of work they do is quantitatively based. the strategies with an alpha. like curt mentioned we have seen this with other strategies. mixed strategies. i think it is all very positive. >> i concur. i wanted to point out i tollly agree. >> we support 100% transition of the 1,000 strategy to the esg by black mark. >> second. >> moved by driscoll and seconded by bridges. public comment?

>> thank you. press star 3 to be added the queue. are there any callers on the line? >> madam equity, no callers on the line. >> public comment is closed. >> thank you very much. roll call, please. >> mr. bridges. >> aye. >> driscoll. >> aye. >> ghandi. >> aye. >> held fond. >> aye. >> president casciato. >> aye. >> we have five ayes. motion passes. >> item 8, please. investment committee meeting report. >> item 8. discussion item. investment committee meeting report.

>> in your minutes what it did on the september 15th meeting. they stopped the presentations to put it off for a while. we got it done. i will take this opportunity to underscore our conversation earlier that the upcoming and i haven't talked to curt about this. i do want to give a heads up. what day was that on november? >> november 17th, correct. >> the next meeting which was planned that another informative subject matter. we might have to defer that for a board situation in terms of like we did last time. we will get the information to you as soon as possible.

we might have to be doing some talking to potential candidates. that is what it is. same as it was before. we will do this china thing on the basis it is very important. i am happy to answer any questions. >> thank you very much. report is submitted. information only. public comment, please. >> thank you. callers. reminder to press star 3 to be added to the queue. moderator, any callers? >> there are no callers on the line. >> thank you. hearing no calls. public comment is closed. president.

item 10 please. >> 10. discussion item. risk review for sfers total plan. >> this is risk reviews. last year we introduced new allocation policy with substantial increases to public and private equity. as a result our risk as measured by projected or forecasted volatility increased 10% from 12.8 to 13.8% today. more than 85% of the risk is attributable to public and private equity. the higher volatility requires dim get risk management and monitoring and managing of key concentrations and keen eye on liquidity. this is the second leg of the

risk review. today our presentation will cover the risk exposures with a particular focus on considering the sfers exposure and what happens. presentations put together by anna and brady. he joined us in february of this year after spending four years at uc investments working as operation investments working in private investments. prior to u this he worked as senior research at the emerging markets private equity association in u.s.a. c. masters in political development from the lemon school and ba the global studies from santa barbara. i will turn it over to you and

brady. >> thank you, curt. i am trying to share. i would like to remind our risk framework -- about our risk framework that we put together about three years ago with three main pillars. first as chris mentioned liquidity. some things we consider very carefully, very diligently because we are large investors in private markets. we are active investors. we will talk about that. part of that active investments is that we believe in liquidity premium and harvesting premium.

liquidity is first. second is some things that curt mentioned total strategic asset allocation we spent most of 2020 with nadc and allen martin to make sure that we understand the risks that we are taking. we understand how much risk we are comfortable to take for the total plan. we increased the risk that we feel we need to take considerably by 10% last year with larger allocations to equities, to growth. so we added to where we felt we can get more returns. we also added to leverage. with that i will introduce complexity, more risk. we had to build even further risk measurement and monitoring for the total plan. that is the third one.

you can see substantial comprehensive reports. we are not going through each page. even that is just a subset of what we do. just to introduce technologies we use and departments that we work with to get this type of report analysis, you met our total portfolio risk partner. we work closely with black stone and wilshire. that is just a sub set what we can do. we cannot show everything. [ inaudible ] it cannot be shared publicly. we do review on an ongoing basis. risk management is the core of

what we do day in and day out. what you see in front of you is the result of all investment teams. there is a touch point for every team member. obviously, brady is our risk analyst put all of it together. all investment team members contributed. many thanks to them and cambridge and abc for reviewing that and adding to the risk analysis. i am going to speak the first part on the performance and risk assessment. chris mentioned the risk tilt that we have and performance was covered last time. [please stand by]

>> -- knowing, again, that there is justification coming from the number managers that

they had. we increased our sales over the last several years to payoff. page 24, performance distribution, let's look right at the bottom right of the portfolio -- of the table that we're referring to. number 27.2 is the accumulative active return over seven years, so public equity portfolio outperformed the msci equities by 27%.

