this meeting is being recorded. politic you may begin the retirement board meeting december 11, 2024 at this time yoochl thank you. call the roll >> mr. thomas. >> present. >> commissioner held fond. >> present. >> thank you quorum is present.

item 2 communications. we welcome the public's participation during the public comment. there will be an tounlt for general public comment after closed session. and an opportunity to comment on each discussion or action item on the agenda. each comment is limited to two minutes. public comment will be taken in person and remote by call in. for each item comment from people in person and then remote. comments or opportunity to speak are available by phone, calling 415-655-0001. access coated 26627635405 then pound twice. you will hear the discussions but muted and listening mode. when your item come up press star 3.

best practices to call from a quiet location speak clearly and turn down your electronics. note that city policies with federal and state local law probability harasses conduct against employees and others during public comment and will not be tolerated. public comment is permitted on the matters within the jurisdiction of the meeting, body and thank you for joining us. >> thank you. next item. >> item 3, closed session. >> at this time the board will be moving into closed session. . [inaudible]. can i have a -- motion. >> who? >> the board needs to vote to

invoke attorney/client privilege. before closed session we will take a motion to impose attorney/client privilege. >> moved. >> second? where second. >> it has been moved and seconded. public comment, please. >> thank you. we have no in person comment on this item. moderator, do we have callers on the line? we have no callers. i see no callers on the line. >> thank you. >> moved and seconded.

all in favor say, aye. >> aye. >> opposed? >> okay. we will now go into closed session. motion in order whether we disclose. [inaudible]. move not to disclose. >> second. >> okay. [inaudible] thank you. we have no in person comment on this item. do we have callers on the line? >> there are no callers. >> public comment is closed. >> okay. moved and seconded all in favor say, aye. >> aye. >> opposed? >> motion passes.

next item. >> item 4 is general public comment. a reminder comment limited to two minutes. we have no in person public comment on this item. >> moderator do we have callers? >> there are no callers. >> thank you. public comment is closed. next item >> item 5, action itemful minutes of november 13, 2024 retirement board meeting. motion to adopt the november thenth minutes. >> second. >> public comment? >> thank you we have no in person comment. moderator are there callers? >> there are no callers. >> public comment is closed. >> moved and seconded and all in favor? aye. >> opposed? >> thank you.

next item. >> item 6 action item consent calendar. everybody reviewed the items on consent is there anybody this has would like to discussion on items? move to adopt consent. >> second. >> thank you. >> public comment. >> thank you we have in in person comment on this item. moderator are there callers? >> there are in callers. >> public comment is closed. >> great. moved and seconded all in favor? air. >> opposed? >> motion passes. great. thank you. >> item 7 action itemful approve to adjust industrial disability retirement allowance from 50% to 90% until qsrh20.

>> please. >> i request that the board approve they be recuse friday voting on this item. >> should we vote on this? >> yes. >> okay. >> thank you, commissioner. commissioner driscoll requested to be recused is there anybody that will accept this as a motion? >> we may want to brief statement about why. on the reason? on advice of council >> when the members spouse was helping him apply for worker's comp adjustment, i was in contact and there was confusion about the process she was without an attorney i made the call to get the application process rolling. that perception of conflict

raises so easy for me to stay out. >> motion made. and we have a motion. moved. >> second? second. >> public comment. >> thank you, we have no in person comment. moderator do we have callers? >> there are no callers. >> public comment is closed. moved and seconded all in favor, >> aye. >> opposed? >> okay. >> so.

present this. joy will present this one. so, this is a request for the adjustment of the disability percentage for a member who currently is receiving 50% of their highest final compensation. and received a worker's compensation appeal's board rating of 100% for a serious disability. and under the charter, the board should vote to approve and recommend that the vote the board approve an adjustment to the resierment allowance up to 90%. so the individual has 100% disability charter says vote between 50 to 90% we recommend

90%. >> happy to answer questions you may have. >> anybody have questions? >> if not, i will accept a motion. i would love to hear why not 100% >> sorry, it says in the charter they can get 50 and 90% even though the award is 100 you are catched at 90%. >> what is written in the charter is -- >> motion to move to 90%. >> second? >> second. public comment. >> thank you, do we have in person public ment on this item? none. moderator do we have callers?

>> there are no callers. >> public comment is closed. >> all in favor moved and seconded all in favor? >> aye. >> opposed? okay. motion passes. next item. >> thank you item 8 is action item. review and acceptance of the supplemental cola analysis the july 1, 2024. good morning the action is to adopt supplemental cola analysis as of july 1, 2024 and direct staff to process the supplemental cola payable effective july 1 of 24 to all eligible retirees. so additional detail, there are 32,000 over 32,000 retirees eligible. and as the members hireod and

after january 7 of 2012 not receive a supplemental cola the system is in the funded that is 500 retirees. i'm happy to answer questions. i guess we need a motion to approve. >> we do. i move we pay additional cola half % to all entitled members who are retired. >> point of information look at the agenda are we accepting and approving the analysis? >> yes. we would approve the analysis to pay a supplemental cola of 2-1/2% less the basic cola.

>> second. >> public comment. >> do we have in person comment on this item? >> moderator, do we have callers on the line? >> there are no callers. >> thank you, public comment is closed. >> just society record is clear, i want to make surety person who made the motion approved of the amendment to the motion? >> amendment to pay after adopting the report. >> yes. >> okay. >> thank you. >> okay. moved and seconded all in favor? >> aye. >> opposed >> motion passes. >> next item, please. >> item 9 action itemful review and acceptance of the scent/68 report june 30, 2024. >> commissioners the action in

front of you is to accept the gap 67-68 report. this report is separate from the funding report. which is presented in february. and these are accounting numbers, and are in our own audited financials and in the city's and those of financial reports of the other employers. if you would like to look at it we can look at page 7 i recommended just starting on page 7. and from there you see that calculates pension liability last year was then.3 billion dollars. and this year end of june of 202439.4 billion dollars the

plans in the position [inaudible]. and -- this used the audited values. the audited values june 23 were 33.7 billion dollars now june 30 of 24, it is 35.4 billion dollars. the net pension liability is a difference with the liabilities and assets grows with the surface cost, which is the portion of one year of service earnings for all our active members. what the portion of lieshlt for active members and when they earn a year of service. interest costs all of our liabilities are discounted 7.2%. likes grow at 7.2% during the year. have differences between our actual and expected

responsibles. i would say that these are although i'm showing you numbers june 30 of 23 to june 30, 24. each of the numbers are based on a census of year previous. so, the upon difference with expected actual responsibles on the liability saturday 480 million dollars. is responsibles that the board has seen in 23 actual evaluation it was due to salahi rews and contributions reduced are nest pension liability contributions from the employers and members and have net investment income positive net encome reduces the pension liability. and expenses are [inaudible]. part of this change. so, we -- the net pension

liability does tends to be volatile this year grew from 6.6 billion dollars to 4. 4 billion dollars. it is volatile because of the there is no smoothing of the asset in this number. any investment income directly influences that to the extent our investments areville tile that swing around a bit. >> again this is [inaudible]. >> questions as from -- happy to answer questions issue later,

too. >> motion to adopt the report. >> seconded. >> public comment >> do we have in person comment? moderator do we have callers on the line? >> there are no callers. >> thank you, public comment is closed. >> moved and seconded all in favor? aye. >> opposed? >> passes. >> thank you. >> thank you. >> move to the next item. >> item 10, discussion item

board middle easting schedule. >> commissioners this agenda item was a topic discussed at the guilt or innocence committee meeting. putting forward a principle for the consideration to move the number of board middle eastings from 12 to 7. based on recommendations i shared the same information with each board member and today we are here to provide the opportunity to discuss the proposals. and there are two topics one is it discuss the meeting frequency and begin had we are having this discussion i wanted to put forward a discussion on the day of the week that the board prefers to meet. i know there are members expressed challenges with wednesday. so we can use this as an opportunity to discuss this. i have had individual

