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HomeMy WebLinkAboutCOMM - Agenda - 8-17-2022RETIREMENT BOARD MEETING Ausust 18, 2022 1. Opening of Meeting. 2. Approval of Minute No. 286 dated February 17, 2022, Approval of Minute No. 287 dated May 19, 2022. 3. Public Comment. 4. Treasurer's Report: Bank Reconciliations — January 2022, February 2022, March 2022, April 2022, May 2022, and June 2022 5. Requisitions: Requisitions — May 2022 — July 2022 6. Old Business. 7. New Business: A. Approval of a request from Raffaele Casale to purchase prior service time dated December 27, 2004 to March 17, 2006 in the amount of $1,975.75. B. Presentation: Dave Reichert — Korn Ferry C. Portfolio Presentation: Lee Martin, Ph.D. — Marquette Associates. 8. Adjournment. Minute No. 286 February 17, 2022 The quarterly meeting of the Washington County Retirement Board was held at approximately 3:00 p.m. on Thursday, February 17, 2022, in the public meeting room with the following members being present: Commissioners Diana Irey Vaughan, Larry Maggi and Nick Sherman; Treasurer Tom Flickinger. Also present: Finance Director Joshua Hatfield; County Solicitor Jana Grimm; Chief Clerk Cindy Griffin; Secretary Paula Jansante; Executive Assistant Marie Trossman; Chief of Staff Michael Namie; and Lee Martin, Ph.D. representing Marquette Associates. Absent was Controller April Sloane. Approval of Minutes Mrs. Vaughan entertained a motion to approve Minute No. 285 dated December 1, 2021. The motion was moved by Mr. Sherman and seconded by Mr. Maggi,at,the above -mentioned minutes be approved as written. No discussion followed. Roll call vote taken: - Mr. Flickinger — yes; Mr. Maggi — yes; Mr. She `yes; Mrs. VaugE es. Motion passed unanimously. Public Comment None. Treasurer's Report Mr. Flickinw Flickinger and seconded b' XSh,,, statements . Mrs lin paused to lie laC �} r neither more completed Roll ch ote taken: Mr. Flicking oyes; Mr Motion passed imoki Retirement Allowance Report for NoVember 2021. It was moved by Mr. )nciliations of the above -mentioned January and Mr. Flickinger responded that — yes; Mr. Sherman — yes; Mrs. Vaughan — yes. Bank Balance as of November 1, 2021 $ 293,491.85 Deposits to Checking Account -0- Transfers In 671,704.45 Add: ACH Credit 289,210.23 Less: Cancelled Checks (289,783.57) Less: ACH Debits (862,598.09) Bank Balance as of November 30, 2021 $ 102,024.87 Less: Outstanding Checks (68,991.68) Less: Retirement Check Run (33,033.19) Reconciled Balance as of November 30, 2021 $___0__ Requisitions Mr. Flickinger stated that requisitions for the months of December 2021 and January 2022 totaled $2,374,023.52 It was moved by Mr. Flickinger and seconded by Mr. Sherman that the requisitions be approved. No discussion followed. Roll call vote taken: Mr. Flickinger — yes; Mr. Maggi — yes; Mr. Sherman — yes; Mrs. Vaughan — yes. Motion passed unanimously. Distributions Check 2283 2284 2285 2286 2287 2289 2290 2291 2292 Transfer Transfer National Slovak Ottey-Jones Ili Stein is Ashcom Leeann Howell t ounty Regular Payroll Escrow Account on County Cash Disbursement Account PNC Bank Washington Co Retirement Account Amount 1,479.07 600.14 10,795.33 3,112.3 11,000.00 323.93 1,099.35 5886.06 24,13.42 60,176.92 62,727.32 825,234.80 Total December 2022 Distributions 1,057,569.70 January 2022 Check Payee 2294 Estate of Elizabeth Carol Shawley 2295 Robin Joyce Amos 2296 Michael L Garber 2297 Walter W Garber 2298 William R Garber Jr 2299 Dustin Vandivner _ 2300 rho Joyell Carter ��g_ 2301 Kimberly A Fianbk 2302 YWy.}'+' Stifel As Trustee if I chael Anthony Ier 'gig, 2303 GBU Financial Life as Truf IRA _r = . A Sichi Co. Retirement Acct January 2022 Distributions Old Business Amount 530.58 21,702.92 21,702.92 21,702.92 21,702.92 56.79 1,761.87 12,047.61 15, 870.11 16,690.97 15,021.85 160,608.65 25,019.26 19,487.90 9.51 123,952.93 838,584.13 1,316,453.82 None. New Business Mrs. Vaughan entertained a motion to approve the 2022 Washington County Retirement Fund budget. It was moved by Mr. Sherman and seconded by Mr. Maggi that the above -mentioned budget be approved. No discussion followed. Roll call vote taken: Mr. Flickinger — yes; Mr. Maggi — yes; Mr. Sherman — yes; Mrs. Vaughan — yes. Motion passed unanimously. Mrs. Vaughn entertained a