out of that 27%, 17% was due to active selection, and 10% came from stock selection, and some of this selection was driven by our managers, and some of it was driven by us where we put more weight into health care and technology. so we just -- from here, we see that the bulk of the performance came from stock selection, and we can conclude that [indiscernible] till paid off.

you could see that this tilt in public equity portfolios paid off over the longer term. on this health care, if you look at the row that says health care shorter than one year, it doesn't benefit, but the sector tilt benefited us. sector technology, longer term, the portfolio added more than 8% in accumulative outperformance in information technology and #.3% in health care. so overall, you could see that a large part of the outperformance came from the two sector tilt. and the last number four tilt that are intentional in the total portfolio is our

[indiscernible] tilt, and you can see here that throughout all time horizons, our health care and technology outperformed the cambridge and it outperformed our total equity, as well. coming back to the fourth tilt, the fourth tilt is our geographical tilt, and this is the tilt to china. this is 13.5% or $4.4 billion.

we're including our exposure to hong kong and taiwan, and this is a considerable tilt, and we're managing this very closely. as kirk mentioned, we're scheduling an i.c. presentation to cover the investment and market in china. intentional tilt, underwritten very carefully with what we believe are one of the best managers across public and private equity. you can see a lot of it is coming from public and private equity, and most of it, a big exposure, is coming from private equity and public equity.

27 gives us shorter time frame for china managers. they returned 22.88%, outperforming msci equities, which is our benchmark, as well as the s.m.t. china managers has delivered 14.4%, outperforming cambridge essential benchmark by a wide margin. so we monitor this tilt and this intentional risk very

closely, and the quality of our managers and selection is paying off. so with that, i'll stop and will pass it onto brady who has the trust on the scenario analysis, the key asset of our portfolio and how we continue. so brady, let me know how you want me to proceed. >> [indiscernible] if you want to jump to page 46. so they've -- and good afternoon, everyone. as ana discussed, we have

manageable risk in our portfolio, and one of the ways we assess that is doing a stress test and scenario [indiscernible] and then we'll also be looking at historical scenarios. so, for example, what would happen to our [indiscernible] portfolio as it exists today in the case of a [indiscernible] environment. we are running all of these out of the platform that ana mentioned earlier, but i'd like to mention it's just one subset of stress and scenario modelling that we do, and they

monitor press closely, so i think it should show where we have relativities and where we do not. so jumping into the single market factors, [indiscernible] we are most sensitive to equity drawdowns in the equity heavy portfolio. e.m. currency, we'll be talking about that, as well. another quick note is we have adjusted our privates from this platform to better align with our empirical track records of private through these solutions. ana, if we could jump to the next slide.

so looking here, in this case, we looked at if the [indiscernible] would rise up 40%. now, we looked at that number, and the rest of these number in the market factor stresses because they're between two and three standard deviations between what we like to expect normally. that's meaningful drawdown, and it's one that we'd normally see. it's not something [indiscernible] that is way out there, and it's quite likely to happen, and so we are not stretching too far. if we look at what's going on with publics here, that's sort of what you'd expect. private and real assets, about

40%, and then, about 26%. ana, could we jump to page 52? so here's the emerging market's currency index. it tracks the currency exposure of the constituents of the e.m. equity index. so the implication there that whatever is in the equity index, china now makes up 35% of the total index, and

emerging asia as a whole is a vast majority, so it's a really, really heavy part of the index. as ana just mentioned, our china exposure is a meaningful and important overweight in our portfolio. so the way that you can read or sensitivity is sensitivity to our china overweight. you can see that in our public equity book, which would be down 26% in the case of a 26% e.m. currency drawdown. the way to read this is one way to see our sensitivity to china. so i think from here, we can jump down to our historical

stress tests. yes. here, we look at what would happen to our current portfolio given recently correlations between s.f. classes and significant scenarios between light tech melt down and the g.r.c., the subprime crisis because we have a [indiscernible] and because egfc, we think this is a perfect storm. so here, we can see the portfolio. we see we have a lot of equity in our growth portfolio [indiscernible] public equity