conversations providing the committee for record i wanted to share a few points why we have this conversation. so every year in december, typically we set the meeting calendar for the following calendar year. and the board meetings really need to be thought of as a mechanism for the board to complete their duty. and that calendar should be set up with what the board is required to accomplish based on duty and out lined in terms of reference. what changed? the board granted investment delegation. some of the need to meet monthly was driven by the fact that things move quickly in the investment world and have money to put it work and needed to meet on a regular basis to have approval to the make the investments. with investment delegation, that

no longer is necessary. so, then i locked at all the other business we conduct and the requirements that you have, and came to the conclusion this we can ft. meet all responsibilities taken in account what we need to accomplish on the investment and the benefits administration side. and we have the opportunity to reduce the number of middle eastings from 12 each month to 7. why 7? we need to meet minimum every other month given you approve retirements to conduct business as usual. we need to meet in february to get budget approval and so 7 balanced all those objectives and i believe result in an individual meetings that will be full. and they will have action items

and be you know take the upon afternoon but what it mean system we will not have board meetings where we have a light agenda and the board spent time to come here and taken staff time to prepare when well is not a significant number of topics to discuss. 7 meeting is a balance of being efficient with everybody's time and did our duty with respect to the investment side of the house, business side and operations. that is the rational there. and i'm open to answer any questions on that proposal. and open up to the board to discussing the day of week. in terms of next steps, we have a couple options depending on the board's direction. take it back before the governors committee because this would result in an amendment to the board operation's policy. or simile bring it directly to

the board the following meeting should you desire to proceed. i will turn it over to the commissioners if you have questions. >> to clarify. this item is a discussion. and will you are suggest. this item is a discussion because i wanted give the town to discuss it first in terms of next steps, under your direction we can make it an action item at the next board middle easting or we can make it an action item for the committee to bring it to the board. >> got it. >> i'm personally happy to see this came to a resolution on how we propose to go forward because the not only the efficiency. it -- really demands efficiency for us and staff. and also with a declining amount of revenue, our budget dollars

that will be available for when we do, in hiring staff and supporting people this . is an inefficient use of staff time and does in the drain the necessary and hours they need. so, that's my opinion. >> other sns >> yes, mr. president and i like to thank our ceo for bringing. i concur with the recommendations. and i would support it as well. the other thing i would ask you said looking at the day is looking at the committee how we stack the committee meetings. as a result of it. will the committee meetings then commence with the date of month that we are meeting? >> and that you can come back i

don't expect you answer today part of the evidence looking how to address that. i think it is this is more efficient than when we are doing now. >> i have a calendar and the materials i have the left page of the exhibits. gi see temperature is this is not set in stone to give you a sense. >> and there are certain meeting this is do have to help in certain months. so those got keyed in and some cases i sprinkled in the other meetings. but what we tends today do with meeting system set that calendar each year so while this is a suggestion we have the opportunity depending on who is chair. >> are there things we have to meet on we can have a called meeting. i don't see a reason yu can't suggest a called meet i begin this schedule, i would support

it. >> i'm sorry. >> two observations one, regarding the investment committee meeting, may seem like unfair comparison how the last couple have been. if when the primary reasons for the -- committee is education. if we have [inaudible]. speakers to increase the level of education for the board we need longer meeting fitting them in the same day will be may be a problem. so how it identify the issue is there enough time that is different than the question of enough meetings. the second part is missing here the way it is scheduled. ing onnal item, how to schedule for a separate board retreat. those are longer offsight to

make them more effective. that is missing from here. that should be identified in terms of some of us plan for their own schedules and -- since most of the prep work is done by staff staff then and there is something we will plan for. >> i appreciate that idea. i think when we put forward theical dear for next year we can add, seek availability and schedule the retreat. we do have part of the education plan half day retreat on typeset for this year. >> this is a discussion item we don't vote.

>> no. >> the board want to discuss meeting day a preference? >> i like to -- just -- first on the investment committee issue i like to respond to this, i think commissioner driscoll raises a point good on have time for training, however, i think that given the membership dynamics of the investment committee a committee of the whole, attendance i think is a big priority and combining them on the same meeting day helps us achieve that goal with minimal impact to schedules. if we flub a situation we need additional time, i would rather have the problem of having to schedule a special meeting to address a time topic. than to have the scheduling issues of putting the investment committee on a different day.

i appreciate the staff's work into alining a lot of our committees with our meetings. additionally whshgs we started this this exercise of looking to shrink the number of meetings and that we have throughout the year, i came in and brought this up at the committee meeting with a skeptical eye. i did not think that it was as necessary. staff did a great job presenting the work we have done in the processes. to make it more efficient and found the presentations persuasive. i appreciate the work put in this. >> in terms of day of the week that is tough to figure out. wednesdays have been working good thus far. i know that from i think every

commissioner will look at calendar and staff person and calendar and staff person and

everybody nobodiville 100% alignment wednesday and thursday those other sweet spots given the way the rest of the city

meeting structure works and things like that. for us. so. i'm open to it. but wednesdays working well so for. >> i would point out and look down the road that we have to be mindsful of if you remember under supervisor safai who was here on partial low why we changed, i believe. wasn't it? so this meshes with the same issue we might have going forward. with the supervisors schedule. >> tuesday was a question the board meeting but depends on committee meet manages. >> the committee i will not know this until january. >> right. >> okay. so -- we gotta be mindsful we can work it out

>> i agree with commissioner thomas, the two days that work best ared with or thursday. >> right. why with the in the middle of the week and a lot of committee meetings upon around the city, that's the problem. >> may be thursday. >> yea. >> everybody meetings wednesday, too much >> retreats used to be on saturday. villetorying saying. >> that's not a bad idea. >> i don't think there will be a perfect date but perhaps informal survey availability might be helpful in finding the least problem day of the week. >> i can follow up againmented give you an opportunity top discuss and be consistent with all of our public requirements. i will seek feedback frommule of

you. put something forward in the next meeting or when appropriate and discuss it further at that point. gi like the recommendation is great. thank you for spending time and effort november temperature i think it needed and it is efficient. >> okay. is there a preference for the board to pursue this through the governance committee. it would require a change in operation's policy, which technically is heard before the governance committee but the board has the ability to say it can go directly to the board. i will follow up. >> i -- personally feel we go forward and as a board the board to get it done. and but certainly, that is valid having it over to the committee

if we can't sort it all out. >> what the pleasure of the board in i say, pending commissioner engardio's committee assignments make the decision by the end of january. >> and may be it is just process driven we made an effort to bolster our xroesz do work in committee i'm eager to be simple theftic with jumping to the full board i think sticking to our priority of work through committee fits with our broader goals. i would prefer we go through the regular process to stick to that plan. >> general consensus? >> [inaudible].

adopt any new information this come out. >> we can find the member at this time ceo this is what i cannot do. and [inaudible] fridays are out or cannot meet in july teller find out how many restrictions and plan around that this is input we can handle. >> good idea. >> okay. thank you. >> go ahead. >> have some public comment. >> do we have in person comment on this item? >> moderator do we have callers on the line? >> there are no callers. >> public comment is closed. item 11 discussion item. executive officer's report.

are you leaving? okay. i sdoept have much to report in item 11. you will see here the standard materials we have a full agenda on other topics so if there are questions you have under the report i'm happy to address. >> questions? >> no. >> no. okay. public comment. >> do we have in person comment? moderator do we have callers? >> there are no callers. >> public comment is closed. >> before we go we will have now we will going in the andrew show. but first, not sure thomas will be have to leave i think at 12

for an hour we don't have a quorum problem. let's break for we'll did our thing and may be eat while we discuss and if it is pleasure of the board we can do that now. get that and come back? or do you want a couple andrew do a couple items >> break and come back. >> okay. is that all right with you guys? >> good. >> we will call it. >> come become at what time. come back at in -- 15 minutes. how is that. noon? >> no. 5 after noon? pick up on item 12.