motion to approve of the purchase of Employee Benefit Statements from Korn Ferry at a cost of $1.85 per statement for a total approximate cost of $1337.55. The cost per statement remains unchanged from 2021. It was moved by Mr. Sherman and seconded by Mr. Maggi that the above -mentioned purchase be approved. No discussion followed. Roll call vote taken: Mr. Flickinger — yes; Mr. Maggi — yes; Mr. Sherman — yes; Mrs. Vaughan — yes. Motion passed unanimously. Mrs. Vaughn entertained a motion to approve a Natalie Mazza to purchase prior service time dated August 5, 2002 to July 24, 2004 in theme. __ ntof $2,0 It was moved by Mr. Sherman and No discussion followed. Roll call vote taken: Mr. Flickinger — yes; Mr. Motion passed unanimously. Portfolio Presentatic Mr. Martin qui two new partnep wi in beg Washm;County produced mid�n i 16 to the current strain GDP did retreat in t consumer spending. No above -mentioned request Vaughan — yes. the new controller, April Sloane, and that the End of Year report. He stated that out that four out of the past five years had gains to help protect the impact on the County ADC in . Martin went over the market environment and pointed out that accelerated in the fourth quarter driven by business and asked Mr. Martin if he's seen that people are really investing in remodel projects. Mr. Martin responded that in this low -rate environment, there has been significant amount over recent years assuming the project was not impacted by global supply change. He went on that business investment is expected to continue through 2022 due to the need to build business inventory back on anticipation that the world was opening again post pandemic. He stated that the hope is people will continue to spend because that is what drives our economy and the January numbers have come out and, even with inflation, people are continuing to spend. Mrs. Vaughn asked if people are saving less or are they saving at the same rate. Mr. Martin responded that they have more money saved because of the stimulus provided over the past couple of years. Mr. Martin noted the problems associated with stressed global supply chains. Trucker strikes in the US and lockdowns in China are making it more and more difficult to move goods, which subsequently has catalyzed inflation as demand outstripped supply. Continuing with the inflation discussion, Mr. Martin addressed the real estate market. He stated that over the past 18 months there has been a significant shift in leadership within the real estate market, with more traditional office and retail sectors struggling in the work from home environment whereas, industrial and apartment segments have really benefitted from the new environment. For the past year, real estate has gained over 20%. As inflation has risen, the value and income derived from real estate has moved in line. Mr. Flickinger asks what the impact of the bond and equity market will be, pointing out that the Federal Government is raising the interest rate and inflation is still rising. Mr. Martin answers this by saying that downward pressure is on both bonds and equities. Inflation causes prices to rise which, in turn, lowers company profitability and future earnings which are headwind for equities, particularly growth stocks. Additionally, the outlook for bonds is not great as we enter a period of rising rates which are a headwind for price appreciation in the bond market. Aggregate Bonds are already down four percent this year. The Federal Government plans to have six or more 25 basis point rate hikes over the next two years, begin March. There has also been some talk of the Federal Government kicking March off wit - asis point increase in March to combat inflation — but it seems unlikely. 