is drawn down nearly 30%, as well, because it's a growth equity that's in that portfolio, and here, we see that we have a small bounce from public fixed income. we don't know exactly where correlations would be in a situation like this, but for what it's worth in this case, we had a little bit of benefit from diversefication. so again, i think this is probably what we would think of, just a worst case scenario, and we do have another [indiscernible] that runs another stress test but actually uses forward looking assumptions, and they're in a worse case scenario that actually lined up really

closely with this. in that, public equities would be down about 50%, public and private would be down about 33%, and our total portfolio would be down about 33%. the thing i'd like to emphasize here is it feels quite painful to look at that 33% drawdown, but this 'em -- empirically did happen, and it's about as bad as what we are thinking through. with timeline, i don't know if ana had anything to add or if there are any questions. >> this is what we've prepared? we're standing by if you have any questions. we know it's been a long

meeting. >> any questions of any commissioners? >> i have two sets of questions. let's start with this last chart. if there were another incident like the subprime, and there were another significant drawdown, in your estimate, the other large tool here is the liquidity -- i feel what you call the liquidity plan, where you've broken-down the assets and the highly so-called liquid and illiquid. if this scenario were to cure, what is our challenge in terms of liquidity? will we be okay? >> yeah. >> that's a good question, and we certainly look at the drawdown in conjection with liquidity, and we likened the

analysis, if you'll remember, with a haircut, a haircut knowing that there could be drawdown from the assets that we would like to use in the liquidity pool. so our liquidity analysis includes stress tests on the m.a.e. of the liquidity pool that we'll be drawing. i think this is also interesting. we're okay now. the one thing that we need to be careful of is -- for example, two or three years, and most of the pension

obligations will be coming from the fund if that happens at the time of this market stress is going to be quite challenging, as we also outlined in the liquidity presentation last month. >> the bottom line or answer to your question, commissioner driscoll, is yes. with the haircut [indiscernible] the scenarios we actually are actually [indiscernible] than what we presented here, but the answer is we're able to handle these scenarios presented today as presented in september will [indiscernible]. >> perhaps i is could have brought that liquidity report to show that with all the things that we're trying to achieve with the issue of

return [indiscernible] i want to reconcile those two numbers. >> very good question. [indiscernible] actually, the volatility that was actually realized by the fund. >> ana, you cut out for a moment. just to confirm, slide 16 is what's been realized, correct? >> right. >> all right. that's what's important. this issue is if our goal is

one of these returns is 7.8%. i'm going to kind of have to go over very quickly today the informal survey that was done of us last year about what our risk tolerance is as a board. if we want to achieve a great rate of return by drives contributions and our funding ratio, we have to decide where we're going to take the risk, given we must maintain liquidity at a certain level. it's going to push us into the more volatile public equity areas, which is then very successful for us, as well. i ask the questions this way to make sure we as a board understand the differences between risk and volatility and how the demand to maintain

volatility will be accomplished. what do we really -- do we have a common understanding of what we mean what we say risk. our staff is going out to execute and achieve with all the tools and tactical controls they have, we'll understand what they're doing, and at the same time, we can tell city hall hey, look, we're ready for some drastic times before we start selling off assets that we don't want to sell. so that's a long winded question before i try to figure out if there's a way to show the small improvement after so we can see how we're on track and managing the risk, not just the excellent results over the last 20 orthat's been

particularly on those charts on pages 28 and 29. thank you. >> the other thing that you'll see on the risk side, there's annual presentations by each asset class, and they present a lot of [indiscernible]. >> i'm going to take back to comment back to another subject based on some comments on china and our exposures there. i think the comment i made before about the i.c. maybe being moved from the 17, i

think the last couple presentations, china keeps coming up, and as an educated board, we have advisors that we bring in. so president casciato, as we've just been suggesting, let's work the other item around that and hold investment to the 17 but possibly find a date -- clerk -- you have somebody presenting, right? >> right. and look, we can be understanding and be flexible here. we have some speakers arranged for the 17. that said, our intent for the investment committee on the 17 is not for it to be super super

lengthy. their schedules are just limited, but we can find a time. >> we can do it, right? we can find it for the 17? >> yeah, i think we can if we commit our day to that. >> okay. >> our time that day. i would like to keep it on the 17. >> yeah, because that's the purpose of the i.c. is to give the board members what is topical and clinical and relevant to our success. >> let's see how many we can get commitment to. >> just plan on doing the china for the i.c. on the 17, okay?

