Police and Fire Retirement Board

Item 4. December 12, 2023 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING November 17, 2023 Page 1 of 6 The regular meeting of the Center Line Police and Fire Retirement Commission was called to order at 3:00 p.m. by Chairperson Stys. Members Present: Richard Stys, Gregory Suma, Jorge Bermudez and Gregory Pearl who arrived at 3:12 p.m. Members Absent: None. Also Present: Timothy Brice from the Graystone Group of Morgan Stanley. AGENDA ITEM 2A. – Approval of the Agenda: A. Motion by Trustee Suma to approve the November 17, 2023 agenda and move item 6 to item 3 as Mr. Brice asked to be on first, was supported by Trustee Bermudez. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Pearl. AGENDA ITEM 3 – Public Comment Seeing there was no one in the audience this item was closed. Trustee Gregory Pearl arrived at 3:12 p.m. AGENDA ITEM 4 – Approval of the minutes A. Approval of the Regular Meeting minutes held on October 10, 2023. Trustee Pearl made the motion to approve the October 10, 2023 minutes was supported by Trustee Bermudez. AYES: 4 NAYS: None Motion carried 4 - 0. ABSENT: None. B. Approval of the Closed session Meeting minutes held on October 10, 2023. Trustee Suma made the motion to approve the closed session October 10, 2023 Minutes was supported by Trustee Pearl.  Item 4. December 12, 2023 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING November 17, 2023 Page 2 of 6 AYES: 4 NAYS: None Motion carried 4 - 0. ABSENT: None. AGENDA ITEM 5 – Remembrances of deceased Members and Beneficiaries: A. None. AGENDA ITEM 6 – Presentations: A. Morgan Stanley Graystone Group information: i. On The Markets – Recalibrating Risk – November 2023. ii. Third Quarter 2023 Money manager performances. Mr. Brice said what happened in the 3rd quarter of 2023 was the same as 2022. The ten- year US Treasury note went from 4.00% to a little over 5.00%. Some of it was caused by the US Govt. debt rating being lowered and the Federal debt ceiling limit being maxed with a scare of the US Govt. being shut down. There was also the US Speaker of the house was removed from his role while another war broke out between Israel and Palestine. Through yesterday’s close the US Treasury ten-year note has come down to 4.40%. The one area Morgan Stanley has a concern about in the equity markets are the magnificent seven stocks who are controlling the stock market gains. They are Apple, Amazon, Google, Meta, Microsoft, Nvidia, and Tesla. These stocks have accounted for 106% of the gains in the S & P 500 through the end of October 2023. The other 493 stocks have been negative for the year. The 493 companies are trading at about 15 times earnings. The magnificent 7 are trading at a range of 25 to 106 times earnings. So, for that reason Morgan Stanley thinks there will be more volatility in the equity markets. All seven of these stocks are involved with artificial intelligence. Other areas of concern in the equity markets are consumer spending lower, company earnings lower and loss of jobs. Mr. Brice said he will be watching equities very closely and may come back to the commission to trim our exposure there. For the 3rd quarter of 2023 the portfolio was down 4.08% while the benchmark was Down 4.21%. For the year-to-date performance we were up 6.01% and the benchmark was up 6.44%. For that time period we were in the to 7th percentile against our peers. For one year we are up 15.09% and the benchmark is up 14.48%. That is good enough to put us in the top four percentile against our peers. We are beating the benchmarks of three years, five years and seven years. A lot of that has to do with the tactical moves the commission has made over the last few years. Currently cash is generating over a 5.00% return but Morgan Stanley is advising not to  Item 4. December 12, 2023 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING November 17, 2023 Page 3 of 6 sleep on cash if interest rates go down. They believe bonds should be tactfully invested in. Western had a bad quarter down 5.00% and its benchmark was down 3.20%. But through yesterday’s close they are up 4.20% and its benchmark is up 2.25%. Once they perform well we will probably terminate them because of their style of investing it does not go well with the way the FED’s strategy of interest rate hikes and cuts. Confluence had a bad quarter. They are a relative value style manager. They were down 6.63% for the quarter as its benchmark was down 3.17%. In the month of November, Confluence is up 7.10% and its benchmark is up 5.20%. Earnest Partners is down for the trailing one-year period. For the month of November, they are up 8.80% and its benchmark is up 7.00%. Our REIT managers have performed badly but REITS are tied to the interest rate environment. When interest rates go up REITS go down. Cohen and Steers is up 9.00% in the month of November and its benchmark is up 8.30%. So, as interest rates fall as they have recently, it makes better for the REIT investments. Mr. Brice turned to our asset allocation. Our Large-Cap equities which we have trimmed back stands at a 25.29% allocation. It is moving up as the equity markets are doing better. If it gets