>> roll call at this time, please. >> would you like me to read the notice? >> due to covid-19 health emergency and given the public health recommendations issued. >> you are frozen. >> am i still frozen. >> she wasn't frozen. >> due to covid-19 health emergency, given the public health recommendations issued by the san francisco department of

public health, governor newsom and mayor breed lifted restrictions on teleconference. meetings held virtually with members and staff participating via teleconference to ensure the safety of the board, staff, members of the public. this allows us to hold the meetingstelli conference i may not be as seamless as we would like. mute yourselves when not providing comments to minimize background noise. roll call. commissioner bridges. >> present. >> commissioner driscoll. >> present. >> commissioner gandhi. >> not arrived. commissioner hell fond. >> present. >> commissioner safai. >> not arrived.

commissioner stansberry. not arrived. president. >> present. >> we have a quorum. >> than you very much. can you call the next item, please. >> item 2. communication. due to covid-19 health emergency and to protect board members city employees and public. the san francisco system is closed. members participate remotely. this is taken pursuant to local, state and federal orders, declarations and directives. board members apartment tend through video and participate to the same extent as if physically present. public comment will be available on each item on the agenda. each speak were is allowed two minutes to speak.

comments or opportunities to speak during public comment period are available via phone by calling 415-655-0001 access code (146)467-8853. pound, pound. when connected you will hear the discussions but be muted in listening mode only. when your item of interest comes up press star 3 to be added to the speaker line. call from quiet location, speak clearly and slowly and turn down your tv or radio. >> thank you very much. public comment. >> callers, if you have not done so press star 3 to be added the queue. those on hold please continue to wait until the system indicates you are unmuted. do we have callers on the line?

>> there are no callers on the line. >> thank you. public comment is closed. >> thank you very much. next item, number 3. >> action item. review and approval of december 2021 board resolution to continue to meet remotely for at least 30-days pursuant to government code section 54953e. >> commissioners. staff has prepared december 2021 resolution for review and approval. continuing to allow the board to meet through the end of december for 30-days from today. we would urge you to approve this resolution so we can conduct the meeting. >> thank you very much.

who moved? is that commissioner driscoll? >> yes. >> seconded by bridges. public comment please. >> callers press star 2 to be added the queue. any callers? >> madam secretary no callers on the line. >> thank you. public comment is closed. >> roll call vote, please. >> commissioner bridges. >> aye. >> commissioner driscoll. >> aye. >> commissioner gandhi. >> not arrived. commissioner held on. >> aye. >> commissioner safai. not arrived. commissioner stansbury.

not arrived. president cause see audo. >> aye. >> we have four ayes. motion passes. >> thank you very much. >> item 4 we will just pass on that today. we can go directly to -- wait a minute. 4a. then 4b. item 4b. >> closed session and you need to take public comment on 4b? >> b, right. thank you very much. darlene do the public comment. >> callers. >> before you go further. i am getting a lot of alert

notices on the bandwidths. i am seeing a lot of alerts coming on the screen. we might have that. see if our tech people can check to see what is going on. >> in the last few days it is general problem. it affected it. >> exact same thing. last two days. we had it at work as well. >> i turned off everything else in the house to make sure that we had a strong signal. >> we will be taking public comment before 4b. callers if you have not done so press star 3 to be added the

queue. are there any callers on the line? >> madam secretary no callers on the line. >> no calls public comment is closed. we will move to 4b. >> thank you. >> you may nowresume the open session. >> take a rollcall please . >> . [rollcall]

>> we do have a quorum. >> yes, present. >> you have aquorum . >> president: thank you. can you hear me? >> clerk: yes wecan hear you . >> president: thank you very much. at this time item be is being continued to the end of the calendar so we will now proceed to item 5. [inaudible] >> clerk: item number five, general public comment. >>president: yes, go ahead .

can you call for public comments please? >> clerk: we received a email from ron stinson and i'd like to read it. i would like to wish all your board members and staff a merry christmas and a very happy new year. with best regards from tom stinson, a 46 year member of stands . if you have not already done so class star three to be added to the queue. for those on hold wait until the system indicates you have been onmuted . moderator do we have any colors on the line?>> there are no colors on the line. >> hearing nocalls public comment is closed . commissioner tran five. >> president: okay. thank you very much. let us proceed with item number six. >> commissioner:

>> clerk: item 6, discussion item. >> no you cannot. can you hear me okay? >> clerk: we can hear you. >> thank you president tran five. good afternoon commission membersa few updates for you today related to the conversation plan. first the irs has announced contribution limits for 2022 . so if you are under 50 years old you are eligible to continue up to 25,000 to the claim. if you are over 50 you can contribute 27,000 and if you are eligible for special catch up this is a special provision for government plans like ours. you can contribute up to $41,000 a year if you are three

years away from retiring with pension benefits. special catch up is allowed on a case-by-case basis as eligibility depends on provision, pensions and any contribution shortfalls in your prior years but we have seen a huge spike in national catch up since the pandemic or the endemic aswe are supposed to call it now has triggered many employees to considering retirement . since 2019 the plan has offered to churchready model portfolios . these are index based targeted portfolios with a risk profile professionally managed and rebalanced at no additional cost . at the end of the year the 20/20 model portfolio will be renamed to the digital ready retirement model portfolio and berebalanced to maintain a static allocation going forward . all other future entities will collapse into this retirement

model portfolio when their target date is reached. so when the future ready 2025 portfolio, it will collapse into the retirement model portfolio. so for the existing future ready 2020 investors, they have been informed by a direct mail and it will also be featured in the plan newsletter which drops later this month. we will be featuring one of our barbecue winners from the october raffle so make sure you check your email or download the newsletter from sfgov.org. as you know the sfpb office has been open from eight until 5 pm at the 1145 market street office. today we have seen a rather steady flow of in person meetings so we will continue to meet in the desired method of

communication. sfpb staff has been coming in at least two days a week and on wednesday we've been fortunate enough again to be blessed with a youth work intern. his name is marcel and he is a student at john o'connell i school. the program began in the 90s and is designed to give public high school students exposure to public sector work. he holds a special place in my heart because i was a youth work internin the 90s . iworked for the unicom hospital and juvenile hall so we welcome him . and as a reminder our committee meeting will meet next week. the items have been moved on the court calendar and agenda will be sent out shortly to the committee and finally also attached to my report is the monthly activity report which theboard is to know your with . it's a consolidated version in comparison to last month and the plan is a little over $5