discussion item update. >> okay. i will make a brief comment we have a lot of items to cover set the stage and turn it over to kirt and andrew and blake. so this is our annual esg updates restrictions and in this case an update to our esg policy. we continue on implement a holistic, materiality based approach to esg and focus where esg factors impact return or risk on investments. this applies to risk when is wee are hiring investment managers. thinking about the upon you should lying investments and when we monitor the funds with risks we invest. esg factors input in our investment decisionmaking process. and when they are combined with

other factors like investment and operational factors allows you to have a thorough evidence of risening and return this is what under pins everything we do here and under pins the discussion this will follow. i will turn it over to kirt >> thank you the risk being rep bunked redundant. you know that the investment policy requires staff provide the board with updates on a variety of matters including each [inaudible] to various [inaudible] allocation and risk including leverage and risk e et cetera . and as we close out the year we'll provide our update on the esg platform i'm joined by blake and andrew, you may recall break joined us a year okay after in focus role unless private, public markets

[inaudible]. and work [inaudible] start up before joining spurs. and andrew join in the mid 2018 and the architect for spurs esg platform which is 3 pill arts ownership, engagement andarctivities. investment manage the intinauguration of think burglar esg matter in thes w we do and collaborate rigz and communication with peer groups and enterprises. alison notices we have a lot on the agenda i think you know this from reading the material. we will start andrew will provide an update on our platform diviewed among the 3 pill arts followed by sick action items staff make recommendations the restricted list within sectors and conclude with recommendation update our esg procedures.

before i thandz over i will make comments. they echo comments the left couple of years and as each of you know let concement of investing has been under siege the last couple years. there have been legal challenges at owners and managers. we seen mechanisms for shareholder proposals used to promote antiesg agendas. now it fear are, we seen many investment managers row move references to esg from their websites and materials. and additional low, we seen flows out of so called esg products. and given national political realities the noise is in the going to end. but it is in our view noise. the behind the scenes or the websites and the materials, asset owners and managers

continue this work. the same is trough for spurs this work continues. we have in the been distracted by this noise. there are reasons for this. including the fact we have not and will not be focused on projects. we are dismissive of those as others. again our efforts north value based our investments process and efforts are guided by our duty to maximize risk adjusted returns. and finally, we are not in this group is not distracted for one large reason to earn the support we get fwr colleagues and investment staff from alison and the board. we thank you all we can do this work on spur's behalf upon our work as active owners and efforts to intgreat matter in our investment processes. our risk and returns and

progress we knead for net zero it is important to understand that spurs approach has been is one where by we consider matters as risks. identified, measured, monitored and managed. and increaseingly we consider it investment opportunity for you to explore. in some despite the noise committed to incorporating them in a merit that is consistent. with this i will have andrew provide an update on our platform and kickoff our esg discussions this afternoon. >> thank you, alison and kirt. good afternoon commissioners. pleased be with you. this afternoon presenting the program update and the voting items following. agenda for the presentation i will begin now, a refresher other motor form.

highlights of the progress over of the past year. a discussion of the engagements kirt referred to that we have. [no audio] considerations in our investment process. i'm focusing how we continue to evolve that process to focus on material recall environmental, social and governance topics they have changed over time. then an update how we criminality to the responsible investment ecosystem and market and close with a brief progress update on our ammission to be a net zero asset owner by 2050. i. ed star by staying what kirt and alison described. we anticipate begin nothing 2025 you know some potential changes at the federal level around esg policies and practice. regulations, possible changing

enforcement. we don't amount changes to our approach in the structure of our approach. as we operate here in the city and county of san francisco. we are committed to that strategy incorporating material environmental and governance factors how we manage the spurs plan. we continue to implement our throw pillar approach. which is designed to keep us focusod our north star maximizing return and minimize risks. it is 3 pill artsor slide 6. including active ownership we use our share holder voting and engage am efforts our voice and vote. to focus public companies on long-term financial success. second, we intgreat considerations in the investment management processes that we under take this is considering

esg risk and opportunities part to the way we source dill janes and maintain investor manager relationships. >> and third, collaboration and communication we aim to foster a broader financial market focused on long-termism androusing risk. over the past year, we made good progress on each pillar. this slide 8 highlights a few of the initiatives we undertook and will not describe all but a bit of a deep dive into a few of them now one from each of the three pill arts of the esg platform. so went active ownership pillar, we continue to priorityize on engagement work. with under lying companies public companies in our portfolio and 2 topic area one

is board diversity and the second is managing climate transition risks. folk out two areas for two reasons. first is each of these you think of as across cutting issue. meanings the issues are broad low relevant for most all the companies in the spurs portfolio. second, we believe the topics have system wide impact across the economy and therefore are of intp to long-term diversified investors like spurs. we feel if we are successful until our attempt to construct and engage with companies we should see benefits at the [inaudible] or level company level, as well as the over all systems level when we engage engaging boardos gonance for 6

years. this is our foundation at prince pels. corporate governance the good gonance starts with a strong board a board guide the strategy of the company and act in best enters of share holders. diversity in all forms is one component of when makes a board effective and adds to the skills, qualifications and characteristic of a group of individuals that were empowering to run the comprehends we invest in the past year we lead and supported engagements with 52 companies. on their board governance structure and press its identify and nominate new directors to their boards. as an outcome 14 of the companies ash pointed 19 new directors. who are qualifyd and diverse

individuals. people of diverse upon genders, race and ethnicity. in addition, and out lined here the vast majority of the companies you see also begone or continued to implement best practices around how they define the skills and qualifications they are looking for in directors that form their board. how they conduct searches for new members and disclose the information in a clear way to investors. of the skills each of the board members brings to the boofrmd it's the bottom you see -- some cumulative statistics the past 6 years the engagement efforts ruin the 447 new directors adding a new range of skills and diversity to 343 different

companies. nextil talk a bit about our engagement on climate risks and opportunity with companies in our portfolio. we engaged with companies on these risks and the opportunity that are presented as the global economy transitions from twhon is fossil fuel baseed zero carbon system. we focus on companies that are in high emitting sectors. we knowledge they face the biggest risks with the economic and energy transition. at the same tiek, they other companies that criminality the largest proportion of spurs we feel this will is effective and good use of our effort. >> here we highlight 3 companies we engageod climate

related risks. and energy transition. one oil and gas company conco and two electric, energy and 96 star energy. they have been multiyear and cover a range of topics we illustrated here things like, how the companies board oversight and governance relates to climate risks. their capitol allocation decisions with respect to fossil few and clean energy how they set goals for methane and carbon, how they conduct analysis for different future potential future climate scenes and community all this information to investors through their revving litted disclosures. >> with each the companies we had productive and successful engagements and result in the

new climate related targets. more transparency around where emissions come from. trend in the e missions as well as getting better disclosure to inform investment decisionmaking for us and other investors. >> next i want to move to the second pillar here. of our platform integrate considerations into the investment management process. um -- and what i want to highlight and reiterate what alison and kirt said is considerations are over all mosaic of how we identify diligence and monitor and maintain relationships investment managers we trust in our allocations. this consideration is not a single point in time exercise. but span the life cycle of our

investments the 3 touch points with asset managers the first during due dill jenls. where we have structured processes to integrate considerations in our over all investment and operational due diligence processes what we are trying to do sunday our manager's approach to integration and if there are material esg risks and opportunities we are considering. the second on going engage am with managers. and this is because our folk out topics does not end after we make the investment. and more we have have been engage with managers on how they are advancing to integration this is both inbound and out bound. so this is spurs reaching out to managers and managers reaching out to spurs for input on esg

policies and practices. managers might solicit input how they develop in policy. wham data they are using to infurthermore their esg prop and how they are reporting this information back to their investors. >> um, we are able to give input because we have -- surveyed the market broadly and subject matter experts. we see what best practices are in the market. we thank you is a benefit to our smaller managers. that might not have a dedicated team and we comprehend see that we have been constructive as we see advance in their processes over time. and then from time to time we identify managers where we see room for improve am and we might reach out to them to give constructive feedback on policies and practices and both of the case we think that this