4` Finally, Mr. Martin moves on to the global ec He stated in the developed world, inflation is a problem everywhere. He goes on to that the one exceo is China right now. Mr. Martin recalls that last year, China really dra: d clown the emerging in because of the tech regulations and the issues they had within the rea $ to ' ets. He orate s peaking about � p p g that over the summer. Mr. Martin goeplain that everyone has started to tighten fiscal policy, China has gone the opposite way haf d to sti their economy and have lowered rates. Which is why Chm�lads the 4k marke ar in 2�2: . Transitioning to s, rtin pom gut lead the way in 2021, up 25 percent. However, so fs year, t growth st nd tech stocks have been pummeled. The good news is that the aunty has all those s relatively to more defensive value positions. FNII Emergin -0�gati �t year opoor performance in China. Moving forward a -, ds were flat W-_for f uarter. However, in real terms, with inflation so high, fixed income ret were negative:��olute ,,ns in 2022 are negative. We have, however, benefitted from high -yield ids, as they ark p over o for the year. Mr. Martin continues by saying that the real story pertains tb�.linflatiositive assets. TIPS is up 2.4% and public real estate is up 41 % for the year. Private ma t follow public markets by about 12 to 18 months, which is why private real estate returns are-- rting to mimic what we saw in public markets last year. Mr. Martin then reflects on the County's performance. We ended the year at just over $213 million, gaining about $10 million in the fourth quarter. As of now we are down to about $21`08 million. Our high quality equities are really performing well. Defensive equity added about 5% of over performance last year over its benchmark because people were buying stock options as insurance. The County put private equity and private credit in at the right time last year, as equities are going down, therefore we expect to see private equity and credit to increase outperform their traditional counterparts. Over five years, which is the most important benchmark, is the assumed rate of return, which is 6.5%. During this time period, we have handedly out performed that — posting a return of 10.2%. Four out of our last five years, we have had a high double digit percentage return. We have a lot of gains which could come in handy because we expect a few tough years ahead, likely beginning this year. Moving forward, Mr. Martin elaborates on some changes made in the fourth quarter. We switched out the low volatility manager to MFS, the one that we've seen in OPEB for years. MFS is Marquette's number one low volatility manager. Also, in the defensive equity, we split it between Parametric and Neuberger. This should yield more premium in a market sell off. Mr. Martin summarizes that the diversity in our portfolio has really set us up well for the likely tough upcoming years. After some discussion with regard to percentages allocated to private equity and public equity, Mrs. Vaughan entertained a motion to move an additional 2% of public equity to private equity. It was moved by Mr. Flickinger to move 2% of public equity to private equity. Mr. Maggi seconded the motion. No discussion followed. Roll call vote taken: Mr. Flickinger — yes; Mr. Maggi — yes; Mr. Motion passed unanimously. After additional discussion, Mrs income to private credit. It was credit. Mr. Maggi seconded the No discussion followed. Roll call vote taken: Mr. Flickinger 9.3% for the-_Ll._n aj 1 % ahead so f outperformed by an lag by about 170 basis & Cox Global Stock, j Vaughan — yes. from fixed % from Vaughan — yes. to private that U.S. equities are up 10.2% relative to Select, the local large cap defensive manager is over environment. GW&K Small -Mid Cap Core has since inception. On the global side, Mr. Martin noted we did fourth quarter, which was recouped in January. Artisan, Dodge and MFS Global Low Volatility aided in this. Turning to the Non-U.S. Equity Composite, we outperformed by about 30 basis points in the quarter and 2% in January, thanks to Schroder International Multi -Cap Equity Trust. Also, we added two new managers: one in the emerging markets, Wellington. Additionally, we added Harding Loevner International to give us some small cap exposure overseas. Moving to the Defensive Equity Composite, we are up about 5.9%, about 40 above the base portfolio. The Real Estate Composite brought in 22.0% last year. Since April of last year, TA Realty Core Fund returned 27% which is 10% above the index. Mr. Martin also noted that Timberland/Farmland returned 7%, and Infrastructure had a great year bringing in 6% for the year. He noted that Private Credit Composite delivered 2.4% since inception. Also, Private Equity was up 4.3% for the fourth quarter. Finally, Mr. Martin announced that