billion with a b as of today so that is my update for today. i'm happy toanswer any questions the board may have . >> president: thank you very much. any questions from the board members? >> thank you for the update. i didn't know we weregiven the youth board program . is this your department or maybe it's for existing director coolidge or is it the entire third group? >> i think it's open to several city and county departments, city and county departments. i know that we have been participating in it for the lastcouple of years . it is been helpful for us. it isintern work so it's

basically very light work answering the phone , scanning, faxing and things like that but to my understanding as far as the retirement system ithink our little division has been participating in youth work . department of public health, like a lot of other areas even though puc i think also benefit from the use works program and i was part of the inaugural class in the 90s when it was mayor willie brown who launched it . i don't know if that inspired me in to look service but that's a little personal history for you. >> to answer your question we've had in our budget money to participate in themayor's youth program the last 20 years . we've had high school students who have worked in the operations side over the years and with the pandemic the nature of this work needs them to be supervised and mostly in

office but i will agree that the deferred comp program has been the most active over the last three or four years as far as getting an intern but we have the money to bring on the high school students that we have and over the years . and not just in the deferred compprogram but also across the organization . >> that's great, i think it was agreat program . i came in as a student and i think it's a great program to give students exposure to public service so i'd encourage that we create a part of our group. it's a great program and alot of students benefit from it . i like to salute the, for takingadvantage and thank you. i think we should encourage others to do the same .

>> i agree, thank you . >> thank you so much. >> thank you very much. any other questions? diane? >> that concludes my update. >> that concludes your update. thank youvery much and please wish everybody and staff happy holidays andthank you for all the good work . we will see you in the new year . >> thank you very much, you too . >> president: darlene, would you call the next item. >> clerk: public comment. >> colors if you have not already done so press star 3 to be added to the queue. those on hold wait untilthe system indicates you have been unmuted . moderator, any colors on the line>> madam secretary there

are no colors on the line . >> clerk: hearing no calls publiccomment is closed. next item, item number seven action item , approval of the minutes for november 10th 2021 retirement board meeting. >> i will entertaina motion . >> i move that we adopt the meeting minutes. >> moved by liana bridges and seconded bycommissioner driscoll . public comments please. >> clerk: press star 3 to be addedto the queue . are there any colors onthe line ? >> madam secretary, there are no colors on the line. >> clerk: during no calls publiccomment is closed >> president:thank you . roll call vote . [roll call vote]

>> clerk: we have 4 aye's. motion passes. president casciato. >> president: item 8 speech. >> clerk:action item, consent calendar . >> president: does anybody wish to take any item from the consentcalendar" on it separately ? i will take a motion to adopt theconsent calendar >> so moved . >> i am seconded .

>> president: movedand seconded . public commentsplease . >> clerk: a reminder to any colors to press star three. are there any colors ? >> madam secretary, there are no colors on the line. >> clerk: public comment is now closed. presidentcasciato . >> president: rollcall vote please. [roll call vote] we have 4 aye's,motion passes . >> president: can you call commissioner gandhi ?

aye, thank you. 5 to 0, motion passes. president casciato. >> president: at this time we will callthe investment item 9 . >> clerk: item 9, action item. update on strategy to address climaterisk in the portfolio of the gas sector. this item was continued from the november 10 2021 retirement board meeting . >> three years ago the board approved a plan of transition work framework to guide shareholder engagement or risk investment restrictions in oil and gas companies. this has been widely acclaimed for its data driven approach to investment restrictions in a way that is consistent with fiduciary standards and as you know 18 months ago the board

adopted the ambition to be anet zero carbon household by 2050 in line with the objectives of the 2015 paris agreement . staff will provide a summary of progress made towards measurement and management of climate risk within the public well and gas sector. i'll turn it over to andy now. >> thank youkirk and good afternoon commissioners . this is part and we are presenting ourrisk framework which we introduced in 2018 . so while our broader climate action plan wouldbe updated to the board on last month , to address climate risk across sectors and asset classes in charge of a pathway to net zero, we do face attention to certain high risk high-impact sectors including the upstream oil and gas sector so we will present here some updates to the framework that targets analysis of that sector. and then present the outcomes

on the company that we recommend for investment restrictions aswell as those we recommend for engagement . as bass was introduced in october 2018, as part of six strategies the board approved earlier that yearto address planet risk . the framework that we used pulls together climate risk data as well as poor financial ratios and the order is to provide a forward-looking holistic view of risks faced by fossil fuel companies. we used data from a variety of sources but we really tried to use specialist research forms and organizations, things like carbon tracker initiative, influence maps and sci and the transition pathway initiative and as far as the middle tier

we've seen strong updates from other investors around the country and around the world that are also usingthese data factors to see to understand climate risk in the center over the past few years . this validates the appropriateness of our approach inusing this data for our analysis . our goal really is to analyze publicly traded oil and gas companies and try to differentiate between those companies that have relatively higher funding transition risk from an investment perspective versus those that are better positioned as the world transitions to an economy based on clean energy which would be low at 00carbon emission . we run this framework result here gave a watch list of companies that we acquired with shareholder engagement and also

to identify specific areas of engagement with those companies. and it also identifies a set of companies that may have more unmitigated climate risk that the board may wish to restrict investments in other words divestfrom . we visit this framework each year. this is the fourth year we run this analysis. we tried to update the framework with any new data, new types of analysis framework and tools that people in the interim . so i'll walk through the five core areas of the framework with some updates that we've made over the past year.the first area in the framework we look at his fossil fuel reserves mix of companies. this category is working to

assess the project pipeline of oil and gas companies to understand which projects in their pipeline as they go forward would be at risk for drawdown or this asset stranding. in this scenario in which the world israpidly the harmonizing and there's a drastic change in oil and gas demand and price . so the high-level this category is trying to classify companies that have a significant amount of future plans that could be deemed financially risky given the way that the climate transition and regulatory frameworks are moving. that's one area, the second area critical operational emissions and efficiency to see how efficiencies efficient these companies are using