constructive engage am strengthen our relationships and improve our investment out come. and the third case here would be monitoring environmental social and governance risks or incidents arise during the investment period. we of course, hope that the don't happen but that do from time to time. and we are continuing monitoring and improving our approach to investigating incident this is could, rise. trying top understand if they might have material impact in our financial out come and addressing these risks or controversies. there is a range of actions we can take in the instances and vary depening on circumstances but have this lens toward how the e sg legal risks could manifest in investment risks for

spurs. . we feel this monitoring is important to protect our investments as well as our reputation. as we discussed i think here before in prior updates we have a defined and structured process. out line in the the slide for all of these practices are engagement and monitoring. we tailor this specific it each asset class and time investment strategy. begins with shared set of topics we address and want to be flexible enough to explore special under esg risks specific to asset classes geographies and different styles of investment approach. >> again. our north star here is how do the risks potentially affect investment out come. and them and then document them in our investment mem sxoes

monitor performance over time. so if you congress of our initial due diligence it is teach to understand what managers say they intend to do. monitoring those over time to ensure that they are dog when they said. this process has not been statutic in nature and we are continue canning to seek now ways to ensure we implement best practice relative to what other have theors doing. market trends. emerging risks. and always improving the sophistication of our work. we wanted high live here a few mile stones over of the past 5 years. in terms of the way we improved our policies and processes. so, begin nothing 2019, we move friday a sort of ad hoc or

general set of du diligence questions to developing due diligence questionnaires. this allows you to be targetd and specific in the information that we seek and focus on the most material topics for each victim. in 2020, we move from interacting with our managers only during the investments during a fund raising cycle. to having conversations and monitoring their policies and practices. . outside of that investment cycle. this helped us strengthen our relationships understands what future plans are. and understands upon progress on our existing portfolio on esg practices and targets they put in place. in 2021 we added esg specific

language to willing documentation so we have 4 more acknowledgment of the principles and policy a step to embed esg matters to the structure of our investment relationships. in 20 twooshg we add questions on climate risks and opportunities. so we assess alignment with spurs ambition. we had a more as needed approach to understanding climate risk. felt it was a benefit to be more structured and comprehensive in our approach. left year we implemented a concern policy. and this some a policy that we have in place now to document if esg risks arise during our investment period. this has improved our processes to have a formal structured documentation. if things have occurred, any

risks associated with the incident and follow up nesz over time. and then the past year,il give more detail on into how rew introduced questions to our due diligence process on waiver and human rights related topics. these are issues that we have looked at over time. typically would investigate if we deem them relevant or appropriate. for an investment. this past year we added process to more systematically include the questions in our due dill jenls. and wanted highlight a few of the questions that we asked our managers to give a sense of the type of information we seek, this is from existing and potential investment managerless. we ask themmings like does the firm have process in place to

ensure companies have labor and human capitol practice such as fair work space. antiharassment and discrimination and health and retirement benefits. are wars in existing companies represent by labor union sns if so come and commentom whether there have been recent labor contract, work stoppage, strikes p identify if occurred prior tore to or the firm's ownership of the company. does the firm have freedom of association and right to collective bargaining policy in place. if than i say, yes we ask them to describe the policy fist no, we ask them to describe their approach to freedom association and collective bargaining within their portfolio we receive a

range of response like we do on all environmental, social and gonance topics and these sit within the over all set of information this we use to make decisions to invest or remain invested with an upon investment manager. as always whether the topics or others we are irrelevant if trying to determine if we think an issue on this material to an investment we're considered and based on manager's practices, we determine if they are managing risks. taking advantage of opportunities. if we release the risk on an esg topic, we consider this along other risks and decision could be a range where we determine a risk is immaterial and proceed

with an investment. instances we engage with manageros an area and give input to adopt or improve a policy and it is possible to envision where there is an esg risk that would cause us to pass on investments. like any investment risk, the risks form that full mosaic of information employmented dive deep are ear. we will continue to monitor best practice across the industry. stay current of emerging esg trends and risks. and ensure our process is aulgsz purpose built and functioning well as we go forward in the future. >> next i wanted highlight an example of the work we do upon within the collaboration and communication pillar. and this irrelevant is it

resources and market structure. one has been through the seat on the institutional limited partner's association. the esg advisory council. you may know they provide its 600 plus limited partner members like spurs, a variety of tools, resources, education around investment manage and the private markets. some are focused on esg practice. the past year resunrising it is assessment framework and payment in the this process, gave input to revisions. and now there is a resource in the market for all limited per ins like spurs to use to evaluate the quality and naacp maturity of partners practices. we continue to always look at select, and look at opportunities like this to participate in groups we think

we can learn from and contribute to to raise the bar for the entire industry. >> and then last, here i want to close giving update on our progress and -- our ambition to net zero owner by 2050. we continue to measure the progress today for when we call our public markets portfolio. this is a blends of our public equity investments and the corporate sweep of the portfolio we are limited by data availability to measure ways the carbon affordability for other aspects of the spurs per foal i don't. as you see from the chart on the left we continue on be ahead of our 2025 goal. that we communicated. today we are sitting at 20% lower e missions on a weighted

average. example this 25 goal ouring e missions associated with our investments on per with footprint last year. and that sits today at 35% lower than our policy bench mark. so ton have a local carbon portfolio on a relative base as well as relative to the interim goals we set in 2019. so in addition, this is one component of our climate monitoring this carbon footprint, we focus other aspects. this includes our assessment of investments through a 11s of climate risk and opportunity and advancing better data collection for other classes beyond the public markets to fill in the gaps this i mentioned.

next year, we plan to begin an updating this plan. that we presented the board in 2021. and at time committed to revisiting this every 5 years we intend it start that next year that concludes my presentation here. but welcome comments from the board. >> several questions, do we have any place that we can see our how our performance stacks up on i don't know the metric is how we -- stack up against? not all -- our size? >> with respect to carbon or? >> our progress >> >> i would i can look in that. i thank you carbon data point may be the only thing that would be publicly available our

portfolio looks different than other plans it might have set the goals. but can look in that. >> in your gut. how is spurs san francisco -- spurs, doing in terms of our goals and our goals aspirational? are they norm are they. i don't have to say that i know we are we are doing proactive. what would welcome commentom this if they want to relative it our size of our resource base i feel we are doing a lot in terms. engage am work and carbon

commitment on the second public funds in the u.s. to set net zero ambition target. w to engage you know is not at the scale someplace better resourced and learninger peers but similar in terms of scope and focus >> and what you explained is available there across the plaza the mayor's office? >> the work do is yea we try to describe it public low in forums like this. so it should be available to anybody. >> great store. questions. my colleague lauren leads our

effort on the space on the line. w width team lauren areow line? >> i am and hopeful low am i coming through. >> you are, thank you. >> great. >> yes, hello board. wonderful to be here from london. great to be here wish i could be there in personful but andrew i thought you did a great job and one key things that i think you emphasized and the delivery of over all spurs plan and also eluding to within the climate action plan thshg is mull eye pronged effort. and a single data point is difficult to summarize if you look at just the carbon reduction that would be difficult and explaining the full picture of how spurs is doing relative to pierce. looking for a point of yes looking at to you should goals in if he weres of what you set

out to do that is good. but being the engagement at work that andrew noted the successes and the resolutions move forward i think you see through a lot of the w that the team has been doing to work with the individual teams and to assess different investments to -- to make questions robust and capturing the risk and capitolizing opportunity that it is, that those best practices are being done by the team. and it is a small team. yet accomplish a lot. so, it -- again difficult to say that one certain item you want to say whether you are -- below pierce is -- really meeting that mark and doing things on the multipronged approach to which look toward the net zero goals

and to make progress. >> thank you. >> thank you. and thank you andrew again for your reporting on esg. i think spurs is ahead when it come to footprint and on this space. i want to you go back to the -- i know you are involved with this and they november? new york and -- begin that is going on around the country as kirt mentioned in his res retreating and not putting as much on esg, what did, did anything come out of the meeting how they will address the companies this are -- large companies not mid sized. i know talk about this learning are companies that are take a

step back. were there discussions how they would address this with companies moving forward in terms of the land scape? >> good question . i think -- different investors take different approaches. i think the key things that were focusod and others are trying to understand change in communication and language versus changes in practice. and we already seen examples where languages change but the practice has not changed. and -- i think that will be a key component to went next year and few years. begin there is the term esg can be there now politically charged terms. to understand the practices associate with the concements if they changed or not. and there are case i seen they have not changed.