there would be some fee reductions coming up with MFS Global. The meeting was adjourned at 3:29 p.m. THE FOREGOING MINUTES SUBMITTED FOR APPROVAL: 2022 ATTEST: Minute No. 287 May 19, 2022 The quarterly meeting of the Washington County Retirement Board was held at approximately 3:30 p.m. on Thursday, May 18, 2022, in the public meeting room with the following members being present: Commissioners Diana Irey Vaughan, Larry Maggi and Nick Sherman; Treasurer Tom Flickinger; and Controller April Sloane, via phone. Also present: Deputy Controller Heather Sheatler; Chief Clerk Cindy Griffin; Secretary Paula Jansante; Executive Assistant Marie Trossman; Chief of Staff Michael Namie; and Lee Martin, Ph.D. representing Marquette Associates. Approval of Minutes Mrs. Vaughan entertained a motion to hold Minute No. 286 dated February 17, 2022, in abeyance pending corrections. The motion was moved by Mr. Sherman and seconded by Mr. Maggi Grp. that the above -mentioned minutes be approved as written No discussion followed. E— x VP Roll call vote taken:low __ Ms. Sloane — yes; Mr. Flickinger — yes; Mr. Maggt Mr. Sherm des; Mrs. Vaughan — yes. Motion passed unanimously. r �Q Public Comment None. Treasurer's Report Mr. Flickinger Flickinger and secon statement. Roll call vote Ms Sloanyes,f Motions d unanim Bank Roncili Mr. Sian to inge �.„gs; Mr. Bank Balms of De ber 1, 2021 _ Deposits to Che °ount Transfers In Add: ACH Credit Other Credits Less: Cancelled Checks Less: Other Debits Less: ACH Debits Funds Transfers Out Bank Balance as of December 31, 2021 Transfers to Mutual Fund Less: Outstanding Checks Less: Retirement Check Run Reconciled Balance as of December 31, 2021 ih or 2021. It was moved by Mr. of the above -mentioned Mr. Sherman — yes; Mrs. Vaughan — yes. $ 102,024.87 4,656.2 1,338,021.18 490,578.00 -0- (209,104.80) -0- (858,480.33) -0- $ 867,695.12 -0- (831,421.97) (36,273.15) $---a-- Requisitions Ms. Sheatler stated that requisitions for the months of February 2022, March 2022, and April 2022 totaled $3,273,579.54. It was moved by Mrs. Sherman and seconded by Mr. Maggi that the requisitions be approved. No discussion followed. Roll call vote taken: Ms. Sloane — yes; Mr. Flickinger — yes; Mr. Maggi — yes; Mr. Sherman — yes; Mrs. Vaughan — yes. Motion passed unanimously. Distributions Check 2308 2309 2310 2311 2312 2313 2314 2315 2316 T Transfer February 2022 Payee Estate of Ralph Ric ha William =3 Oman Jr NFS/FMTC IRA F1 —E pse Al vital k & Trust IRA fo ;�� eld Carson J" R n III General Li trustee o ara J h F V.t' Jam Z' Steveri tt cholas P+ O Charlee Rosini �titv as trustee wf Charlee Rosini maw Michael Carso & Nicho� FBO Charlee Rosini (check date: 11/30/2021) on County Regular Payroll Escrow Account shington Co. Cash Disbursement Acct PNC Bank Washington Co. Retirement Acct Total February 2022 Distributions Amount 170.62 994.10 20,307.76 17,265.47 703.64 5,383.57 33,664.12 36,190.15 6,235.95 4,484.39 1,821.97 11,807.68 -6,306.36 24,494.96 26,906.04 71,792.42 QA0'71A 40 1,105,630.87 Check 2322 2323 2324 2325 2326 2327 2328 2329 2330 2331 Transfer Transfer Check 2332 2333 2334 2335 2336 2337 Transfer Transfer March 2022 Payee Robert Greg Fresa Michael Boyza Meloney Dennis Richard Griffith Myra Jakubek John W Kibbe Paul C Rock Shalee Schnore Washington County Regular Pay Washington Co. Case rs s � Payee Edward Grey Capital Bank Trust Co as a trustee of IRA of Joseph J Joscsak IV UPMC Savings Plans FBO Claset Klos Ameriprise Trust Co as trustee if IRA Deborah C Webb Washington County Regular Payroll Escrow Account Washington Co. Cash Disbursement Acct PNC Bank Washington Co. Retirment Acct Total April 2022 Distributions Amount 63.33 242.22 386.48 1,263.04 18,8483.19 2,601.70 99,728.06 2,132.40 24,779.20 58,614.26 76,689.31 847,219.05 1,132,567.24 Amount 3,225.81 9,819.12 3,539.16 78,671.50 23,937.09 6,469.67 59,816.21 849,902.87 1,035,381.43 Old Business None. New Business Mrs. Vaughan entertained a motion to approve a request from Robert Lonick to purchase prior service time, dated December 17, 1998 to July 20, 1999 and September 7, 2004 to November 8, 2004, in the amount of $2,848.32. The motion was moved by Mr. Sherman and seconded by Mr. Maggi that the above -mentioned request be approved. No discussion followed. Roll call