energy and their direct operations. which is a meaningful contributor to overall gas emissions . in relation to the most manageable emissions program of these companies.so this is the energy it takes to extract, refine oil and gas as well as emissions of methane and greenhouse gas. it may leak from oil and gas wellsand pipelines . the goal is to try to differentiate between those companies that are more efficient and improving in their intensity and understand which ones are better positioned shouldthere be increased carbon pricing , operational costs associated with their own assumptions. thethird area is climate policy . this category focuses on how companies approach climate policy and regulation and our view here is that some things that are negatively influencing

or trying to assert influence around climate regulation may be less prepared to transition their business model or react to a policy environment that's increasingly focused on planet legislation. on the other hand we feel like companies that are more positively engaged in policy debate are those that are having a seat at the table and can better design their business strategy to reflect a world where carbon and other greenhouse gases are going to beregulated . this year we did update some measurements inthese categories . to really like not just at companies direct lobbying themselves but also having a participating in our rely on trade associations to conduct pro-or anti-climate assets. the fourth category and a new

one we added is here and it's really the to reflect the fact that over the past few years we've seen companies increasingly developing climate targets and beginning to make progress against these targets. so we call this category transition targets and outcomes. and we're really trying to focus on identifying companies that are setting ambitious climate targets around their own emissions and the product emissions so the downstream combustion of fossil fuels. versus those that are not setting goals in this area. i think are increasingly seeing companies setting and progressing against these targets. forcing those companies and varying very much forward-looking in terms of a world that is moving towards a

net zero economy in the future. and in the fifth category remains largely the same as it has in the past 4 years. this is called financial capital discipline. this tries to understand which companies have a stable capital base. our our solvent or profitable. we feel like these companies are better best can weather the climate transition in terms of price volatilityand changes in demand . they're going to be the ones able to fund projects on health transition their business model in a way to remain viable going forward inthe future . so taken together these categories i'm going into a framework they're meant to differentiate between companies with more risk and climate transition scenarios. versus those with less risk and those less risky companies

through the lens of this framework can sort of be bypassed those companies that have low-cost oil andgas reserves , focused on aggressively reducing their ow carbon emissions , are engaging constructively in climate policy and have set their own net zero targets had a strong financial position. on the otherhand , companies that are higher risk would be those that are more costly reserves in their pipeline. are not focused on commissions production . maybe blocking or hindering climate policy and are not setting targets to reach their own emissions. those higher risk companies are the ones that we do prior engagement on to understand their practices in more detail. and where we tend to consider recommending investments for

investment in restriction to you.so we then in this framework again publicly traded oil and gas companies that we reinvest in. we ran it here and the outcome is where recommending one additional company being added to our list that currently has 11 companies restrictive on it. those companies are continental resources and as of june 30 we had about $120,000 of direct or digestible exposure to these companies. where also recommending the removal of three companiesfrom the restricted list . really because they were merged with other companies here. and that with an other relevan .

we then have the two companies that we've identified as the watchlist. due to their relegated climate transition risk and we intend to engage these companies as part of our climate action priorities focusing in on the seven companies that we identify and the memo as where it's more meaningful equity exposure is the best way to prioritize status resources engagement. the engagement will continue to be through the same variety of means we have now which is letterwriting , dialogue with management and board and voting on shareholder proposals. annual elections directors of those entities. we view this engagement as essential to continue to focus on reducing real economy carbon

emissions reduced by companies so because we cannot diversify a way from climate risk, we feel it'sessential to continue to keep a seat at the table . to incentivize these companies to reduce their risk transition to viable his miss models and a net zero or low carboneconomy . we think this will reduce the risk by those companies and the ones we're engaging with if we are successful in that, we should also reduce real-world carbon emissions. which in turn should reduce overall market rates. that's being caused by climate change so engagement continues to be a really really important tool for us to use to manage climate risk. we continue to be active as we discussed last month in the overall esd update. in the climate action initiative by shareholder

initiative over 600 investors globally. engaging high performing companies and we produce the investor network through engagement companies. and over the past several years, we've been very successful in securing commitments on a variety of topics from companies we've engaged with and set net zero targets allocated capital to low and zero carbon business units. they wish to eliminate methane from their operations . they amended and updated their approach to climate lobbying. they've begun to link executive compensation through their own climate proponents.so we are seeing tangible results from these engagement activities. so i will pause here for any questions but we will just note

that the memo also includes a brief overview of oil and gas market developments the past year. as well as a bit of a discussion of pure science for investment in the sector which may be of interest to the board. >> any commissioners have any questions weston mark at this time? okay. >> i would like to thank andrew for providing our information. this is great because given where we are right now with all of the interest in climate change and what's going on i think the first position right now is great and it's largely

working with andrewand his team putting into the program so i just wanted to say thank you . >>. [please stand by]

>> i'm getting some interference. >> we've added a resource. adrian who i think you may have been introduced to previously. so, yeah, i think we're well resourced. >> there was a little bit of interference. joe, go ahead. >> question. andrew, did you develop table number three or are you buying the data? >> we've developed the data and

some of which subscribed to and license from data vendors. >> commissioner: i think it's excellent work trying to get a better picture. commissioner casciato, are we ready to make a motion on staff's recommendation? maybe it's broader than the way it's simply written at the end of this item? >> president: yes, i was going to ask staff if they were comfortable with that wording or if they wanted to add to it. >> so staff is recommending that in order to continue to

fulfill the board's request for prudently safe investment which was what was directed in 2018 originally that we divest positions in one company which is continental resources and then restrict, continue to restrict investment and aid additional companies that we currently have investment restrictions and that total that the company is which is on

page 13. >> do we want to do a continuation of the watch list. >> plus on page 13, the underline where it's regarding engagement recommendations. it signifies to me new words. therefore, it needs to be an additional motion to give clear direction to andrew or not. >> i think that the intent there is that that is the motion is the establishment of a wash list and the addition of the one company to the existing. >> right. that's the way i interpret it as a twofold. >> what about the engagement recommendations then? >> the engagement is -- will be focused on the 32 companies.