but also cases where companies more then and there investors have changed >> right. >> and were some of our partners and management partners and how they address it and approach as well. i know on the private equity side they were coming long in terms of how they approach typeset and research they put in it. i'm not sure if they have stepped become or in course? but this was the one segment this was weak having practices in place. >> yea. went private market i think two things we see are continuing to place importance on esg and sustainability one is european regulation. many u.s. companies public and private are within the value chain either required to report under that regulation or the have you chain that are. having commitments and targets

and disclosure in place is important. there are regulation within california. >> capture asasa lot of companies and we see cooperate leadership. too. big corporates have their own sustain ability related objectives and targets many private companies who's clients are those companies, condition to move forward with their commitments to fill operational and business operations requirements. i think i look toward the two market based trends and regulatory trend with stranding changes in theus regulation or policies. >> yea. >> thank you. >> yes.

two questions one about engage am and the other decarbonization. do you have a feeling how effective your engagement in the private sectors meaning equity, credit and real? are the general partners resisting or causing trouble resistance? a general question i'm focusing on private area. >> yes employment to be clear when we engage in the private is with our investment managers. we don't directly engage with companies. in our private markets. . those managers are all really receptive it the questions we ask in due diligence desire to engage on going we have not received any push back or challenge in terms of the dialogue getting information, and giving the constructive.

>> they encorporate that in their victim process. great >> second question about decarbonization. somemented you to do more. your graph shows our performance ahead of the goals. g. and i'm wondering again, those people who ask us the most questions and it, city hall, have you report third degree to them? because there is a cost of pursuing decarbonization. it is more then and there a simple issue of impact. i wonder if anybody showed after we took a lot of heat on the subject overnight years this is what occurred efficient last 6 years after we invested time and effort it is showing results short of whether or not they don't like our goals there have been resulted. >> where any communications upon with our stake holders? >> not directly.

our approach is head's down and report to our board. so, no we have not done reach oust. >> okay. different member vs different interests they have come here and spoke and asked. takes years to, prove and now we are showing evidence worth showing a little on the active work you do -- [no audio] >> so i can add that enemy of the past we have been responsive -- when there have been requests from parties. >> thank you. >> or not >> not. we are -- responsive when we need to. >> and just for the record, i want to reiterate we are open to stake holder questions and getting them the information that they need part of this presentation is it is a public forum for us to communicate

this. the decision to imtlement within the plan suspect spurs decision baseod risk and return opportunity. first, thank you to the team. for the work on the esg. i love the time line on slide 73 had shoes how we built on prior successes. and taken on new challenges. -- especially reasonable in the labor and human right's questions added due dill jenls i appreciate staff educating me on this. focussing on making sure and come per with the highest level of our duties and responsibilities while leading in an area where we can cammure risk associate weaponed labor disputes or freedom of association.

i'd like to follow up on commissioner driscoll's question kwuchl might have answered it. when we say whether a private market or something, the questions are not just for the initial business but the portfolio companies. the ones you read to us. >> that's correct. we have the various touch points during diligence and then on going monitoring. post investment. so we have opportunity to get updates and monitoring questions over time. understood in terms of huwe calgary this risk depends on when business we look at. would you say that -- if a company is reporting that it is portfolio does not have a policy on freedom of association or collectedive bargaining would

that be a red energy or cause for further investigation prior to jumping in? >> yea. what i was trying to say this is in the context of both the full side of prescription and operating context. i think right there being be a sceneo a manager investing companies little organization activity and the lack of a policy may perceive a lower risk. could be a manager that invest in companies that have moreorthed workforces or rep centtation for the workforce a higher risk. hard it give one answer on that. we want to make sure our managers are have policy that focus on the risks material to them and than i are managing them appropriately. we don't want to be in a

position we request or seem to request a set of policy that are ectrainious to how they invest and where. >> we have a broad portfolio with differen investments where it would be material you have an opportunity now to analyze it. >> correct. >> helpful. sorry it put out spot. to your knowledge, is this common are we leaders? is this coming you see in most your partner constitutional investor sns >> lauren, you want top refer to you >> sure. to clarify you refer to the labor and human -- that aspect or just broadly speaking. jot labor and human capitol aspect. >> yes, this has been a.m. an issue we have seen increasing number of clients and discuss and boards interests around. i say that we have not seen many

upon do much about temperature and but this is we had a few like spurs who have taken action. spurs is amongst leaders on the front and implementing change and so the inclusion of those questions and andrew mention today of the team wanting to keep a pulse on best practices and trend this is is a prime example how the team is doing that. and staying ahead of the curb. >> thank you very much. last question, you may have mention third degree this is in the on the front end in investment them is continuing due dill gents is part of the question as well. >> correct. both initial do you diligence. continuing due diligence and the ad hoc monitoring if there is say sort of issue or incident that arises we can have a touch

point there. >> thank you very much. >> any further questions on this item. >> no. >> okay. need to call for public comment. thank you do we have in xhernt on the item. moderator do we have callers. >> there are no callers. >> public comment is closed. >> thank you. great report. >> appreciate it. and we will call the next item >> item 13 action item. update on fossil fuel investment and engage and divestments >>mented start with a quick preface we will have 6 updateos investment restrictions spurs has in place. for our direct holding in public

markets. each memos follows a similar format the nature of that restriction. give a bit of a history of why it was put in place. i have tearia we follow to assess which companies subject and update to that list of companies. we estimate financial impacts an estimate they can describe the process in detail if you like. estimate the impact of having that restriction in place. and we described what a select group of pierce how they approach this topic. want top give this preface i will start on the oil and gas investment restrictions. want to note they are not a

sector wide restrikdz or divestment but are based on internally developed risk framework that we put in place in 2018. this allows us to analyze investments in the. public oil and gas and companies identify those we female have higher climate transition risks verse you low with lower risks. and then recommend for restriction the consistent with our duty. this allows you to identify dhauchls we place on investment restriction and those this we put on a watch list and prioritize engage am around their management of climate risk.

one of the 4 comprehends was nowly added the other 3 remain on the list from the prior year. and. since we put this restriction in place, we estimate that it is our methodology it cost us 3.8 million in returns since 2018. there is a motion that recommend here and happy to answer questions. commissioners. >> yes. thank you. um oop00 i move that san francisco employees retirement system affirm intent to remain divested from companies and adopt a list of receipt to oil and gas companies in table one

>> a motion is there a second? >> second. >> we call for public comment >> thank you. >> we have no in person public comment. moderator do we have callers. >> we have no caller >> public comment is close said. motion made and seconded those this favor say, aye. >> o posed? >> pass. next item. item 14, action item. annual report and recommendation on to becomeo sill tobacco divestments there are no changes recommended. we are recommending one company remove friday the restricted

list a special company this previous produced paper uses for rolling cigarettes and has exit third degree business sold off that business. no languager involved in the tobacco industry. over all estimated the to becomeo restriction cause spurs arnold 130 million in returns since 1998 temperature is our longest restriction in place and so, most of it impact can be a attributed it compounding over time >> this 130 million seems how do you capture that the opportunity cost the money was in the put to use. is there like a rough estimate? >> we created a methodology in

2019. to try to do something this is complicated which is for a diversified plan and one this invest active managers try to estimate yes, constrict in opportunity divesting how it would affect returns. in a simple way it assumes that we would have invested according to our policy bench mark. so that imi index. and then looks it's difference in returns versus that index excludeing companies a restricted list. gains or losses from the restrictions we assume are redistributed according to allocation across spurs plans.