>> sounds good. >> okay. sorry for that. >> no, that was excellent. we need to do that. >> but great presentation, brady. >> chairman casciato, before you leave this topic? >> yes? >> i did want to advise the challenge -- and i advise a lot of public funds. the challenge is to be able to achieve the actuarial rates that you have to amortize the liability. you have to understand the risks you want to take and the effect on the portfolio is. this is very much state of the art, because for most plans, integrating public and private assets, you have the staff that can get beyond the numbers and

break this down into the kind of levers you pull, so i did want to add, from my standpoint as an advisor, this type of analysis is as strong as any i've seen, and it's critical in this environment. you can't do what you want to do without taking risks, but the risks you want to take need to be really monitored rigorously as staff has done here. >> thank you, alan. appreciate it. any questions of alan? again, at this point, let's take public comment and we'll move the agenda as time is running short. >> clerk: thank you. a reminder to any callers to press star, three to be added to the queue. moderator, do we have any callers in the queue? >> operator: madam secretary, there are no callers on the line. >> clerk: thank you. hearing no callers, public comment is now closed.

president casciato? >> let's take item 11. >> clerk: item 11, discussion item, chief investment officer report. >> thank you, president casciato. i will be brief here. a lot of what i would otherwise state is written here. what we covered in july and august that the markets were at a bit of an inflection point, and we saw volatility in the market because of covid and the on going regulatory events in china to potential budget showdowns, and the potential advising inflation and interest rates. later on in the c.i.o. report,

i won't go through it here, one of the more notable events was the fed decision that they would begin tapering, which is the first step in reducing monetary stimulus. the effect will be dependent on inflation measures and unemployment measures, both of which the markets are beginning to focus on, so those will be two things that everyone participating in the markets will focus on. given that there was a downturn in the market, sfers was down an estimated 85 basis points for the month. for the quarter and for the fiscal year, we estimate sfers'

assets to be up about 4%, and what has been true for quite sometime [indiscernible] notably, that 3% for the quarter is ahead of a 60-30-10 portfolio and a 60-40 portfolio. counter year-to-date, sfers is up an estimated 18.1%, again, led by private equity, and again, comfortably ahead of a 60-30-10 portfolio and a 60-40 portfolio. sfers assets at the end of the quarter are estimated about 36.1 billion. so quickly, in terms of an update on board approved investments, at its meeting on

june 9, retirement board approved up to 50 million to [indiscernible]. the fund is classified at a venture capital investment within sfers venture portfolio. next up, sfers allocated 40 million to be invested in [indiscernible] closed on september 21, 2021. these investments will be classified also as venture capital within sfers' private equity portfolio. next at its meeting on february 10, 2021, the retirement board approved in closed session an investment up to $25 million in

cbs-1lp, the investment of 25 million in cbc-s-1. it's classified as a coinvestment, the first with cbc group. two more. at its september 8 meeting in 2021, the board approved total investment of 12 million classified as a venture capital investment within sfers private equity portfolio. and finally, at the meeting in -- on august 11, 2021, the retirement board approved in closed session an investment up to 50 million in hcp studio fund lp and up to 60 million in

studio fund sfers. 50 million to hcp closed on september 3, 2021, and it's sfers' first investment with hackman capital partners. two more items, one of which we've discussed, but i will turn my attention to personnel. i noticed in august we posted for a senior portfolio position and buyout equity. we began interviewing for those positions last week, and we'll have more next week, and we are pleased with the candidate pool. in addition, we are taking our first steps towards the career steps and additional resources, and we're excited to begun we're posting for manager