>> correct me if i'm wrong. >> andrew, maybe let's do this. look at the motion that you have there on your memo and it says staff recommendation is move that in order to fulfill the board's request for credentials prudently faced investment, die vest positions in one company, restrict further investment in that company as well as eight additional companies identified in table four of the staff's memo random. maybe we can give that more

clarity. >> this is maybe a question for jay if there needs to be a separate motion to direct staff and engagement as well. >> my understanding is the engagement plans we're adding restrictions to one company that we actually have holdings in, so we need the board's approval for us to direct our manager to divest the company and then we're adding eight additional votes to the watch list. these are annual reports, but i think that's really, those two are the main things we need the board to approve on because to

commissioner discoll's question, are the ongoing engagement plans, you know, we will continue to develop those and continue to engage action on the board today. so i propose that the motion be that we approve staff's recommendation to restrict, divest from one additional company and that we add so they're adding, divesting from one company, continental

resources for recommending to maintain those. >> and the nine companies that will be restricted. the engagement element of it which i accept is really an ongoing and expected effort from staff. i don't think we need direction there. it should be with the nine companies. >> well that's, i can make the motion dealing with table four. the confusion is perhaps why this engagement recommendation

was underlineded. don't underline if it's ongoing unless you're trying to change the watch listish issue. that's trying to avoid confusion. are any of those nine names listed in any of the index funds that we might be investing in completely or partially? >> our passive exposure is primarily separate accounts to which these restrictions apply. we do have some path so we would have some indirect exposure. from where we have separate accounts, things are restrictive and that is the vast majority of our passive equities. >> president: just in case some of our members or people who are paying attention to how we invest, in case they ask why we're doing it, some people may or may not understand from in-depth response sometimes we're able to restrict and limit and sometimes we're not.

that's a clarification for people who think we're not pursuing divestment the way they believe it should be done. i'll try to make one final clarification about this engagement section. the words that are listed here and underlined, do they need to be adopted or addressed to make clear direction for andrew? >> no. >> can i make a question? >> do we currently have our as it relates to oil and gas, do we currently have companies that are restricted in an

investment. >> the policy shows everything we've done to date and it will show the additional changes and i think it will be less confusing for the board and items like this will just go faster. >> understood and noted. >> president: i would agree with that very strongly. okay. >> president: so if the motion's not been made, staff's recommendation regarding the use of table four, the divestment and the restriction on the other eight. >> president: thank you very much, is there a second?

>> commissioner: i will second. >> president: okay. thank you. it's been seconded by commissioner stansbury and call for public comment. >> secretary: thank you. a reminder to public callers. for those on hold. >> there are no public callerses on the line. >> president: roll call vote, please. [roll call] . >> secretary: thank you. we have five ayes.

the motion passes. >> president: okay. next item, please. >> clerk: item number ten, a discussion item report on the investment performance of the retirement fund for the quarter ended september 30th, 2021. >> okay. thank you. bear with me. >> thank you, kirt. can everyone hear me? >> yes. we can hear you. >> it's nice that we're doing this in december because the results here are incredible. we've continued the progress made in june and added to it. so you have before you the 9:30 investment performance report which includes the performance report for the first quarter of the 2022 fiscal year. you'll also know that since this report was produced, the

equity markets had been considerably more volatile. the s&p 500 was up 7% in october. down about 70 basis points in november and it was down through last friday, but has rallied, so we're positive in december now. the international parking lots have been more volatile and as you know, china, an area where you know we have a large exposure has been challenged in this quarter although we expect that to be reversed. you'll see from kirt's report later that through the end of november, the plan is up another 1.5%. so we should be roughly up 5% at this point on the new fiscal year. page two, if you go back one, kirt, highlights the economic backdrop which reflects this ongoing push pull between positive economic growth in

g.d.p. and reported earnings, but increasing concerns around inflation and the potential that generates for rising interest rates which have the potential to seriously impact equity valuations. gdp growth here was 2% in the quarter. and reported profits continued to exceed strong expectations in terms of equity impact. we don't know right now the impact of the covid omicron variant and so that's not fully reflected at this point, but it does add a cloud to this ongoing expansion. unemployment has continued to be low. we add here the a lot of people are no longer looking for jobs which is not good for economic

growth going forward. the big debate that you continue to hear centers around inflation which is clearly high. we had another 5% month higher than we've seen in 20 years. whether that is likely to continue or whether this is a there's a lot of debate around that and it's crucial to understand that because in a low to declining interest rate environment, that's what's fuelled the growth inequities and if there were to be diverse will not be value as it has been. if you turn to page three now, you'll see the market environment looking back for the quarter. it's a mixed picture with modest declines which is about

35% china. given the slight drop in rates for the quarter, you see a small plus in returns with fixed income and if you look down the page, the area where you were significantly overweighted incredibly strong positive returns continue in private equities. these are numbers that tonya would tell you we haven't seen in a long time. the numbers of companies coming out of private going public, it's extraordinary multiples. tesla, the company that has never generated a profit if you don't count the money they get from pollution credit is now worth $5 trillion slightly amazing. for the year, everything is up, big time except public fixed income which is note worthy. of we have for the year have a slight increase in interest rates, public fixed income has not done well. mercifully by policy three years ago, you reduce your exposure to public fixed income

which continues to do well. u.s. equities up 31%. high yield and leverage loans here which were a proxy up 10% versus the -90 basis points in fixed income. that's our concern going forward. we are in a low rate environment if rates go up, we're going to have less support to an ongoing expansion in equity multiple's. if you go to page 12, we'll now talk about san francisco results in particular. the top line on this page is san francisco's total fund return meta fees and time waited for followed by your return ranking in an 80-member

peer group and the only thing to say to this i will tell you those ones are not just in the top 1%. and i'm a data geek and so i constantly see if i can find someone that maybe is big and not in this universe that's better than you and i found two or three. so this is an extraordinary result. in going through it, one, i would note that all of your annualized returns are significantly greater than your assumed rate of 7.2% and this goes back 20 years now. i've checked that that number when i've told you you are number one in dollar terms.

