Police and Fire Retirement Board

Item 4 A. October 15, 2024 November 12, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING September 12, 2024 Page 1 of 5 The regular meeting of the Center Line Police and Fire Retirement Commission was called to order at 3:05 p.m. by Chairman Allen. Members Present: David Allen, Richard Stys and Gregory Suma. Members Absent: Jorge Bermudez and Gregory Pearl. Also Present: Joseph Sobota, Timothy Brice from Morgan Stanley and John Sarzynski. AGENDA ITEM 2. – Approval of the Agenda: A. Approval of Agenda: September 12, 2024. A motion by Trustee Stys to approve the September 12, 2024 agenda was seconded by Trustee Suma. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Jorge Bermudez and Gregory Pearl. AGENDA ITEM 3 – Public Comment John Sarzynski, a retired member of the Police and Fire Retirement system spoke to adding precious metals to the retirement system’s portfolio especially silver. Mr. Brice said that he works for the commission and any action done by him would have to be done at the request of the commission. If the action is taken by the commission, then a report would show how it helps us return wise, risk wise and how does it correlate with the other asset classes of the portfolio. Mr. Brice also pointed out that some of our money managers probably have an exposure to some companies who already have an interest in precious metals. Mr. Sarzynski then asked Mr. Brice what would happen if we saw a collapse of the markets like in 1929 and how is the retirement system set to protect its assets? Mr. Brice pointed that there have been periods of corrections and crashes since the great depression and how markets have recovered over the long-term. That is why we do an asset allocation study every year to see what asset classes are set to underperform and overperform for the long-term horizon. We are always looking for the most efficient portfolio.  Item 4 A. October 15, 2024 November 12, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING September 12, 2024 Page 2 of 5 Trustee Suma said it doesn’t hurt us to take a look at how precious metals could be part of the portfolio. Trustee Suma made a motion to have Mr. Brice conduct a study of what impact by adding precious metals to the portfolio would have including risks and how more efficient or less efficient the move would be. Trustee Stys seconded the motion. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Jorge Bermudez and Gregory Pearl. Chairman Allen left the meeting at 3:19 p.m. and returned at 3:20 p.m. AGENDA ITEM 4 – Approval of the minutes A. Approval of the Regular Meeting minutes held on August 13, 2024. A motion by Trustee Stys to approve the minutes was seconded by Trustee Suma. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Jorge Bermudez and Gregory Pearl. 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 – Sticking the Landing – September, 2024. ii. Discussion on Western Core Plus Fixed Income manager. Value as of September 4, 2024 ~ $ 1,320,079.97 iii. Portfolio asset allocation and Market value as of September 3, 2024 ~ $ 13,936,732.27. Mr. Brice said the main reason he is here today is to discuss developments with the Western Core Plus Fixed income manager. Quarter to date the entire portfolio is up 3.70% and year to date we are up 8.00%.  Item 4 A. October 15, 2024 November 12, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING September 12, 2024 Page 3 of 5 Mr. Brice addressed the On The Markets document. The labor jobs report came in a few weeks ago, and did better then the markets anticipated and the markets retreated. Especially like over-valued stocks like the magnificent seven. A recent inflationary number came in that was good but not great. It is for that reason that Morgan Stanley believes the FED will cut interest rates over their next three meetings by 25 basis points at each meeting. Now we look at asset classes that are under-valued and pay good income. So, time to take a look at the other 497 stocks of the S & P 500. The FED will be cutting rates but is keeping a look out for any recessionary activities. The markets do not like uncertainty. The are three things currently happing that is causing the markets to be nervous. They are: What is the FED going to do, what is the economy going to do and finally, the upcoming presidential election. Fixed income is doing quite well returning 5.00% to 6.00% while over the long-term it has been an asset under-performer. Western has been performing well. Up 5.40% quarter to date while its benchmark is up 5.30%. Mr. Brice said since the last time we met, Western has since lost a co-portfolio manager who has been put on leave. He was doing treasury derivative trades but was haphazard on how he put them into portfolios. They should be added to portfolios equally but he was not doing that. The SEC and Western have started investigations. If any investors have lost money they shall recoup any losses. The potential problem is if that co-portfolio manager is asked to leave then many of his associates may leave with him. Morgan Stanley is reviewing the performance and the activity the SEC and Western may take. We should be looking for a manager to replace them. If Western falls out of Morgan Stanley’s due diligence platform then they have to be replaced. We have had Western on board for the last nine years and they have never had any personnel issues over that time frame. It was determined to have Morgan Stanley monitor the situation and notify us if there is any escalation in the matter and we will commence a zoom meeting. Our current asset allocation shows that we have 66.5% of the portfolio in equities and our maximum target is 75.00%. Morgan Stanley likes the asset class of MLP’s and should invest there. REITS have exploded we are at 7.11% and our maximum target percentage is 7.50%. Private credit has done well and we are almost at the top of our target of 4.00%. We are well within our minimums and maximums on fixed income. From an asset allocation standpoint, we are well positioned. Mr. Brice said he will never  Item 4 A. October 15, 2024 November 12, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING September 12, 2024 Page 4 of 5 come into a meeting and say he knows equities are going to tank and we are taking our 66.50% exposure in equities down to 50.00%. That is market timing. Chairman Allen asked Mr. Brice if we should worry about the impact of one of the presidential candidates getting elected and it crashes the market. Mr. Brice said he has seen big moves after elections but is usually short-lived. Election years are generally good for the markets. The major concern today is how will the economy perform in the future. AGENDA ITEM 7 - For Your Information: A. Letter from Allan Swaringen, President and CEO of JLL Income Property Trust. Re: Second Quarter 2024 results and performance. Trustee Suma said JLL sends us a quarterly report. In their latest report they are doing well on the income side but not so much on the capital appreciation side. The rise in interest rates have hurt this asset class. Mr. Brice said Private Real Estate lags Public Real Estate like REITs. So, it may take a little time before Private Real Estate shows returns. Cohen & Steers is up 15.00% year to date. One of our REIT managers. Trustee Suma made a motion to receive and file this report. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Jorge Bermudez and Gregory Pearl. 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:  Item 4 A. October 15, 2024 November 12, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING September 12, 2024 Page 5 of 5 A. None. AGENDA ITEM 12 – Approval of Pension Figures: A. None. AGENDA ITEM 13 – Vouchers: A. August 23, 2024, pensions paid: Pay Report 556 ~ $ 127,233.98. A motion by Trustee Stys to pay the August 23, 2024 pensions was seconded by Trustee Suma. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Jorge Bermudez and Gregory Pearl. AGENDA ITEM 14. - Commission Members Comments: Trustee Stys returned his tablet with a signed release form. 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 3:51 p.m. AYES: 3 NAYS: None Motion carried 3 - 0. ABSENT: Jorge Bermudez and Gregory Pearl.