Police and Fire Retirement Board

Item 4 A. June 11, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING May 14, 2024 Page 1 of 6 The regular meeting of the Center Line Police and Fire Retirement Commission was called to order at 3:03 p.m. by Secretary Suma. Members Present: Richard Stys, Gregory Suma, and Dave Allen. 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: May 14, 2024: A motion by Trustee Stys to approve the May 14, 2024 agenda was seconded by Trustee Allen. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Gregory Pearl and Jorge Bermudez. B. Election of Officers: a. Chairperson Trustee Stys nominates Dave Allen as Chairman. Mr. Allen accepted the nomination. 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 April 9, 2024. A motion by Trustee Stys to approve the minutes was seconded by Trustee Allen.  Item 4 A. June 11, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING May 14, 2024 Page 2 of 6 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: A. Timothy Brice from Graystone Consulting a division of Morgan Stanley. i. On The Markets – Navigating Higher for Longer – May, 2024. ii. First Quarter 2024 Money Manager performances. iii. Discussion on Wealth Strategies Analysis prepared on May 7, 2024. iv. Portfolio asset allocation and Market value as of May 6, 2024 ~ $ 13,369,047.43 Mr. Brice addressed On The Markets. The first quarter of 2024 was quite strong. A handful of managers finally realized stock prices were too expensive and did not correlate with corporate earnings so they were sellers. Economic data was coming in indicating the economy is strong and inflation was sticky. As a result, the ten-year treasury yield was edging higher. Some economists feel the FED may not cut rates in 2024. Morgan Stanley feels the FED will cut rates two times in 2024 starting with an August 2024 cut. Our portfolio returned 4.00% in the first quarter of 2024 and ranked in the top 85th percentile of our peers. Mr. Brice feels the other peer do not care about risk and are taking chances there will not be a correction. The portfolio’s one year return is up over 14.00% three years we are up 3.2%, for five years we are up 7.50% and our ten year return is just under 7.00%. Fixed income managers in the first quarter are down. John Hancock last year was up nearly 34.00% and in the first quarter of 2024 they are up 7.50%. Confluence was up 7.24% in the quarter. Our large-cap growth managers are performing well. Earnest partners did not do well against the benchmark because they did not hold two hot chipmaker stocks. They buy quality stocks at a reasonable price. Clearbridge our international manager performed well and Harding Loevner had a disappointing quarter but has performed well the last few years. Harding Loevner one of are emerging markets managers did not perform well. We took some of their portfolio and gave it to GQG earlier this quarter. Mr. Brice is concerned with them. Trustee Suma asked if we should do a manager search. Mr. Brice said there is another manager they have been using called the American Funds New World Fund. Mr. Brice was asked to have that material for the commission for next month’s meeting. Trustee Stys asked if  Item 4 A. June 11, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING May 14, 2024 Page 3 of 6 the GQG July 1st inception date will be when GQG gets the assets. Mr. Brice said they already have the funds. Trustee Suma said we moved the assets in April so the inception date should not be July 1, 2024. Mr. Brice believes that July date was picked because that will be used to report quarterly returns. Mr. Brice will ask about that back at his office. Our REIT managers were down because interest rates again headed higher. Our private real estate manager, JLL was down 2.77% in the quarter. Our private equity manager was up 6.42% in the quarter. Blackstone our private credit manager just had an upgrade in its rating by Moody’s. Blackstone returned 3.10% for the quarter while its benchmark was up 2.76%. Mr. Brice addressed our current asset allocation and Morgan Stanley’s capital markets assumptions. He covered strategic and secular future returns. Total equity returns over the next seven years should return 6.80% but US equities only returning 6.10%. Value stocks should do better then growth stocks. International equities should return 7.0% and emerging markets should return 9.70% over the next seven years. Fixed income should return 5.20%, REITS should return 6.70%, MLPs should be up 10.30%, Private real estate should return 7.80%, Private equity 10.90% and Private Credit should return 