that is updated with each of the changed and restricted lists. take into account like for example, this has been around. we have created new buckets during this time. so it is heard to is this a net of all of that? or just sort of only apply to one portion. >> it is limited it the public equity portfolio. now the restricts, ply to the fixed income. the public aggregate where well is most material potential impacts from them. an exercise but manage the board directed you to come up with a methodology to do. we worked with our consultants

and create third degree. so, i caution it is not real gains or losses but based on methodology that we developed. >> you are not recommending shift in the policy beyond what has been put on the agenda today. >> correct. >> >> comments >> no , i was -- have you du finish? thank you, mr. violent. mr. vice president. i move we support staff recommendation to move the san francisco employee's retirement system intent to remain divest friday u.s. to becomeo companies and adopt a list of companies involved in the production. or wholesale distribution of tobacco products. i have a question.

on the list of restricted companies, healingier choices management. what is that? what do they do? >> do you know? why is this snail >> good question. i can be more get information. we did add companies involved in electronic cigarettes distribution. it is is this category of vaping technology. part of the protest in san francisco. >> a motion by commissioner bridges >> second. >> second. in dam call for comment. >> we have no in person comment. moderator? >> no callers on the line.

>> public comment is closed. thank you. motion med by bridges and seconded are those all in favor? >> aye >> opposed? >> motion passes. next item. item 15 action item report and recommendation on targeted divestments. >> so we are not recommending changes to the victim restriction for company this is prit if sudan. we note that as you are like low aware an on going civil war we are monitoring this and how tell could affect our investment restriction policy. but begin that not recommending changes. over all we estimated this restriction has added around

forty-four million in returns since in place. help to answer questions. why questions? on going risk is correct. >> no questions? motion? i move we support staff recommendation to move the san francisco employee retirement system intent on remain divest friday companies in sudone or adopt a list of companies involved in sudan presented in table one. second. >> public comment >> no public comment are tr callers. >> there are no callers.

public comment is closed all in favor? >> aye. opposed >> motion passes. next item. >> item 16. action item. report and recommendation on firearms divestment. >> thank you, similarly, the investment restringz in sudan no changes being recommended for restrictions we have for firearms and ammunitions, manufacturers and retailers the restriction added less then and there within million in returns since in place in 2016. happy it answer questions. >> any questions? a motion? du say 1 million dollars? >> yes. under. >> yes.

mr. pit move that the san francisco employee's retirement susintent divest friday firearms and ammunition and adopt the list of restricted firearms and aming niz retailers in table one >> second. >> thank you. public comment. >> we have no in person comment on this item. moderator do we have callers? >> there are no callers on the line >> public comment is closed. >> moved and seconded all in favor? >> aye. >> opposed? >> next item. >> item 17 action item. anual report and recommendation on thermal code divest am. >> for the dermal coal investment restrictions we recommend several changes to the

restricted list. this year based on our policy. the first is removal of two companies whose revenues from thermal coal dropped the threshold we have in place. we are recommending adding one company, were new to the universe this we look the at that has over fest % of revenue from thermal coal and adding 4 company this is derive 10 and 15% from thermal coal. and have don't meet criteria of having plans to exit that business in a time bound manner. those changes are out line in the memo. happy to answer questions on that. over all we estimate third degree restriction hadingly impact on returns since in place

in 2017. questions? accept a motion? move to adopt staff recommendation. >> second? >> second. >> public comment? we have no in person comment on this item. moderator did we have callers. >> there are in callers. >> public comment is closed. motion moved and seconded. all in first? aye. >> opposed? >> motion carries. next item. annual report on russian divest am. >> um we continue to recommend the investment restriction for russian related sanctioned security in place across the

portfolio there are no changes in 2024. because this restriction worked russian securities remove friday our policy bench mark and most major bond industries we can't estimate what this performance impact has been. but -- likely negligent given the are novelty included in our policy bench mark going forward. happy to answer questions. >> questions. >> i move the san francisco retirement system intent divest friday russia sanctions securities and adopt the 202 criteria for restriction in russia in a. i second that.

public comment. no in person. are there caller. >> there are in callers. public comment is closed. moved and seconded all in favor? aye. >> opposed? megz passes. next item. >> item 19 action item. approval of revisions to spufrs esg policy. . commissioners. one thing related the last items as much as we appreciate the efficiency i want to acknowledge the work that went in to draft the memos >>. andrew joined in 2018 and the focus and efforts for developing the 3 pillar motor furthermore this we reviewd and oil and gas framework we discussed the following year we recommended or

andrew recommended board approved a stand alone procedures reflectd that 3 pillar framework and special seeded social investment policy this is spurs had on file. today we prosecute pose changes reflect the evolution of our program discussed earlier. urth consistent with our gonance practices and other areas propose we refer to these as a policy. rather than a set of procedures. i want it acknowledge the press here and lauren i apologize for acknowledging 9. . 15 your time of helpful in all of these matters and helping us develop the policy over the past several months it was done with york board's consultant. in addition the -- policies or the new policy reviews and improved by what we you know

called the portfolio management group. i will hand it over to andrew to introduce it. >> we had policies in place around the matters going become to 1988. when we called them social victim policies. and than i have been reviewed and updated from time to time. to reflect practices and policy on responsible investing. currently called vipiral associating and governance procedures. left update in 2019 recommending i range of updates there is a red line version in your packets i want to highlight a few areas. one, reanymore this policies to procedure. from procedures to policy. this reflects our approach to the documents.

this does constitute a policy oriented document. the second we added sections on scope and governance to the policy. this is a way to continue to add more structure and formalize the policy a bit more. third. we added a new section, consideration of esg factors. we list examples of the types of environmental and social and gonance topics we could consider under this policy. we in the active ownership section. added specific language on how we think about active ownership principles for private market investments and expectations we have of general partners and role as a limited partner and

clarity around investment restrictions including spurs preference to pursue active ownership approaches before investment restriction. and then lastly the collaboration and communication economy section. we added language that describes actions spurs has taken or will take on esg topics are based on our exercise of our discretion and consistent. happy to dive deeper. wanted call attention to those points. >> thank you. >> any questions? eighty-onep one question the level it is a typo on your page 5, in the middle where [inaudible] through exerts

shareholder i can't determine if this is tide back to something else. men a typo. i think it it is finishius. first to address esg through exercise of shareholder it was a type or format. thank you. >> i wanted thank staff i have been able to convene with y'all to review the changes and explanations that were handy helped me understand this. i appreciate the work that went in preparation on this. and i appreciate kirt you mentioned, they are very helpful to understand our reasoning and for commissioners to articulate on the decisions. thank you for those they make it

easier it get through the agenda a lot is written out ahead to understand. so. >> the pri principles moveed another location is the recommendation is to continue to be signatoryies and commit toup hold. >> useful words >> okay. >> i was wondering. thank you. motion to adopt staff's recommendation. >> second. >> public comment. >> we have no in person comment on this item. moderator, do we have callers on the line? >> there are in callers on the line. >> public comment is closed. >> moved and seconded all in favor? >> aye >> opposed? >> motion passes.

next item >> item 20. >> wait a second. >> thank you, kirt and thank you andrew. thank you. >> thank you. item 20 discussion item report on -- you guys are stars >> investment performance on retirement funs september 30 of 2024. good afternoon can't believe it is december already. drifting away >> today we will cover performance for the third

quarter for your portfolio and comments on markets. may be first starting with some spurs by numbers here on page two. currently as of september 30 around 36 and a half billion language term performance is strong. 8.4% over the last 10 dwloers is in excess to discount rate of 7.tw %. we have seen dynamics public and private market performance this impacted your performance relative to your allocation. you see that quote urn 20 base i we will touch on drivers of this. fund suggest strong 95% on market value basis.