that is worth $5 million. the fact that you have developed a policy that is what it is and that your staff is implemented in manager selection and timing had you simply sent the money in an index. thirdly, if you compare policy if all your allocations were maintained at the target despite markets moving around and all manager results matched their respective benchmarks. as a result, the difference in your return and the policy return is what's been added through portfolio positions

and/or manager performance and you can see in all cases going back to 20 years, it's a positive number. for five years, it's the 13.27% you actually earn that is 2.8% per year and that's the highest number i've seen and as a predictable result of that the volatility of your return, that now ranks in the lowest 7% of your peers. extreme moves in the market has

left on the portfolio because you've taken steps over the last four years. that 7% is down from 13% over seven years. so, are again, it's been progress that's been made in the last three or four years. that is the return minus the risk-free rate divided by the standard and that top 2% is number two. that's the only thing that can get better if you ask david to comment, he'd tell you that's

extraordinary. that 29.67 return added $8.55 billion to your total fund bringing your assets at the end of this period $36.71 billion. that's an all time high. that's the numbers you see on the next page. i wish i can find something negative to tell you in this but it is followed by the long term board approved policy targets and rangeses. you'll note all of the allocations are within the policy range. the total fixed income is slightly below target with private credit being a you have

to go find the managers commit, and build that which you've been doing overtime. you did more of that with kennedy lewis today and that will go away as you implement. as you also know, private equity is over and those two positions. you'll also note for the first time you'll see here we're reflecting the use of leverage. so if you were to add up all the current allocations below that cash number, you'd come up with 101.3 and so we're reflecting the fact that some of the cash used to collateralize futures is now buying additional units.

it's small. so all our allocations planned slightly under and over with categories and well controlled. the next page shows the asset allocation through history and if you look at public equity that has come down overtime, but it's also incressed, but mostly it's been a shift you can see the addition of private debt and absolute return which is now being drawn down so thgs now a picture of a portfolio.

the next page is just an overall reflection of the plan. the plan pays out roughly as you see under one year, $500 million in benefits over contributions and you can see in the one-year period, your investment gain was $8.5 billion. that pay-out is not at all usual for mature plans and $500 million is less than 1.5% for most public plans, that number is 2% to 3%. so the liquidity concerns is relatively small. the next few pageses are risk return charts.

but to orient yourself to these charts, the charts are returns on the vertical axis. so you'd like to be towards the top and the volatility of those returns is measured by standard deviation. everyone one of those dots is greater than a billion dollars in value. and you are that black square. so you can see there's nobody on this page higher than you in return and the distance from that vertical line is less volatile. the other point here is that policy index which is the black triangle, the black diamond, you can see that your actual is higher in return and less volatile than your policy index. so that means through manager selection and portfolio

positioning, you've added value in both reducing the volatility of the portfolio and at the same time increasing the return. if you turn the page one more page, you'll see that same chart for five years and, again, a similar chart, again, you are the highest plan on this page and you are to the left in volatility. you can see that on floating bar charts if we turn to page 20. this is nothing more than looking at those statistics on a floating bar chart versus your peers. so to repeat over 5 years, that 13.27 return is number one in this universe. the floating bar chart runs from the top 5% to the lower 95% and you're over the top at that because you're so far up on that return statistic. if you look at the third

column, annualized standard deviation. you can see again your 6.5% standard deviation would put you seven in terms of only 7% had less volatility risk than you do. and you put that together with your sharp ratio to the right. your sharp ratio of 1.86 is number two in this overall universe. so, again, statistic by statistic, very strong returns. if we go to page 23, all of these results are heavily influenced by how well we've done in recent periods. on page 23, you see the results for the individual fiscal year that make up the five years and while most of these are significantly good years, what is interesting about your performance is you look at

fiscal year 2020 which was a less attractive year. we still -- can you still hear me? >> yeah. i can hear you. >> i lost my screen. there it is. gotcha. you can see even in 2020 which was not an attractive year, you still did well and in every other year which tends to be more attractive, you've done well. usually when you do well in good times, you do poorly in times almost regardless of the environment and that produces the five-year results you see to the right where your five-year result is off the chart in terms of literally off the chart in terms of your ranking. so that's sort of the ranking. it's good news. we're going to turn now and talk about where those returns came from. so if you go to page 24, kirt,

here, you have the blue line is your five-year rolling out performance versus your policy. and that is super imposed on the quarter by quarter results of policy for your outperforming policy. and so clearly starting about the second quarter or the fourth quarter of 2017, you can see that blue line moving upward relatively over time and you can also see the preponderance of those bars is negative. and q2 of last year. and as you'll recall that was an extraordinary circumstance where public markets did well and recovered, but your private market assets were still being valueded at a march value and so you had that blip really caused by the fact that your private market asset values hadn't caught up and now you

see going forward since then, the extraordinary recovery. so what we're going to do now is look at that 5 year performance versus policy in terms of where it came from if you turn to being overweight asset classes that did well and poorly and you can see that effect is positive. a lot of that is randomness and you never want that to be too high because that would indicate excess on market timing. so here's positive and it's small. the manager selection effect is what's left.

that's 2.78% and what's extraordinarily encouraging about this result is it's not just one asset class. private equity in this period did extraordinarily well, but real assets outperform fixed income and private credit outperformed. every single l major asset class that you oversee did well versus benchmark with the exception of absolute return. absolute return underperformed benchmark by about 25 basis points. you'll recall the benchmark for absolute return is t-builds plus five. that is an aggressive spread. most plans that i work with that have absolute return, that number is t-bills plus three. so you have an aggressive benchmark. you've underperformed it and outperformed in every other asset class. any questions on sources of performance at this level?

because we're now going to look a little bit more into detail on asset returns. if you have no questions, we can go to total fund risk statistics on page 37 or 38. a busy page, but you see the percentage of assets in this case your public equity asset classes and these are two line sets. the top line public equity is how your composite did. the next line is how the policy index did. so you see your annualized return over five years at 15.4% was above the 13.0% of the index. that would rank you number one in annualized return and as you go across the page, you see an annualized alpha and at the far right, an information ratio which is similar to the sharp ratio. it's the return per unit of volatility risk of the asset

class and you go down that last column, public equity number one. u.s. equity number six. emerging market equity number 2. extraordinarily strong equity performance. i would also tell you that of my six clients, you were the only one in a believes you can outperform acting managers. you've certainly been able to do that over the last recent period despite a lot of evidence that's very difficult to do and most clients that try it do not implement the kind of plans you have. if you turn to the next major, the same picture for fixed income. it's a very small allocation. remember, historically public plans used to be 60/40. here, you have a much smaller number and it's been rewarded.

