Police and Fire Retirement Board

Item 4 A. May 14, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING April 9, 2024 Page 1 of 4 The regular meeting of the Center Line Police and Fire Retirement Commission was called to order at 3:18 p.m. by Chairperson Petroff. Members Present: Richard Stys, Gregory Suma, and Danny Petroff. Members Absent: Gregory Pearl and Jorge Bermudez. Also Present: Timothy Brice from Graystone Consulting a division of Morgan Stanley via teleconference. AGENDA ITEM 2. – Approval of the Agenda: A. Approval of Agenda: April 9, 2024: A motion by Trustee Stys to approve the corrected agenda and agenda date to read April 9, 2024 and not March 12, 2024 was seconded by Trustee Suma. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Gregory Pearl and Jorge 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 March 12, 2024. A motion by Trustee Stys to approve the minutes was seconded by Trustee Suma. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Gregory Pearl and Jorge Bermudez. AGENDA ITEM 5 – Remembrances of deceased Members and Beneficiaries: A. None. AGENDA ITEM 6 – Presentations:  Item 4 A. May 14, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING April 9, 2024 Page 2 of 4 A. Timothy Brice from Graystone Consulting a division of Morgan Stanley. i. On The Markets – Great Expectations – April 2024. ii. Morgan Stanley – Annual Update of GIC Capital Market Assumptions – Dated: March 27, 2024. iii. Discussion on GQG Partners Emerging Markets Equity Mutual Fund as of December 31, 2023. iv. Portfolio asset allocation and Market value as of April 1, 2024 ~ $ 13,614,753.73. Mr. Brice said the portfolio is in good standing. Mr. Brice addressed the On The Markets document. Our portfolio is up 4.50% in the first quarter of 2024. Mr. Brice said the equity markets have moved up but companies’ price to earnings ratio went up too. Earnings were not as good as expected. The magnificent seven stocks are still having an influence on equity performances. Historically In a twelve-month cycle there usually a ten percent correction and we have not had for a while. It is for that reason we should maybe trim our equity exposure. Mr. Brice addressed the GIC Capital Market Assumptions. At our next meeting Mr. Brice said he will deliver the 2024 asset allocation study. Mr. Brice said the forecasts for the secular and strategic returns are up anywhere from 50 basis points to 125 basis points over last year. Trustee Suma pointed out from Mr. Brice’s report that the asset class of emerging markets is set to return 8.10% and 8.30% secularly and strategically over the next seven to twenty years. Morgan Stanley is underweighting large-cap stocks and our portfolio is nearly at 27.00% in large-cap stocks. Our target is twenty-two percent and our max is thirty-two percent. As large-cap stocks continue to rise we will have to keep an eye on our market exposure. We are okay with are small, mid and international exposure targets. Our overall equity exposure is nearly 66.00% of the portfolio which is in the middle of our asset allocation model. Our REIT exposure is at 6.00% and our private credit is slightly over 3.00%. Our fixed income is at 18.00%. Our portfolio as of April 1, 2024 is $ 13,614,753.73. Mr. Brice addressed Harding Loevner as our emerging market manager. Harding Loevener is up 50 basis points year to date while its benchmark is up 2.60%. We have had them on a watch list for some time. Their exposure to China stocks has hurt their returns. China equities have been an underperformer for a while. GQG Emerging markets has been in existence since 2016. It is a mutual fund. In 2023 they had a one year return of 28.81% while its benchmark was up 9.83%. For three years they returned -.17% while the benchmark was down -5.08%. For five years they have been up 10.05% while its benchmark was up 3.69%. And since inception they have been up 9.01% while its benchmark has been up 5.17%. Returns are reported net of fees. Helping them has been the underweight to China. Mr. Brice wondered if they ever had a heavier exposure in China and the answer is yes. Mr. Brice said they are active in  Item 4 A. May 14, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING April 9, 2024 Page 3 of 4 country exposure of stock holdings and went through their current portfolio. Mr. Brice also addressed their asset allocation by sectors. Mr. Brice said their expense ratio is .98% which is common in emerging market managers. Morgan Stanley has done their due diligence on them. Trustee Suma questioned their number one sector was in energy and the highest of stock holding is in Petroleo Brasileiro SA Petrobras. Is this a place we should have exposure in with oil over $ 80.00 a barrel? Mr. Brice said their sector is at 18.40% while the benchmark is at 5.10% for energy. He said while it is high but its not like it is at 30.00%. The management has done a good job over time managing what sectors and which countries they should have exposure to. Also, if you look at their risk exposure by standard deviation they are at 14.48% while the benchmark is at 17.39%. Their beta is at .69% while the benchmark is at 1.00%. They are active managers that limit their overall risk. Trustee Suma asked Mr. Brice should we make the move today or wait until next month with asset allocation report. Mr. Brice said he feels it is warranted now and after the asset allocation report comes out, we can see if we should adjust the asset class further. Trustee Stys asked Mr. Brice do you think it would be okay to take half of Harding Loevner’s portfolio and give it to GQG Emerging markets fund and then at a future date reexamine both performances. Mr. Brice said that would be good and there is about $ 480,000.00 to be divided. Trustee Suma made the motion to take half of Harding Loevner’s portfolio and fund the GQG Emerging markets fund was seconded by Trustee Stys. Mr. Brice will continue to monitor our large-cap asset target relative to how the markets are moving. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Gregory Pearl and Jorge Bermudez. AGENDA ITEM 7 - For Your Information: A. None. AGENDA ITEM 8 – Old Business: A. None. AGENDA ITEM 9 – New Business: A. None.  Item 4 A. May 14, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING April 9, 2024 Page 4 of 4 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. March 25, 2024, pensions paid: Pay Report 540 ~ $ 127,233.98. A motion by Trustee Stys to pay the March 25, 2024 pensions was seconded by Trustee Suma. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Gregory Pearl and Jorge Bermudez. AGENDA ITEM 14. - Commission Members Comments: Trustee Suma said it was nice to have Danny Petroff back on the commission albeit for a short-term time period and wished him good luck. AGENDA ITEM 15 – Adjournment: As there was no further business to discuss, a motion by Trustee Suma and supported by Trustee Stys that the meeting be adjourned at 3:53 p.m. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Gregory Pearl and Jorge Bermudez.