97% is around this point out. and then the bottom there on the left side you see highly ranked versus peers we seen that decrease given the challenges with private market % and allocations there. again. we touchod this it is in the necessarily a matter that -- occurrence us. it is more information for to you be able to provide context to your performance. no leverage being deployed. you have this 3% target. staff has been thoughtful with regard to the use of that thinking in multiple considerations including the shacht yield curb we seen it flatten out that has decreases rates. so, that -- has changed that environment. but at this point no leverage utilize the.

and lastly al asset segment in rink. the broader targets you see for growth the diversifying assets and income all check marks that verifies you are within the rages for those buckets. >> more detail on performance page 3. the quarter portfolio return of 2.6% year to date. yieldingly return. 7. 1%. for the i don't remember ending september 30 spurs return up 11. 8%. wrashd to growth it was up 6% the public equity this did willing the bench america the

third quarter out performing begin the rate excess begin other concerns about. am. we did see a rotation in value and small stocks this was a driver of under performance where the public equity in the third quarter. i add this over the one year period your public portfolio up 31% out paced the policy bench mark. and that's the challenging thing to do when the bench america is over 30% and you are out performing that is something worth noting. absolute return portfolio provides strong returnos absolute and relative base i. some of the longer term trends. if you recall, a year ago the bench mark was changed for the

absolute return it reflect the diversifying nature. with less equity data. certainly this has been part of when we benched since this change was made. income, strong returns. we have seen the yield curve and see decrease in tightening spread this is is supportive. your credit portfolio over 5 percent and treasure easier up 4. strong cross the board. may be moving over to the economy. and over all markets on slide 4. some of numbers are dated the september 30 a lot transpyres the last couple months an election, but depoint this the economy does remain on solid footing condition its navigate

the soft landing. they try to wraech the down inflation on get to the 2% together we saw today the cpi at 2.7%. left my will be the hardest. that is true. the, area to monitor is un. am drop growth did weaken. that caused tresz and we get consumer confidence. >> coordinate we did see the weaker employment numbers leave the fed to be aggressive in cutting rate in assessment. another 25 pins next meeting and

the prevailing markets or betting there will be 25 billsis points next week. and after this remains it be seen when they will do, there is a lot of questions to be answered about the new administration coming in and the initiatives and when they may do. i happening prior to the election, marks will pricing in 4-5 rate cut in 2025. you in you are seeing 2 rate cut in 2025 a lot will shape up as we see what gets implemented and rolled out. >> moving to terms of compliance page 7. so, now we are in the third quarter. the targets reflect the strategic >> part of new fiscal year the

black embarrass you see are reflective of the long-term allocation. and you can see some case close to target and other case as implements and public credit went rebeens ranges. >> and then at the bum see cash and leverage combined on one >> subsequent. your profile improved relative had the portfolio was adopted staff is movingly toward targets. vis interum wilesented. >> on this note on page 8 more numbers to stair at.

this is detail. in terms of your currently allocation relative to the strategic policy but your interim bench america. and so a couple things to note your private allocation now 20 opinion 3% this is 3% decrease then and there when we saw may be overnight left 12-15 months. markets move and equity done well. private markets faced challenges rebalanced on theiren it a degree. a reverse affect that was. so strong in 22 in terms of over year private equity target. you have that target you can see for public equity 23% relative to 32%. we review this target every quarter and then have done had review with stipulate and the goal there is to as the adjust

the targets to move close to the asset allocation special not necessary low puts staff in a position they need to trace the portfolio and be thoughtful about the implementation we cover in the presentations. >> on page 13, this is an over all will performance table for the total fund. the numbers already you see 8 opinion 4% the left 10 years and left 5 years urn 9%. willing the bench mark we'll touch on that in the section coming up jeechl woor long-term investors we do shorter term numbers and under performance you see over that year number is striking. i would say that a lot of that has to do with the challenges of private america bench marking we than your private market bench

america is premium and equity yield 30% and add a premium tell be a challenge it bet this and you are in the dissimilar to every cline in terms of shorter term driven by that private mismuch we don't have occurrence. but stand out on the chart. page 14 upon reference make of asset ace slim view of growth rate and inflation. the point here you see over the long and short term it out performed the mix. it peeks to inclusion of absolute return. a mix another data point for to

you consider. here on the first demo the slide the last meeting an over view of purpose is and in terms of evaluating the drivers of excess perform broken up in 2 piece. the affects of deviate yagsz from our asset allocation over weight or under weight classes and the collection of affect which has multiple compossiblies how are your active managers doing to their bench america and trucking it relative to your mix and other thing this is are out of control from staff bench mark considerations and private bench mark i brought up this will capt. capture there.

what is now is on page 21. again in the spirit transparency we wanted to help the board dive into the larp layers or steps across 2 components. first step is total fund during allocation policy that decomposes that excess return. under loyaling are 2 components the p that composes excess performance over the policy that staff is moving toward in the short term and do testimony on the interpip everim policy and strategic asset allocation. the idea measure measuring the experience of huwe built puerto rican foal i don't to it. tell be helpful to see is that

an affirmation how we approach belling interim policy to give more control in terms of without deviating. if this increased that would be a question to answer. try to learn from that. and so thez multiple steps are in the spirit transevertransparency to be informative we do it 3 and 5 year basis. i lead toward long are term. we may presently 5 year perform or an update in the some -- against to focus long-term. with that may be using the 5 year example, first on page 25. you can see total fund that return of 8 opinion 8% under performed by a percent look at

drivers asset allocation and selection you see deviations from policy were add in the. to the. tune of 70 basis points. when drove the other performance was president selection piece if you navigate to the bottom right you will see the primary reason is private equity. again 130 basis points stemming from this bench mark mismatch with those two compoenls the other asset classes actually criminalitied 40 points. under performance. you get sense of. -- the magnifying glass and this type of framework is more exageerated with shorter times. we touchod in the left meeting rerouth the investment structure the notion of of actionable risk and nonactionable risk this highlights contribution to your

tracking our experience this come from a compossibly an actionable. looking on page 26. step 2 relative to interim policy it is a similar story. i will not be repetitive. the fact it is similar should mean the policy is close low in line with your strategic policy. they are scomplr on page 27. you can see the results there your interim policy out performance the bench mark by 30 points over 5 years most of that -- always from deviations wrchl them is an affirmation overnight 5 year that interim policy has been close low linked with where you are strategic this goal. tell be interesting going

forward. results for in goal going forward because -- i know >> 50%. going in this. we'll see how this transpire says through time. i open up to questions. applied for something -- as far as get through all those. announce it is back. unfortunately given the dates we have. it is april 8 and currently

scheduled to say the primary day will be will be a full day. we obviously love to have. 6. . 45 flight oust airport. >> the floor of the board. so -- we would love to have you there. get to the airport >> with had i will puz and take questions this you miff on performance. combhfr you have. >> april was the once a possible contedzer for no meeting i saw that. >> yea >> there you go. >> in your favor.

that was -- i once unclear loaded question regarding pages 23 and 26, the affects from the allocations meaning that -- the green bars look positive i'm understanding the selection affect since that is a combination of many factors. i know it is important to be patient and private equity which i am. i wonder if the public equity 3 and five year number february there is anything else this staff is doing it is aggregate when there are 20 plus manager in there.