while it's policy has been you see the results for private markets. you'll see if you add up those percentages, it's 45% of your portfolio and in each area, private credit has outperformed its benchmark the other thing is private credit. if you recall a total fixed

income is up 3%. that was a strategic choice. you took the money out of public fixed income and you moved it to private credit and you were awarded over this period substantially. i would also say the duration of your private market or your private so if we see a 1% rise in interest rates from an expected basis, the impact on your private allocation could be offset by a substantially higher yield versus a 6% loss in a public fixed income not offset by the current yield. so not only is this a strong result looking back. if we see higher interest

rates, it should preserve that sxex tend it going forward. finally, the detail follows and i wasn't going to go through it all, but if you go through page 46 you can see the impact of china. in the last quarter, your china portfolio declined 7.1%. the china all shares was 13%. so the managers you've selected were less impacted by these challenges that the chinese market had faced and if you look over the 20-year period, you've made 20% a year in the china index versus 10% in the index. i would say we're well positioned for a more distressed market going forward.

we've had strong management contribution and leverage which i didn't talk a lot about here, but you start to see the impact of leverage. it's hard to pick out the exact impact of leverage because you've had an overlay manager that's equitized cash together with the leverage. unfortunately, it's hard to report to the board what the impact of that small amount of leverage is off of these reports, but off of some of the reports we get from the bank of new york and it's roughly a 10 or 13 point basis contribution in the quarter that we've been in effect. i would pause there and take any detailed questions. but it's extraordinary to see how well you all have done in these rather challenging times. >> president: thank you very

much, allen. does anybody have a question for allen? any specific questions? >> the question is i assume that 10 points was positive. >> yes. joe, staff, the board did fully implemented. the staff has been interviewing managers to help do that. so we've been modest in the application of leverage so far and you can see that in that it's point -- it's a very small

amount. >> correct. the tools are there to measure their performance. >> yes. it's a huge difference. so there's two points. the premium we're getting it therefore it's a much more accurate comparison. we've been in real estate a long time, maybe it should be higher since we are now depending on how you want to count private credit. we are almost 50% ill liquid which 60/4 is liquid. great work by staff selecting

partners and general managers. obviously he is a tremendous influence on how the managers, the allocation to and the managers found and funded in china. again, hats off to the contribution. thank you. >> president: thank you very much. is there anybody else? leona, is there anything else you'd like to share? >> commissioner: no. great performance. i've gone over it in detail and i concur with allen and his comments in the portfolio and to the investment team which is extraordinary. so i just hope we can continue based on the allocation that will be set forth at the board. i just want to thank our investment team and, again, starting with pharmacy i.o. and

the entire team. >> president: thank you very much. anybody else? there are no further questions. darlene, would you call the next item. >> clerk: public comment callers, if you have not already done so, please press star three to be added to the queue. for those already on hold, please continue to wait until the system indicates you have been unmuted. >> madam secretary, we have one call on the line. >> secretary: thank you. callers, please state your name. your two minutes begins when you speak.

>> caller: can you hear me? hello. >> secretary: i can hear you. >> caller: yeah. this is fred sanchez from protect our benefits. it's an extraordinary report. i agree with commissioner driscoll in that bill copen should be taking a bow. i want to see that culture remain when i think of the staff and everybody involved. if it's not broke, don't fix it. it's extraordinary to keep that relationship strong and alive the staff, the managers, they all are doing a wonderful job and it's very fun to watch a system that's so well-maintained. thank you for the good job you guys do.

thank you. >> secretary: thank you for your call. moderator, do we have any further calls? >> we do not have any further callers. >> secretary: thank you. hearing no calls. public comment is now closed. >> president: okay. >> secretary: next item, item number eleven investment committee meeting report on november 17, 2021. >> president: since commissioner heldfond is not here i'd say to accept it as submitted. and i would ask that somebody make a motion to that effect. >> commissioner: i'll move since it's a discussion item only. we wouldn't be able -- so submit it and call for public comment.

>> president: thank you. we have two investors speaking with china with the investment committee meeting. >> secretary: thank you. public comment callers, if you have not already done so, please press star three to be added to the queue. moderator, do we have any callers? >> madam secretary, we have one caller on the line. >> secretary: thank you. caller, please state your name. your two minutes begins when you speak. >> caller: hi. this is claire zonski from the retired employees of the city and county of san francisco and while i want to back up what my colleague said sanchez said in the previous item, my question here is where can we find the investment committee meeting online or on sfgov tv. i tried to attend and could not on november 17th and then i

tried to find it in the archives and i've been unable to find any copy of that meeting that i could monitor. and we would really like to hear the speakers that you brought forward. and i apologize and i would really like to monitor that investment committee meeting of november 17th. thank you. >> secretary: thank you for your call. do we have any further calls? >> madam secretary, no further callers on the line. >> secretary: thank you. hearing no further calls, public comment is now closed. >> president: closed.

next item, please. >> secretary: eight hundred twelve, chief investment officer report. >> commissioners, i'm acutely aware of the inefficient time i've assumed the role of interim c.i.o.. grapple with the emergence of this new strain of the covid-19 virus and which is likely to lead to an acceleration of the federal reserves plan of tapering bond purchases. we discussed that back in september and the consensus now is that tapering may be complete by the end of the first quarter. global equities is measured by the all country world index. so about 2.7% for the month. despite inflation concerns for

the treasury thus global bonds were up slightly about 30 days at this point. with that, the backdrop was basically flat. an estimated return down four basis points in november. however, that was all set by losses to market losses in our public equity portfolio which was down about 3.7% for the month. allen made reference to our results within the first five months of of our fiscal year. we are up about 5% for the first five months. we begin that 5% when you compare it to that 6040 portfolio. those portfolios would estimate a return of about nine basis points and 1.4% respectively for the first five months of the year. again, up 5% for the first five

months. for the calendar year to date, we've returned an estimated 20.4% for the calendar year. results have been led and noted by private equity which has returned about 55% for the year. that's why we acknowledged private credit, for example, is under way. it continues to grow by virtue of our success. real assets of private credits have double digit returns as well. both positive up around 9.7% respectively around 24 basis points. up about 24% for the year and that compares to a return of 5.32 and 9.09 respectively for the 604860/3010 penitentiary marks. next, i will turn to updates on