positions and these positions are new and effectively serve as second in charge within the respective assess classes, so we're extraordinarily grateful to all of the work that went into each of these positions by our director, jay huish. we're grateful for your efforts here, and we're grateful for the support that we've had from the board of supervisors and the mayor, as well. this is a big undertaking, and i know there's a sense of urgency among all of us to get this done, but we need to get it done the right way. it's going to be an effort among staff. there's going to be about ten of us doing all the interviewing, so in addition to our day jobs, we'll be doing a lot of interviewing over the next several months. since we're hiring a number of positions over the next several

months, there's a risk of cannibalisation, and finally, you've met some of our investment -- additional members of our investment staff. adding six new people to a group of 20 today is a real cultural challenge, so we'll make sure that these people have the technical skills, but it's important that they fit culturally, so bear with us as we go through this process as we're super, super excited. lastly, and we've acknowledged it already, we have scheduled our next investment committee meeting on november 17, during which we'll focus on the investment regulatory changes going on in china. we'll be joined by the

cofounding partner of asia alternatives and a global strategist for jpmorgan inside strategy team, so that brings both a public market and private market perspective. so i'll pause there and answer any questions the board may have. >> any questions? hearing none, public comment, please. >> clerk: thank you. callers, if you haven't already done so, please press star, three to enter the queue. operator, do we have any callers on the line? >> operator: madam secretary, there are no callers on the line. >> clerk: thank you.

>> we'll go to the deferred compensation calendar, and since we always put this at the end of the calendar, next month, let's give them a break and put them at the beginning of the calendar. item 12? >> clerk: item 12, discussion item, sfdcp committee report. >> thank you, madam secretary, mr. president. the committee report stands submitted unless there are any questions from the board members. >> any questions from the board? public comment, please. >> clerk: thank you. moderator, do we have any callers on the line in. >> operator: madam secretary, there are no callers on the line. >> clerk: thank you. hearing no calls, public comment is closed. president casciato? >> item 13, please. >> item 13, discussion item,

sfdcp monthly report. >> thank you very much. that will be a nice change next month. it'll be our quarterly report, so that will be a nice one. i will be brief in my comments. i'm aware of the hour. first is the stable value crediting rate, which has increased to 1.71%. this crediting rate is guaranteed for the entire q-4 and will reset for q-1 this year. they will value wholes just under 1 billion and is the most conservative fund in the lineup. as of august 31, the fund is just shy of 5 billion, and you can find the fund performance in the attachment activity report starting on slide 10 in

the item 13 materials. as a reminder, the plan is 100% contribution dollars that employees have made to complement their pension retirement. sfdcp funds are chosen to be liquid. shifting gears, october is national retirement security month. as you may recall, the plan usually conducted a seminar at the main library, and it tends to result in standing room only. since the pandemic, all seminars have been virtual, and we have seen an uptick in webinar attendance. to date, nearly half of the stainless steel travel mugs have been awarded, leaving around 50 more for early

entrants. you can see the criteria before you in slide 3 and the prizes on page 4. in fact, the whole presentation deck has been prepared so that the whole board has an avid glance board at the actual activities campaign. this is also our first prize raffle approach, so i anticipate some learning from this maiden voyage. we also announced our first woman planning and retirement seminar, which launches soon. an e-mail campaign to nearly 24,000 active participants in also underway, with the first one last week and the second one sent yesterday. open rates have been normal,

but conversion rates, when a reader clicks a link, has been strong, about 5.5%. you can view these on slide 7, and lastly, our five-minute videos can be found on sfdcp.org. finally, what i would like to highlight is our partnership with other city departments in helping us promote national finance security month. the month of october is, by design, as employees are in a benefit state of mind due to health services open enrollment. the plan has been blessed with steadfast supporters and partners such as safety, d.p.w., and h.s.h., but this year, we've also been fortunate to have the city administrator, p.u.c., department of human resources, to spread the word

through their own e-mail, newsletter, or webpages. i look forward to continuing interdepartmental support. that concludes my update for this month. i am happy to answer any questions regarding the plan. >> any questions of diane? hearing none, public comment, please? >> clerk: thank you. a reminder to callers to press star, three to be added to the queue. moderator, are there any callers on the line? >> operator: madam secretary, there are no callers on the line. >> clerk: thank you. hearing no callers, public comment is now closed. >> okay. thank you very much. diane, thank you very much. see you later in the afternoon. >> thank you. >> okay. administration calendar, item number 14. >> clerk: item number 14, discussion item, personnel committee report. >> okay.