8.90%. Mr. Brice moved to our target portfolio asset allocation with three other market allocations. Our portfolio should return 7.30% for the next seven years and 8.10% over the next twenty years. It makes sense to continue moving towards our target model. Mr. Brice said the other three mixes do not make sense as they are taking more of a risk with not adding much alpha. Mr. Brice said we may want to start looking at MLPs and adding to private investments. Mr. Brice was asked to bring a model projection if we added to Blackstone and MLPs and how that would look. Equities are at all time highs and we may want to trim now. Mr. Brice said all the hard work the commission has put into rebalancing over time to our target model holds up well and we continue on with it. Trustee Allen stated back a few years ago when he was on the commission, he remembers that Mr. Brice was recommending stocks in healthcare sector. Are we still doing that today? Mr. Brice said a lot of our money managers have weightings in that sector. There are new drugs and procedures that will make big money for them. Value managers as well as growth managers both purchase healthcare related stocks. Trustee Suma mentioned to Mr. Brice to put back the money manager profiles in future quarterly presentations. AGENDA ITEM 7 - For Your Information: A. Fiduciary Liability Insurance Binder from Encore Fiduciary covering the period  Item 4 A. June 11, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING May 14, 2024 Page 4 of 6 of July 1, 2024 through July 1, 2025. A motion by Trustee Stys and seconded by Trustee Allen to receive and file this item. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Gregory Pearl and Jorge Bermudez. B. Gabriel, Roeder, Smith & Co. – Standard EDRO Fee Schedule for work completed July 1, 2023 through June 30, 2024. Trustee Suma stated that the Eligible Domestics Relations Act allows for the commission to charge the participant and the alternate payee for any actuarial calculations that have to be completed for an EDRO. This commission adopted that policy a number of years ago. This was a topic that was addressed a few years ago when a situation came up and the policy was reviewed. A motion by Trustee Stys and seconded by Trustee Allen to receive and file this item. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Gregory Pearl and Jorge Bermudez. C. Email from Danny Petroff on April 23, 2024, RE: Resignation from the P & F Retirement Commission. A motion by Trustee Stys and seconded by Trustee Allen to receive and file this item. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Gregory Pearl and Jorge Bermudez. AGENDA ITEM 8 – Old Business: A. None. AGENDA ITEM 9 – New Business: A. None. AGENDA ITEM 10 – Retirements:  Item 4 A. June 11, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING May 14, 2024 Page 5 of 6 A. None. AGENDA ITEM 11 – Annuity Withdrawals: A. None. AGENDA ITEM 12 – Approval of Pension Figures: A. None. AGENDA ITEM 13 – Vouchers: A. April 25, 2024, pensions paid: Pay Report 543 ~ $ 127,233.98. A motion by Trustee Stys to pay the April 25, 2024 pensions was seconded by Trustee Allen. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Gregory Pearl and Jorge Bermudez. B. First Quarter 2024 Money Manager fees ~ January 31, 2024 $ 2,647.43, February 29, 2024 $ 2,532.73 and March 31, 2024 $ 2,771.44. Total $ 7,951.60. A motion by Trustee Stys to pay the first quarter 2024 money manager fees was seconded by Trustee Allen. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Gregory Pearl and Jorge Bermudez. C. First Qtr. 2024 Graystone Consulting fees, Invoice # 10062024094, Dated: April 3, 2024 ~ $ 16,590.40. A motion by Trustee Stys to pay the first quarter 2024 consulting fees was seconded by Trustee Allen. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Gregory Pearl and Jorge Bermudez.  Item 4 A. June 11, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING May 14, 2024 Page 6 of 6 D. Nickel & Saph, Inc. – Renewal of Fiduciary Liability insurance for the period of July 1, 2024 through July 1, 2025. Invoice # 23325, Dated: 04/19/2024 ~ $ 5,995.00. A motion by Trustee Stys to pay the Nickel & Saph invoice was seconded by Trustee Allen. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Gregory Pearl and Jorge Bermudez. AGENDA ITEM 14. - Commission Members Comments: None. AGENDA ITEM 15 – Adjournment: As there was no further business to discuss, a motion by Trustee Stys and supported by Trustee Allen that the meeting be adjourned at 4:00 p.m. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Gregory Pearl and Jorge Bermudez.