board approveded investments and closed session. there are six, five of which are noted in the material. six closed yesterday. its meeting on october 13th, 2021. the investment of up to $100 million australian dollars. our investment owes $75 million australian closed. it closed on november 15th. investments first second investment with p.g.h. next at its meeting on november 10th, the retirement board approved a closed session discovered funds for explorer fund too. investment of 50 million in the fund 15 closed on

november 19th. this is classified as a major buy-out investment and it spurs twelve commitment in sponsored equity funds. next on the meeting october 2021, the environment board 9. and first commitment of $65 million to pepper tree capital fund nine closed on november 5th. if this investment is classifieded, real assets portfolio in its first second investment with capital tree management. next, in this meeting on october 15th, the retirement board closed an investment up to $60 million. on november 12th. it's classified as a natural

resource investment within the real asset portfolio and its first investment with springway capital. next at its meeting on august 11th, 2021, the retirement board in closed session approved up to $50 million. we closed on this investment of $150 million on november 17th. this investment is classified as the venture capital and deserves private equity portfolio. finally, the materialses that closed yesterday and its meeting, the retirement board approved within our real assets

portfolio. the second investment with crow holdings. i want to acknowledge disbursement that's been acknowledged by the organization. the initiative are a.a.i. which recently selected spurs as an award in the world responsible for investing and this index analyzes e.s.g.s in ten core principles and 30 detailed criteria. it's a pretty neat recognition of our efforts. most of the other asset donors

that have been recognized for far longer than spurs. but it's a great recognition for spurs. next, i'll turn to personnel. >> thank you. >> sorry. a comment there. >> i was just going to say well done. thank you. >> yeah. that's great. in late august, we began to recruit for a senior portfolio manager. >> president: you're frozen on my screen. >> okay. i can see you. well, am i frozen to others? >> you're okay with us. >> okay. i'll forge on here. you may recall back in august, you began to recruit for a position within the buy-out portion of our equity portfolio. we are pleased to announce, i know you're watching. i'm going to apologize for miss pronouncing your last name in the beginning of 2022 to serve in this role.

more than 15 years in private equity funds and he started his career as an investment banking analyst for stevens corporation sequenced and most recently, he was managing the private equity for contra costa county. at the beginning of the year. as you know, we have a number of recruitments for associate portfolio manager level positions. we'll have some announcements to make around a couple of those positions i believe at our next board meeting in january. next, attached to the c.i.o. memo, we've included reports that filleded our calendar year for private equity and absolute return portfolios. and, finally, i'll conclude by noting the investment community that was scheduled for january, we have moved it and it will be

scheduled for february 15th and having some commentary and introductions to investments in so-called digital assets. i'll pause there and i'm happy to answer any questions that the board may have. >> president: i'll just make the observation that point number four regarding the esg award, the board was wise to adopt the work that our director andrew collins did along with his assistant as well as the analyst before she came on board. again, their hard work achieved some recognition for the system. thanks, andrew.

>> any further comments of commissioners? i'll turn it back to you. >> thank you very much. any other comments from the board members? if not, public comment, please. >> secretary: thank you. callers, a reminder to press star 3 to be added toed the queue. do we have any callerses on the line? >> madam secretary, we have one caller on the line. >> thank you. caller, please, state your name, your two minutes begins when you speak. >> caller: my name is john furland. congratulations on your extraordinary performance. i was just wondering if in the future reports, you can give some sense of the valuation levels of your assets versus historical notices either with or without extraordinarily low interest rates, especially for

private equity categories. the returns are i assume the valuation levels are and i'm just wondering in the future if we can give some sense of how high and if those things would start to revert back towards. thank you. end of my comment. >> secretary: thank you. moderator, do we have any further calls? >> madam secretary, no further callers. >> secretary: thank you. hearing no further calls. public comment is now closed. >> president: would you call the next item. >> secretary: item number 13, action item. approve request to adjust industrial disability retirement allowance to 66%. [please stand by]

>> i think that you're muted. >> sorry. callers, a reminder to press star, 3, to be added to the

queue. moderator, do we have any callers? >> madam secretary, there are no callers on the line. >> clerk: thank you. hearing no further calls, public comment is closed. president casciato. >> president casciato: thank you, a roll call vote, please. >> clerk: [roll call vote] we have five ayes. motion passes. >> president casciato: thank you, next item, please. >> clerk: item number 14, discussion item. schedule 2022 retirement board meeting. >> president casciato: board members, we are providing you with a list of the meetings that will be our regularly scheduled retirement board meetings for

2022. and they all fall on the second wednesday of every month and they are all set to begin as a regular meeting at 1:00 p.m. we can answer any questions that you may have. >> president casciato: any questions? if there is none, public comment, please. >> clerk: callers, a reminder to press star, 3, to be added to the queue. moderator, do we have any callers on the line. >> madam secretary, there are no callers on the line. >> clerk: thank you. hearing no calls, public comment is now closed. president casciato. >> president casciato: next item, please. >> clerk: item number 15, discussion item executive director report. >> board members, i have a number of things that are included in my write up, and i also have an announcement that robert brian, the city -- deputy

city attorney wants to make. but i wanted to start off by indicating that we do have a board member who will be sworn in and be on the board effective february 21st, 2022. his name is amar john thomas and i believe that he goes by a.j. he, as you may remember, the board declared a vacancy in february 2022, for the term that president casciato is currently serving and we conducted a notice that is required under the law to provide that there would be an election and a nomination process. as of the deadline for submitting petitions to nominate for the board, mr. thomas' petition was the only one that we received by the deadline. we have certified that the signatures on the petition are

indeed valid signatures of sfers members. i have talked to mr. thomas and i have notified him. the good news is that there's no election required since he is the only candidate that qualified for the ballot. and that he would be assuming the office of retirement board member on february 21st, 2022. he's indicated that he is anxious to start the onboarding process hopefully before he joins the board in february. so i wanted to -- to officially share that news with not only the board, but also our members the second item that i wanted to bring to your attention is since the last meeting our deputy city attorney has announced his intention to retire at the end of this month. and with that i would like to turn it over to him.