since commissioner stansbury is not here, we'll just accept it as submitted. public comment, please. >> clerk: okay. public comment, please. moderator, are there any callers on the line? >> operator: madam secretary, there are no callers on the line. >> clerk: okay. public comment is closed. >> item 15. >> clerk: item 15, discussion item, 2021 review of economic assumptions negative sign yo tests. >> thank you very much. i do ask commissioners to ask questions at any time leading up to the november meeting, and bill, do you have the -- there we go. thank you. >> good afternoon, commissioners. given the hour, i'll move

through this very quickly. let me know if there are any questions. we had presented information back at the august meeting. the updates here first in terms of the projections [indiscernible] which added to about $1 billion in assets compared to these finer projections, so we're looking at slightly better results and slightly higher funded status endings projections. in our august meeting, we had recommended reduction in the discount rate and looked at three alternatives. the commissioners asked for some information about what would happen in some negative investment scenarios, and so that's the primary information in this presentation. we did review the information from the august meeting that led to that recommendation. we had also included in our

recommendation some changes to the amortization schedules in different situations, so we put together this -- these quick summaries in each of the situations. normally, we have the baseline news investment returns equal to the discount rate. since we are comparing four different discount rates, and we didn't want the investment return to cause variations, we just picked a round number, 7%, to use for all of the discount rate scenarios, and so

there's -- you're not going to read anything in particular here. we just wanted to make sure we had an apples to apples comparison. the members contribution rate after cost sharing and funder contribution rate after cost sharing. the member rate is a different scale than the employer rate, so they're not directly comparable, so looking at these, make sure you take that into account. we did put the before cost sharing line on here for the member rates, and you can see whether they're getting adjustments added to their sharing rate. [indiscernible] with the retiree health care trust fund

contributions, special contribution we talked about last time that only applies to the city. this is the negative scenario. i'm just going to jump through these and get to our conclusions, and then take questions. the lower the discount rate, the higher the contributions, and that causes assets to accumulate to larger amounts. in terms of funding ratio, in the baseline scenarios, all of them are above 100% at all discount rates, and the negative scenarios, they drop below 100.

none of the scenarios got above 11.2%, which is what it is right now. so with the good investment returns, we're going to see that go down, and even with these negative scenarios, it doesn't go back up. with that, i'll take questions [indiscernible]. >> thank you. any questions of bill? >> i have one question of bill. >> go ahead.

>> months ago, it was, when you made a recommendation of the discount rate the board should use, which we did not, has kyron changed the discount rate -- as our consulting actuary, have you decided in any way to change what the recommended discount rate was that you told us a couple months ago? >> no, we haven't made any change to our recommendation. we think that you should use your recommendation rate at least to 7.2.

>> fine. this incredible year that we just had. in fact, our funding ratio has jumped up so high, you had not changed what you recommended our discount rate? >> not from our august meeting. >> right. in terms of how you got to that 7.2 number several months ago. >> right. >> thank you. >> thank you. any questions of bill? bill, if i could just ask you if there's a possibility if maybe there could be -- maybe you could work on a one-pager sort of a one-page graph of the

discount rate of how it works as if it were being presented to the public in order our members can clearly understand how it's working and when it moves up and when it moves down? is that a possibility, maybe some type of schematic? >> yeah, we can work on something. >> maybe we can talk offline about it. >> yeah, we can talk offline about what it mean. >> and as jeanette talked about, we will bring this back as an action item for the november board meeting for the board to make a decision. kyron is only recommending a change in the return assumption. they are leaving the rest of the assumption where they're