vote taken: Ms. Sloane — yes; Mr. Flickinger — yes; Mr. Maggi — yes; Mr. Sherman — yes; Mrs. Vaughan — yes. Motion passed unanimously. Portfolio Presentation — Lee Martin, Ph.D. — Marquette Mr. Martin started by pointing out that the financial quarter. The GDP came in below expectations, down 1.4 inventory buildup did not produce as expected. Th'_ issues. He also mentioned that expectations for - stocks would be global issues such as Russia and Ukraine relationg��cting Europe, policy leading supply chain issues in the Federal Government will need to quickly can tip the country into recess Mr. Martin goes on t -mot that spending due to mflat etailu §; 5 because retailer's have ' to main t profits are down This is als�e pointmg sft k `" �;lrts of c k years, � = rids have bee ersifi market came to a head in the first exports and slowdown in elation and supply chain o e to concerns over well Mina's zero Covid This is : ` ernina because . However, inflation rising too except for the Misery Index. is has pulled back from However, this is also is are rising and, thus, their overall net in the equity markets. He continued by a market cycle. However, over the last 5 of said funds are not moving with the Moving only ally, Mr. Mn reiterated that Europe's confidence has collapsed due to the Russian/Ukraine w e stated f mainland Europe's dependency on Russian oil and gas has impacted growth estimate F, more, China's zero covid policy has greatly impacted the global supply chain issues due to cling huge economy's such as Shang Hai. This is leading to continuous supply chain issues which has resulted in lifted prices across the world. Mr. Martin touched developed market, US and internationally, were down approximately 5% while emerging markets are down roughly 7%. Again, he points to China as a causation, due to China being 1/3 of emerging markets and about 8.5% of the broad international market. Switching to bonds, Mr. Martin stated that agricultural bonds are down nearly 6%, giving it the worst quarter since 1981. He elaborated that, through April, the ag bond core bonds were down 9.5%. However, our fixed income is only down just over 6%. He explained that, as rates go up, the longer duration bonds become more impacted. This is the reason for the 300-basis point difference. Transitioning to inflation on sensitive assets. TIPS is down only 3%. This is nearly 3% better than core bonds. He states that commodities, such as precious metals and energies, are up. He pointed out that every sector is down, however, energy is up 39% and utilities are up 4%. This is linked to good infrastructure. Mr. Flickinger asked if the Build Back Better infrastructure investment has hit the infrastructure. Mr. Martin responded no because infrastructure is a 30-to-50-year development. Moving on to the portfolio, Mr. Martin stated that Washington County finished the quarter at 205 million. He pointed out that the portfolio was down about 7 million due to both stocks and bonds being down. This equates 3.3%, which is better than policy, and ranking Washington County's defined benefit plan in the top 10% of the US. This is due to portfolio being well diversified. The smaller funds that are just in stocks and bonds are down more because of the lack of diversified assets. This is the difference from 2008 when investments lacked diversifying assets. Touching on real assets, the private equity and private credit added last year, are all positive for the quarter. Mr. Flickinger asked Mr. Martin to define private credit. Mr. Martin used the example of bank loans that are not impacted by rising rates. And as they write new loans, the interest rates rise. In response lending to private companies and equity stepping in creating private credit. Mr. Martin spoke about gains over the past five has yielded double figures creating a 200-basis poini, on equities: equities and bond prices going up diversified assets, it produced under the bent to private investors out that 4 of the last 5 years in an rates are coming return. The goal would be to reach 6 ° each year. AA credit addendum voted on previously a and 1% Moving on, Mr. Martin pointed out di n€ Particularly the defensive siting vol ty risk is volatility in the ma = e p out the dr 4f This includes real estai ber, fat