i believe that he has someone that he would like to introduce to the retirement board. robert? >> thank you, chair, and thank you, commissioners. as jay said, i will be retiring, and it's certainly been my honor to serve with you over these years. and i will certainly miss meeting with you. but what i intend to do is the new deputy city attorney who will be the head of the retirement team, cecilia mango ba, she's been patiently sitting through this meeting and getting familiar with the issues. cecilia has spent more than 25 years in our office and she's advised and litigated on the labor team for approximately 13 of those years. she's also given advice and handles hearings for the department of public health, aging adult services and human services commission over the course of approximately eight years. she also has experience on our

litigate team and workers' compensation team and throughout all of that she had experience on advising policies, and been involved with retirement and benefit issues. so she's well qualified to step in and i'm sure that she'll do an excellent job. i think you'll be happy to have her. she begins on january 1, 2022. just around the corner. >> thank you, robert. i look forward to working with everyone. >> president casciato: i'm encouraged that you stayed for the entire meeting. that's a good sign. and as you saw through the meeting there are a number of issues that come up during a meeting. so, welcome, welcome. i think that, karen, i have worked with you on i believe a piece of litigation early on. i think that it was retirement restoration cases. and so i'm familiar at least with working with you. and i'm pleased that you're going to be our -- the retirement board's team leader

for the city attorney's office. so, welcome. >> thank you very much. good to see you again. >> president casciato: thank you. and last two things that i have on my report are that i wanted to update you on the return-to-office plan for the department. we are -- since november 1st, we are taking appointment only meetings with our members. as diane had indicated, the setting up of meetings and we're opening up our offices on tuesday and thursdays each week for those folks to come in and to have actually in-person counseling with the board representative. and by appointment we're having remote canceling done for the sfers members, issues like

meeting signatures, witnesses, those type of routine things. we have folks making appointments so that we know that you are coming and we are taking care of business that way. the leadership team will be meeting on friday of this week to determine what our return-to-office will look like for the period after the first of the year. and we're hoping that we would have something to announce, both the staff and the board, related to what 2022 is going to look like as far as our return-to-office. and so i just wanted to let you know that right now we are in the mindset that we're going to be continuing to meet remotely for board meetings. although, we are looking into how we can present a hybrid model for board members to either participate remotely or be in the office for live board meetings.

and we just feel like that that might be where we will end up some time in 2022. so we're working on that. and the last thing that i'd like to say is that i would like to wish everybody a happy and safe holiday season. and a healthy new year. and i look forward to -- in the new year being able to officially retire -- well, i'm officially retired, but i mean eventually retire. so i think that 2022 is going to be a good year. robert, it started with him and so it's contagious. but, cecilia, i hope that you'll stay for a while because we certainly appreciate your experience that you bring to the retirement board. with that i'll be happy to answer any questions. >> thank you, do you want to comment on the board self-evaluation survey?

>> yeah, ashley has worked on the form that she sent out to the retirement board but she wants that approved by the governance committee. so we need a governance committee meeting. >> president casciato: i asked at the last meeting that it be conducted single item only. it has not -- if we could -- if you could work on getting the committee together, at least two of the members, and get it done >> okay. will do. >> president casciato: thank you. i would appreciate that. okay, thank you. anybody else have any questions of jay? jay, thank you for everything.

much appreciated. and, robert, also, thank you very much. very much appreciate it to both of you for all of the hard work it's hard to believe that i was on your hiring panel, jay, when you came -- >> i remember that. i remember that. >> president casciato: so that' so we'll all sail off into the sunset. okay, thank you. public comment now. >> clerk: thank you. any callers, if you have not already done so, press star, 3, to be added to the queue. moderator, are there any callers on the line? >> madam secretary, there are no callers on the line. >> clerk: thank you, hearing no calls, public comment is closed president casciato. >> president casciato: thank you very much. next item, please. >> clerk: item number 16, discussion item. retirement board members good of

the order. >> president casciato: anybody have anything good of the order? i sent out a holiday greeting just before thanksgiving to the entire staff, via jay. and i would like to reiterate that publicly that we have a great staff on all levels -- our consultants, at all levels. and are just really grateful for everybody that puts in all of the work here. they are members of our system. so it's our brothers and sisters. and just really thank you very, very much. much, much appreciated. >> mr. casciato, i remind that we're going -- >> president casciato: we have to go back to 4b. >> thank you. >> president casciato: yes. so at this time we're going to have to go back into closed

session on item 4b. and, darlene, can we do that, is there enough bandwidth on the other side? >> clerk: we first have to take public comment before moving out of this. >> president casciato: yeah, but is there enough -- before i do that, is there enough bandwidth over there so that we can all get in? >> clerk: i guess that we'll find out. >> president casciato: okay, okay. >> clerk: callers, if you have not already done so, press star, 3. moderator, are there any callers on the line? >> madam secretary, there are no callers on the line. >> clerk: thank you, hearing no calls, public comment is now closed. mr. casciato. >> president casciato: thank you. now we'll all move over to 4b, and if there's any problem, if we have any problems, can you send a whole new invite to

everybody. if we get stalled. >> clerk: quickly, are we ending this meeting and going into closed session? we have to come back -- >> president casciato: then we have to come back. yeah, we have to come back. >> clerk:[roll call] thank you. we do have a quorum. >> president casciato: thank you very much. at this time i entertain a motion to not disclose the investment in full session. >> so moved. >> move by commissioner driscoll. >> second.

>> president casciato: seconded by commissioner bridges. any discussion? public comment? >> clerk: callers if you have not done so, press star, 3, to be added to the cue. do we have any callers on the line? >> there are no callers on the line. >> clerk: thank you, hearing no calls, public comment is now closed. >> president casciato: call the roll, please. >> clerk: [roll call] thank you. we have five ayes. the motion passes. president casciato. >> president casciato: okay. at this time unless there's any further business, anybody have

anything? the meeting is adjourned. thank you very much, good night (♪♪)

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good evening everybody. welcome to the 2021 civic center plaza tree lighting and toy give away. [ applause ] my name is "ms. kay" and i am going to be your hostess this evening. how are we all feeling? are we good? is everybody excited to be here? i know i'm excited to be here. well, before we get started, we have to give a couple thank yous.