at, so this was in preparation of being brought back next month, and then maybe result of that decision, we could probably something for the public to show the impact of the action that the board took, however, kyron is recommending that it be lowered to, at least what bill said, 7.2, and maybe we could work on something we could put on the board's website to explain the action on employees as well as employers. >> good. thank you. yeah, let's talk offline about that. maybe a nice picture would be helpful. appreciate it. any further questions of anybody? public comment, please. >> clerk: callers, if you have not already done so, please press star, three to be added to the queue. moderator, do you have any

callers on the line? >> operator: madam secretary, there are no callers on the line. >> clerk: thank you. hearing no calls, public comment is closed. president casciato? >> clerk: item 16, discussion item, executive director's report. >> commissioners, i'll keep this brief. we an update on our office reopening, and we anticipate bringing everybody back to the office at least on a part-time

basis on november 1, and we are making sure that we have enough safety supplies and cleaning supplies and protective equipment to make sure that everybody feels protected. we have very few folks in our department who have not yet reported that they've been vaccinated, but the city, as you understand, has been dealing with this on a larger basis with some of the larger departments. the final issue that i will bring up, and it's a discussion that i've had with a number of board members, what the city is focusing on now in their labor negotiations, and i believe there was a request from labor, is there be an inspection of all of the city facilities where you would have staff return to work to make sure that they have proper circulation or ventilation and those types of safety issues

that are being raised by staff returning to work. and i will say, since we leased this building, the department of real estate has done the assessment for our floors? we have raised concerns of even prepandemic, that there's certain times and certain areas in our department that seem to have a lack of air circulation? it's a closed building. we certainly can't open any windows, so i wanted to alert the board that this is a consideration that we will continue to have each month as we will determine when we return safely to live in-person board meetings with all the board members present, and so i will keep you updated as to where you're at with that. so i just wanted to notify the board that the city real estate's request is looking at

the air circulation in every area of the city where staff would be assigned to work. with that, i'll be happy to answer any questions. >> any questions of jay? jay, just one comment. i heard an interview this morning regarding jean frazier at citigroup, and she's wrestling with all of these same types of issues, and it's quite innovative, what she's planning, so it might be worth looking at her remake of citigroup in these post pandemic times. >> okay. thank you. >> yeah, it was interesting. if there's no questions -- joe, go ahead. >> one question. >> okay. >> yeah. jay, i know the building owners contract with the janitorial service to do all the daily cleaning.

i'm just wondering, do you think they're as thorough and complete and appropriate for all of our staff at sfers, but whether we want to go back over ourselves and wipe down with a very powerful disinfectant? >> we, as part of the safety provisions provided by the city over the pandemic, have the lysol wipes and materials that we can wipe down common areas, kitchen machines, and other areas, so the protocol for staff returning as it stands right now on november 1, is we would urge people to wipe those areas down before you use it so you don't count on someone wiping it down after they used it. the cleaning services, we have,

over a couple of incidents over the pandemic, have requested they come in and do a deep cleaning for certain areas where we believe there may have been someone come in who was either exposed or had some exposure to covid. and currently, the thinking is, they have these machines that will come in and sanitize areas similar to what they use in airports, but the science i don't believe supports that that is really the danger of contracting it from surfaces. that being said, we're still going to have, you know, the plexiglass protective barriers in the member services area, we'll have it here -- when i say here on the sixth floor, not really in the office, but on the sixth floor in the reception area, we'll have it around darlene's area in the

board room because eventually, we will have the public coming back to in-person board meetings, and we cannot, at least currently, require them to be vaccinated in order to attend a board meeting. [please stand by]

>> board evaluation survey. we are in arrears on it, correct? >> we haven't done one for two years. >> we need to get that done. if the committee is having trouble, go with two. >> right. supervisor safai is chair. commissioners ghandi and bridges are on the committee. we can proceed. we have some other governance agenda issues friend friending -- pending. getting this out to get the results back to the board should be the highest priority. >> okay. are you going to contact him? we can talk offline.