>> >> hopeful low stot positive affect over time. so that, some of the challenges with the exposure to china and other area system built into the perform and some certain periods under performance was bill to the bench mark. >> okay that is broad answer. develop the 5 year and 3 year number we are looking at this they are going in the wrong direction this may be unfair way of looking the question is the

one year number what is is the direction? >> so -- begin when we have seen the left year growth, technology a driver. so to any degree you are over weight those segments of the markets that will be added from a structural stand point setting aside when managers are dog. it is fir it say you do have over weight in the area and biotech and technology. over that worn year number this has been additive from a structural standpoint the managers add value of on top of this. we have the ability in our performance system it run on individual asset classes to tease out of the affect of deviations. in the future if this would be helpful we can provide that. i know staff is, wear of that in terms how they manage the

portfolio >> a problem with selection and coverage i go back look at one year and quarter low numbers to see which parts are gchlg i passport to know if wore in the right direct or not so much is delegateed staff i will pursue this later this is sfrz i look at it today. why and -- ficould provide context this is high level. we have an amount of risk we're willing to take in public equity box. we are we place bets to technology and let our managers place bets. inform any begin period we may under perform i hope not, too. the goal is to form over long-term and simple example if we believe in tech in long-term and iier it is in the reward instead america it would knob enterprising there will be a level of under performance but

we steph the hypeoth premesis do we want to be in technology long-term we tried to figure out how much risk in making the bets. over the long-term they don't nominate in such if an extended period where the americas are under performing and other tune to generate positive performance. so -- it sell i broad answer. i know but i want to acknowledge this we make decisions this could lead to under performance in periods. but we want to look hol ~ically over long are period this is sets up up for consistent performance going forward. per aside from the allocation decision this was in selection i'm trying it understand. again, complex question. the charts are simple but combike so much stup i could miss half of the store. okay. where we can follow up with more information there.

>> thank you. kirt? >> i guess i have. upon when you i coon help lean forward 3 and 5 year performance and don't want to go, lot of history but in 20 twoop a very difficult year for us relatively our performance has been strong. some of the changes alison talked about left month and will update you on later in the year is we learned lesson in 22 and when we evolved to with mercer's help a framework where we are better at identifying the risks this wore taking. and we are e involving the portfolio to empsighs was stock selection risk and deemphasize from selection ask counsel row selection. to your question is this one year performance indicative of anything it is if the it is too short we are managing it in i risk aware way today that in the

past. >> okay there will be more information and explanations comingil be patient. thank you. >> i wanted to thank you for w. we check in with staff regular low on the rep and i heard good things. >> thank you. >> appreciate it. you appreciate the update in this area. i had -- follow pickups on inflationary piece rather than have you look in your ball we can follow up later. thank you for the report j. thank you. >> questions? we thank you and happy holidays and appreciate partnering with

you and staff is happy with the decision we made yoochl great and likewise, happy holidays and new years to you. >> look forward that a bang up 25. one. our staff member retired may be we should sends him over and get the information. [laughter]. you have i better recommendation. how about this. there are no caller. >> public comment is closed >> item 21 is the discussion item. investment officer report. >> commissioners i think we

covered performance thorough low in the last presentation. currently assets estimated 36 opinion sick billion. and also my comments updated on closing investments. first, fgp fund at the board meet nothing march on march of 24 the retirement board approved in closed session investment it up 100 million by the absolute san francisco absolute return investor fund. that is fundsd and under the delegated authority spurs committed 100 million to the redwood fund by safari two this is 25 million funded under this. until we reach that 100 million this is classified as an equity

investment. >> secondly, blue torch credit opportunity fund 4 meeting on awk 29, 2024 that internal team the portfolio group and i approved an investment 75 million it blue torch fund 4. our victim of 75 million to the fund closed december fifth of 24 a credit opportunity investment in our private credit portfolio the third with them within that private credit. >> i did for the sake of transparency update the commissioneros one other contract. which we have extend and this with securities lending. and that one through the policies in terms of reference

set up by the board i have the authority to go ahead and extend this contract. then and there when we do that there is a review by staff to get services we need and upon pursued they have been i partner and a unique partner in this they are our custodian and there are certain things they offer this are a benefit to the system. and with all that in minds the -- extend the contract term with them. so. not a traditional investment but wanted provide that update. >> when is the last time we put this contract out like a request for bid? i think at the -- 5 years ago? >> it was started. mr. coke upper came on booshd 5

or 6 years ago. >> i'm sorry. i think a 5 year contract and -- 2020? sorry to putow the pot. 5 years and extended for how long. >> 5 years yoochl okay. we have the capability to make it an evergraen relationship we do with a lot of investments. this gives us an opportunity to continue. 5 years >> do wee weave have a governance. i love to know more about our process. when is the best time. i imagine we might be bound by written obligations >> yea. and it is. the security left-hand laning relationship in the board operations policy but one. governance policy its says that

is one we can security funds and investment management can enter in evergreen contracts. we have capability to do that and that would be under -- our authority. >> understood. >> thank you. other questions? called this item? discussion itemful next. public comment. no public comment do we have callers? >> therure no callers on the line. >> public comment is close. >> item 22 discussion san

francisco compensation plan month low report. why thank you. good afternoon we are in the home stretch. thank you for being here. just have a couple items to share with you i know you had a lot of discussion today about investment performance andmented have our investment to say a few words. go ahead. >> yea inform your board pack knowledge there is the year to date through october i will be sure to performance outstanding. really across the boofrmd absolute returns really impressive. mid single digits for conserve itch funds going to almost 15% on a year to date basis. . drivewaying that really has been the u.s. equity market that has been a theme for over the last decade. i think the other noteworthy item we have done due diligence

today i met with galliard your stable value manager and core flex plus manager. even though they are low returns year to date we are at a very unique time frame. we're 25 year low in credit spreads. understand when fixed income managerers doing and allocating risk the punch line is they are taking rescues off the table because they are not reward for temperature. across the board very strong. returns, happy to answer questions. >> great. on this note, and this was on the first page. commissioners. i want to share a couple updates we have for you number swon this last week the plan roached over sick billion. we are at 6 billion with a b.

when i starred 9 years ago i remember under 2 billion. we were prud to seat growth. so now over sick billion we report out on that. i like to i think the growth has to do with effortos communication and updating educational materials. i wanted to share with the board that earlier this month the rmd mail are went out reminds rmd participate this is there are if not fulfilled will be cut which means distributed via a check. to the participate. the reason why we do this is because pens are very high. they used to be 50%. of the short fall. used legislation reduced that to 25% and they say it is because than i are going to collect the

25% opposed waiving the 50% penalty. furthermore if participates correct the misrmd that penalty reduction guess down to 10%. so in the effort event this participates are not fulfilling their rmd requirement, we work to cut the rmd amounts so upon parents in complianceful no questions kwiped inform the board that effective january first the will be opened for age 60 contributions. as a reminder age 60 catch up krkdzs are per of the 2. zoract allows age 60, 61, 62 and 63 only to contribute the greater of 10 thousand dollars or 50% of the catch up limit this year this year terror is 11, 500 the

mack somebody age 60, 61, 62, 63, this year, is going tiebl to credibility 11, 500. we sent a mail are had 3 then and there participates within this category it inform them and add vance can make arrange ams to mixture contributions starting on january first. i want to share this we have been working on secure 20 to make sure it is available, in collaborate rigz with voya, and the controller's office we have this offer now available to participates next year. and next week we have a dcc middle easting present president stable value recommendation that staff have been working close low on. we appropriate aid recommendation to present to the dcc if approved they will forward to the full board and we

will provide an occupant secure 20 with thing onnal provisions. a discussion item an destruction, more to come. >> with that those are my remarks i'm happy to take questions you may have. q.ed to seat increase. >> congratulations. >> thank you. >> marketing and out reach. >> thank you. >> thank you very much. >> and happy holidays to you. excellent. >> does have a nice ring, doesn't it. >> have public comment. do we have public comment? mod rartd do we have callers. >> there are in callers. >> public comment is closed.

>> next item. 23 is discussion item retirement member [inaudible]. anybody want to bring anything up i will thifrpg everybody at the christmas party. >> yes. >> always good craziness that is going around and everything. one stable thing looks like what we are doing. and i thank my fellow commissioner and is think we are -- exercising our responsibility and -- and -- [inaudible]. [inaudible]. [inaudible], take risk off the

table. two sides to the coin. >> thanks. >> >> thank you. public comment? >> 24, adjournment. >> public comment. >>. no comment. do we have callers on the line? >> there are no callers. >> public comment is closed. item 24 adjournment.

>> good afternoon everyone welcome to the december 17th, 2024 health commission. as you know this is the last meeting of the year and we're going to concentrate on the accomplishment, and at this time the commissioner would like to acknowledge the exceptional work as a department of a whole under the director colfax's leadership,