to thirty, we will probably trim it back again. Our small to mid-cap is at 11.74% and our international is at 22.40%. Mr. Brice said Morgan Stanley believes International stocks will move higher but not so much in the emerging markets sector. We have an exposure in emerging markets of 5.36%. Our total equity exposure is 64.75%. Our maximum exposure on equities is 75.00%. We have not added to Master Limited Partnerships. Mr. Brice said for three straight weeks oil prices have fallen. We are at 0.00% in Master Limited Partnerships. We have an allocation to REITS at 7.00%. We may have to trim back REITS soon as our maximum is 7.50%. We have 3.18% in Private Equity which is our newest asset class. We have 3.84% in Private Equity. Fixed income is at 15.47% is at the low end and Mr. Brice said this is an area we might want to add to as interest rates are relatively high. And finally, cash is at 5.80%. Trustee Suma said after the first of the year we will have to draw on this to pay pension benefits. Mr. Brice summarized the poor 3rd quarter performances because the FED shot interest Rates up so fast that everyone panicked and there were sell offs. But as we had trimmed the portfolio we should be in a good spot as the markets recover. Money can be made in fixed income exposures but caution is advised in the equity markets. Economic indicators need to be studied going forward. Trustee Suma asked Mr. Brice if he could have money manager performances and asset allocation through November 2023 for the December meeting. He said he would but some of the lesser managers who do not set a daily pricing may not be updated. AGENDA ITEM 7 - For Your Information: A. Correspondence from Gregory T. Suma to Mr. Timothy Brice giving authorization to liquidate funds to fund the initial investment of Blackstone  Item 4. December 12, 2023 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING November 17, 2023 Page 4 of 6 Private Credit Fund dated: October 13, 2023. Trustee Suma made a motion to receive and file which was seconded by Trustee Bermudez. AYES: 4 NAYS: None Motion carried 4 - 0. ABSENT: None. B. Correspondence from Gregory T. Suma to Mr. Noah Schlief notifying Mr. Schlief about his rights under the Uniformed Services Employment and Reemployment Rights Act of 1994 regarding right to purchase “prior service credit” while on active military duty. Dated: November 2, 2023. Trustee Suma said he calculated out what his cost would be as indicated in the documents provided. He can pay this back until 2027. Mr. Schlief came by the office recently and did turn his request to buy the “prior service time”. Trustee Suma made a motion to receive and file which was seconded by Trustee Bermudez. AYES: 4 NAYS: None Motion carried 4 - 0. ABSENT: None. AGENDA ITEM 8 – Old Business: A. None. AGENDA ITEM 9 – New Business: A. None. AGENDA ITEM 10 – Retirements: A. None. AGENDA ITEM 11 – Annuity Withdrawals: A. None.  Item 4. December 12, 2023 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING November 17, 2023 Page 5 of 6 AGENDA ITEM 12 – Approval of Pension Figures: A. Revised Final pension benefit for Charles Schubert effective July 5, 2023. Straight Life with 60% to survivor and total annuity withdrawal. Trustee Suma made a motion to approve the new revised pension benefit which was seconded by Trustee Pearl. AYES: 4 NAYS: None Motion carried 4 - 0. ABSENT: None. AGENDA ITEM 13 – Vouchers: A. October 25, 2023, pensions paid: Pay Report 522 ~ $ 127,848.38. A motion by Trustee Pearl pay the October 25, 2023 pensions was seconded by Trustee Bermudez. AYES: 4 NAYS: None Motion carried 4 - 0. ABSENT: None. B. Graystone Consulting – Third Quarter 2023 Consulting fees. Invoice # 10062023285, Dated: October 12, 2023 ~ $ 14,848.54. A motion by Trustee Bermudez pay the Graystone Consulting invoice was seconded by Trustee Pearl. AYES: 4 NAYS: None Motion carried 4 - 0. ABSENT: None. C. Third Quarter 2023 Money manager fees, July 2023 $ 2,706.02, August 2023 $ 2,526.40, September 2023 $ 2,332.45, Total: $ 7,564.87. A motion by Trustee Pearl to pay the money managers fees was seconded by Trustee Bermudez. AYES: 4 NAYS: None Motion carried 4 - 0.  Item 4. December 12, 2023 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING November 17, 2023 Page 6 of 6 ABSENT: None. D. MAPERS 2024 Dues ~ $ 200.00. A motion by Trustee Pearl to pay the MAPERS invoice was seconded by Trustee Bermudez. AYES: 4 NAYS: None Motion carried 4 - 0. ABSENT: None. E. Gabriel, Roeder, Smith & Company GASB Statement 67 and 68 for the period ending June 30, 2023. Invoice # 482786 dated: November 6, 2023 ~ $ 7,000.00. A motion by Trustee Pearl pay the GRS invoice was seconded by Trustee Bermudez. AYES: 4 NAYS: None Motion carried 4 - 0. ABSENT: None. 14. Commission Members Comments: Trustee Pearl asked if our vacant seat is going to be filled. Trustee Suma said he believes Danny Petroff will be appointed at the December 2023 city council meeting. AGENDA ITEM 15 – Adjournment: As there was no further business to discuss, a motion by Trustee Suma and supported by Trustee Bermudez that the meeting be adjourned at 3:41 p.m. AYES: 4 NAYS: None Motion carried 4 - 0. ABSENT: None.