>> we will try to get a meeting going over the next couple weeks. >> thank you. >> we should have that survey back for the november board meeting. >> that may be tough. committee meeting going and distributed and responses back. the governance may be pushed to november. certainly before the holidays, yes. >> thank you very much. public comment, please. >> reminder, callers, press star 3 to be added to the queue. >> there are no callers on the line. >> public comment is now closed. >> thank you very much. item 17. >> item 17 discussion item. retirement board members good of the order. >> any good of the order issues?

commissioner bridges, anything? >> nothing for the good of the order. thank you very much. >> okay. >> commissioner ghandi. >> nothing for me as well. >> commissioner driscoll. >> thanks for asking, i made my earlier comments. >> commissioners i don't have anything and i will entertain a motion to adjourn. >> public comment, please. >> callers if you have not done so press star 3 to be added to the queue. do we have any callers? >> there are no caller on the line. >> public comment is closed. >> thank you very much. this meeting will be adjourned. thank you.

>> thank you, mr. president. >> good night everyone.

as latinos we are unified in some ways and incredibly diverse in others and this exhibit really is an exploration of

nuance in how we present those ideas. ♪♪ our debts are not for sale. >> a piece about sanctuary and how his whole family served in the army and it's a long family tradition and these people that look at us as foreigners, we have been here and we are part of america, you know, and we had to reinforce that. i have been cure rating here for about 18 year. we started with a table top, candle, flowers, and a picture and people reacted to that like

it was the monna lisa. >> the most important tradition as it relates to the show is idea of making offering. in traditional mexican alters, you see food, candy, drinks, cigarettes, the things that the person that the offerings where being made to can take with them into the next word, the next life. >> keeps us connects to the people who have passed and because family is so important to us, that community dynamic makes it stick and makes it visible and it humanizes it and makes it present again. ♪♪ >> when i first started doing it back in '71, i wanted to do something with ritual, ceremony and history and you know i talked to my partner ross about

the research and we opened and it hit a cord and people loved it. >> i think the line between engaging everyone with our culture and appropriating it. i think it goes back to asking people to bring their visions of what it means to honor the dead, and so for us it's not asking us to make mexican altars if they are not mexican, it's really to share and expand our vision of what it means to honor the dead. >> people are very respectful. i can show you this year alone of people who call tol ask is it okay if we come, we are hawaii or asian or we are this. what should we wear? what do you recommend that we

do? >> they say oh, you know, we want a four day of the dead and it's all hybrid in this country. what has happened are paper cuts, it's so hybrid. it has spread to mexico from the bay area. we have influence on a lot of people, and i'm proud of it. >> a lot of times they don't represent we represent a lot of cultures with a lot of different perspectives and beliefs. >> i can see the city changes and it's scary. >> when we first started a lot of people freaked out thinking we were a cult and things like that, but we went out of our way to also make it educational through outreach and that is why we started doing the prosession

in 1979. >> as someone who grew up attending the yearly processions and who has seen them change incrementally every year into kind of what they are now, i feel in many ways that the cat is out of the bag and there is no putting the genie back into the bottle in how the wider public accesses the day of the dead. >> i have been through three different generations of children who were brought to the procession when they were very young that are now bringing their children or grandchildren. >> in the '80s, the processions were just kind of electric. families with their homemade visuals walking down the street in san francisco. service so much more intimate and personal and so much more

rooted in kind of a family practice of a very strong cultural practice. it kind of is what it is now and it has gone off in many different directions but i will always love the early days in the '80s where it was so intimate and sofa millial. >> our goal is to rescue a part of the culture that was a part that we could invite others to join in there there by where we invite the person to come help us rescue it also. that's what makes it unique. >> you have to know how to approach this changing situation, it's exhausting and i have seen how it has affected everybody. >> what's happening in mission

and the relationship with the police, well it's relevant and it's relevant that people think about it that day of the dead is not just sugar skulls and paper flowers and candles, but it's become a nondenominational tradition that people celebrate. >> our culture is about color and family and if that is not present in your life, there is just no meaning to it you know? >> we have artists as black and brown people that are in direct danger of the direct policies of the trump administration and i think how each of the artists has responded so that call is interesting. the common