Police and Fire Retirement Board

Item 4. January 17, 2023 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING December 13, 2022 Page 1 of 6 The regular meeting of the Center Line Police and Fire Retirement Commission was called to order at 2:31 p.m. by Chairperson Stys. Members Present: Richard Stys, Gregory Suma and Gregory Pearl. Members Absent: Bernadette Helkowski and Jorge Bermudez. Also, Present: Tim Meek and David O’Donoghue from Calamos Market Neutral Income fund via teleconference and Tim Brice from Morgan Stanley. AGENDA ITEM 2A. – Approval of the Agenda: A. Motion by Trustee Pearl to approve the agenda was supported by Trustee Suma. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Helkowski and Bermudez. AGENDA ITEM 3 – Public Comment Seeing there was no one in the audience this item was closed. AGENDA ITEM 4 – Approval of the minutes A. Approval of the Regular Meeting minutes held on November 14, 2022. Motion by Trustee Suma to approve the November 14, 2022 minutes supported by Trustee Pearl. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Helkowski and Bermudez. AGENDA ITEM 5 – Remembrances: A. None. AGENDA ITEM 6 – Presentations:  Item 4. January 17, 2023 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING December 13, 2022 Page 2 of 6 A. Timothy Brice, Morgan Stanley Graystone Group discussion on: i. On the Markets for December 2022 – Time for Income, Not Yet for US Stocks. ii. Education on Calamos Market Neutral Income Fund (CMNIX). Tim Meek and David O’Donohue from Calamos. iii. Discussion of portfolio rebalance as of December 6, 2022. iv. Market value as of December 6, 2022 $ 12,270,113.16. Mr. Brice spoke to the On the Markets handout. Just today, some good news came out regarding the high inflation as there was a slight decrease and the markets rallied because of it. Everyone believes the FED will increase the rate tomorrow by 50 basis points and not 75 which has been done the last four times. In February they expect a 25 basis point hike and will be done by March 2023. The US 10-year note was at 4.20% months ago, and is now down to 3.50% which is good. The bond market at its low was down 16.00% and if rates continue to fall there could be a nice rally in that market. There is a worry that the economy might not suffer a recession but equites could suffer an earnings recession further pushing down equity prices. Mr. Brice touched on performance. Quarter to date the portfolio is up 11.00% for the year we are down 15.00%. Mr. Meek and Mr. O’Donohue joined the meeting via teleconference to discuss their Strategy of market neutral. There are two strategies used, convertible arbitrage which provides hedged equity exposure and potential alpha and Hedged equity which seeks to provide income from options writing and upside participation. Mr. O’Donohue is a senior vice president, Co-portfolio manager with twenty-two years of experience and eight years with the fund. The fund is run by a team of decision makers and analysts. Mr. O’Donohue said this strategy is used as an alternative to core-fixed income. It is a low volatility steady income stream. The strategy does not correlate to interest rate risks. As far as the markets being down this fund is up 900 basis points over the Barclay Aggregate index. The approach is for walks and singles with a 90% percent success rate. Mr. O’Donohue explained the process of convertible arbitrage and said their strategy has been successful in twenty-eight of the last thirty-one years. The convertible arbitrage feature has a 0 Beta and the hedge equity feature has a .5 Beta so the two combined strategies have a .25 Beta which is really low. The two gentlemen exited the conference call. Trustee Suma said he is aware of convertible stocks but hoe is their approach different? Mr. Brice said they buy convertibles bonds at a discount and do not convert them but collect the stream of income and potential of market gains. Mr. Brice said Calamos has  Item 4. January 17, 2023 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING December 13, 2022 Page 3 of 6 been known for years for their convertible management. Even when rates were low, they were getting better returns then the markets. Mr. Brice said there may better opportunities with fixed income managers then this strategy as evidenced by our fixed- income manager Western being up over 3.00% above the benchmark. Trustee Suma said if you turn to page 36 there are three classes of ownership. Which owner would we be? Mr. Brice said the one with the lowest fees. A lot of discussion ensued about active fixed income managers versus the strategy we heard today. Most were in agreement that the bond market has been crushed this past year. As rates stabilize or decrease over the next year, the bond market will be a good place to be. Trustee Suma pointed out that our portfolio has a fixed-income exposure currently of 16.00%. Trustee Pearl asked about the manager we heard last meeting on the long/short strategy and how they are doing. Mr. Brice said good. Their strategy will not get us significant gains but uses a strategy to protect equities in down markets. Now would not be a good time to invest in that strategy. Mr. Brice discussed cash flow needs. He said we will drawdown tactically from asset classes that may be overpriced and riskier in the future to pay benefits. Mr. Brice distributed a document to show where drawdowns would come from. Last year it showed large-cap growth is the area we would trim. It would be evaluated each time Funds are needed. A motion by Trustee Suma to let Mr. Brice of Morgan Stanley evaluate each month where to drawdown funds from the managers to meet obligations due by the Retirement Commission was seconded by Trustee Pearl. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Helkowski and Bermudez. A motion by Trustee Suma to receive and file the Market value statement as of December 6, 2022 $ 12,270,113.16 was seconded by Trustee Pearl. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Helkowski and Bermudez  Item 4. January 17, 2023 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING December 13, 2022 Page 4 of 6 AGENDA ITEM 7 - For Your Information: A. Review of Monthly performances for Western - fixed income manager, Harding Loevner - International equity/ADR and Clearbridge large-cap growth as of October 31, 2022. A motion by Trustee Suma to receive and file this statement was seconded by Trustee Pearl. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Helkowski and Bermudez B. Memorandum from VanOverbeke, Michaud & Timmony, P.C. Re: Fraud Alert dated: November 22, 2022. Trustee Suma said that there is fraud going on in society today for people using direct deposit of their benefits. People are submitting fraud change of direct deposit forms to their employers using “Green dot bank accounts”. Employers should be on alert if they receive one of these forms and to reach out to the retiree to substantiate the change of accounts. This was put on the agenda to make everyone aware of it. We have a good check and balance system here at Center Line. A motion by Trustee Suma to receive and file this memorandum was seconded by Trustee Pearl. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Helkowski and Bermudez C. Review of Monthly performances for Western - fixed income manager, Harding Loevner - International equity/ADR and Clearbridge - large-cap growth as of November 30, 2022. A motion by Trustee Suma to receive and file this statement was seconded by Trustee Pearl. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Helkowski and Bermudez  Item 4. January 17, 2023 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING December 13, 2022 Page 5 of 6 AGENDA ITEM 8 – Old Business: A. None. AGENDA ITEM 9 – New Business: A. Resolution for Proposed Retirement Commission meeting dates for 2023. Trustee Pearl asked if we could change the times to 3:00 p.m. Trustee Suma made a motion to accept the dates with changing the time to 3:00 p.m. was seconded by Trustee Pearl. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Helkowski and Bermudez AGENDA ITEM 10 – Retirements: A. None. AGENDA ITEM 11 – Annuity Withdrawals: A. None. AGENDA ITEM 12 – Approval of Pension Figures: A. None. AGENDA ITEM 13 – Vouchers: A. November 25, 2022 pensions paid: Pay Report 484 ~ $ 126,716.67. A motion by Trustee Suma to pay the November 25, 2022 pensions was seconded by Trustee Pearl. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Helkowski and Bermudez  Item 4. January 17, 2023 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING December 13, 2022 Page 6 of 6 14. Commission Members Comments: There were no comments from the Trustees. AGENDA ITEM 15 – Adjournment: As there was no further business to discuss, a motion by Trustee Suma and supported by Trustee Pearl that the meeting be adjourned at 3:53 p.m. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Helkowski and Bermudez