nd, and i ru up as well, hel _ to private e.a; pry T big institutions'=` of return is a little median as well. adds the county' 1 eqt d. Similarly, finked i it,as well that has fueled risk Due to the more assumed rate of private eqt( d private isff d over the past few years. m ytel� a good premium when there lea portfolio which hedges inflation. ture. When inflation goes up, these assets go equity bonds. With the recent additions of he end of March and this will go to 26% this ' 53.5%, Mr. Martin states this is about the median of a is a little more conservative because the assumed rate The other assets classes reflect the previously mentioned Year rankings over tirn ow that the quarter is top decile, top quartile, and above median going back. The older time periods were periods which were less in favor. There should be a high ranking going forward due to the portfolio doing well during the downturn. Washington County is doing better even just on your traditional investments. However, NASDAQ area is what's being crushed so far this quarter. Moving to fixed income, the duration is down at 4.1 said the AG is down near 6.8. The 25% lower duration is why there is a 300-basis point growth in fixed income for the year. This is relative to core bonds, which most funds use. The is a yield of about 3%. The yields are going up and there is more yield due to the high yield fund which are up. Closing with Washington County funds through April. However, due to the length of time it takes for real estate and private to come out, it is not included for April. The U.S. equity was down 4.6 and benchmark was down 5.3. There was a better outperformance by tilt into value. This is better than TWIN. TWIN was ahead 270 basis points in April, but, due to the aggressiveness you would expect on the lag in that environment, they are better protected during selling and that is why there was not a total elimination last year. Likewise, because GW&K is more of a growth bent, they lagged that core benchmark for the third quarter but are well ahead for the one year. GW&K were 100 basis points up April. Global equities are at benchmark, however, there is a lack of about bout 20 for the three-month period yet about 30 basis points ahead in April. Headwinds were the growth time managers like Artisan and the AB Globe Core. The major values were with Dodge & Cox and the high quality/low volatility manager like MFS. They were only down 2.7 when the broad market was down 5.4. Non-U.S. Equity Composite was 100 behind for the quarter due to the emerging markets. Washington County did change from the index to activ�ing the quarter but there is not a 'R, full quarter return, and it will be included in the next reporter is in line with benchmark and 130 ahead for the year. Defensive equity was in line for t a owever, over the past year it is 9.5 rather than 7.8, as the volatility premiums are q, ygh. In the afitive section, real estate is up 29%. Washington County left JP Morgan abc year ago. JP Morga s struggling due to large office and retail allocations. Alternatively, Wash in `County joined Clarion TA. TA only has one retail and is at 37.5% for the year member and fad lding a 10% r Infrastructure 031, is slowly increasing. The county used Cam' Steers as a tic equity version on the short term. They were added in November 2020 an ` ma '' % rather the 14%, in that period. Those assets have been used to i f- private - elY m` becaus ides are selling off and the �p - private infrastructureive he quartef%-YID nd private credit, public equities ,v are selling off. Howe v 4 ere is Aiiniediate gain from the private equity. The county is 01 AV Mmffir invested in oe ride pri a q�'�ding an me from day one. This is fortunate in this 4 environ flu �1quitie�ng dowh-wi .private credit was positive .6 where fixed incom&W6 down 4.5% foie tl quarter;; April alone, . equifyI*s down 77 but the broad market was down 9. Global is ahead 30. Global uities are doiW8. U.S. is still about 30 behind. There are currently no other �� alternatives. However,��thin t are selling off are not affecting the county's portfolio as negatively as expected. Th��i`ve performance is expected in May as well. The meeting was adjourned at 4:04 p.m. THE FOREGOING MINUTES SUBMITTED FOR APPROVAL: , 2022 ATTEST: