##VIDEO ID:W9n_Dtcaliw## [Music] Grand it on my side was a little I don't know got make up for the rest of us are not do are [Music] live [Music] they don't yes I do thank hold TI my favorite Depot feel sir your secret just done with a renovation in my home and I'm a little little frustrated with home but not as frustrated as you were supposed to come see me then you wouldn't be frustrated I need and I walked out and it was the big when they see me coming and I have complaint about one of my customers they don't like it oh man cuz I don't put up with it the bigger problem was the stuff that I ordered online like from Overstock or whatever it's called still over I don't I don't I don't order on Home Dep either I do make runs over to's the name amazones on whole yeah I make a lot of runs over there for my wife drop stuff off and she out it's absolutely genius that they do that shipping and handling Fe I I'm telling you br it up for you how are you selling things online Amazon is all in one just give me one price tell me I need I don't need you know providing coffee for our employees Fe like no build that in that's the price of that crazy I shipping with one PR and handling with another it was unb but I still bought it yeah I know it was the kind of that Myer had eaten my favorite hat old [Applause] okay Nick Curry here Dan jansson here Christine hofman here Brandon maresma here edber here David coohill John Patrick here Matt broi here John godilla here J Shar here George hler Ed Dawson John McDaniel Lance hsh here Dy white here okay first order approval of minutes minutes for the May 29th 2024 meeting this is just a Voice vote so all in favor of approval a motion to give us talk about May ins afternoon happy to talk about the firm but I think we've covered that previously unless you'd like me to go into it everyone Brendan institutional newer folks investment consultant on the plan so we're not specifically managing of money in you report you know how the entire individual sub components and then also we'll periodically you know assist with asset allocations manager recommendations things along those lines interestingly we actually do have a manager recommendation for you that we'll get you in a little bit but if it's all right we'll kind of go through the the typical kind of quarterly materials first and get to some of those items a little bit later if that's all right um so you've got hard copies in front of you um what you'll notice the report or the slideshow that I have up in front all the materials are in front of you but I don't have every single page like the 70 page book I've just distilled it down to the 15 or 16 pages that we're actually going to look at but I kept all the page numbers if you want to follow along it won't be necessarily in quite in the same order um but just really quickly so the kind of the first page um of the the presentation is is page number three excuse me page number four of the book and what I'm highlighting here in the upper right hand corner the quarter ended June 30th was positive very positive at least it relates to the S&P 500 S&P was up over 4% let's notice though if you look on the the midcap and the small cap we also 2000 those were both down 3.3% the quarter so you had a big deviation between large cap and small cap within the quarter and then that continued on if you look in the bottom right for the last 12 months the S&P was up almost 25% while those small and midcap stocks were up 10 and 12% respectively so big difference between large and if you uh kind of flip to the next page tucked in your hard copy you actually have two loose leaf handouts and I want to spend a little bit more time kind of talking about the S&P or or actually more specifically the r 1,000 growth so this first chart in front of you um I'm I'm sure someone has has mentioned the Magnificent 7 you know I well I probably did it last quarter but that's what this particular chart is looking at for the first six months of 24 um a couple years ago it was a slightly larger group we were calling them the U the Fang stocks and then a couple of them sort of fell out of favor so we dropped the fan and we started calling them the Magnificent 7 you can see those companies it's Google Amazon Apple meta Microsoft Nvidia and and Tesla those are the largest weights within the Russell 1000 growth as well as the S&P 500 this chart looks specifically at the Russell 1000 grow so what we've got here on this chart the Blue Line represents the the average gain of those seven companies for the first six months of the year 32 and a qu% the index returned 20.7 in the the Russell 1000 growth they 440 stocks so if you take out those top seven you know strip those out for a moment the other 433 stocks only earned 10.3% half of the index return so when I go back to you know a page before in the book when we're talking about the S&P 500 or the Russell 1000 growth being positive what we we're really saying is about four stocks are positive really really positive and the rest really kind of struggled so there was a a lack of participation within the the markets at least through June 30 okay so that will be somewhat telling when we get to some of the performance later on in the isn't Nvidia kind of an anomaly what they've been through most recently um I mean yes it it certainly is is a little bit unusual now things like that do happen from time to time where where one company gets a you know incredible amount of of of momentum and pressure if you will and ride it you know this is the future and it goes up by two three four 500% um that does happen every once in a while but but it tends not to be a longterm um so if you flip to the next loosle page U what this does takes an additional look at the Russell 1000 IND disase so again I mentioned the Fang stocks that's what we were kind of referring to that group as a few years ago Mor the magnific S what this graph does is look at the top 10 Holdings of the different Russell 1000 indices um over the last 10 and a half years and so when you look at the left hand side 2013 the Russell 1000 value the top 10 largest companies represented about 27% of that index the growth the top 10 represented about 22% of that index typical you know the long-term average if you will somewhere in the low to mid 20s for the representation of that top 10 with this run that we've been on particular in growth and more specifically in the Fang which turned into the mag seven you'll notice that orange continue to move up into the right so we finished June 30th with those top 10 now exceeding 57% of the index the previous high for the growth index was back in the DRC bubble late 90s early 2000s it reached about 40% that was the the record concentration back at that time then it spent the next seven years going back to the low 20 sort of unwinding itself I mentioned that to say you know a few years ago we hit 40% P it and obviously just kept going so now we're above 57 today we're higher than that in terms of the concentration so I I just want to sort of demonstrate that it has further it's been a very narrow market and the S&P and the the Russell 1000 growth are becoming increasingly concentrated in those super large names now if they continue to do well for the foreseeable future no problem everything will be fine but kind of normalize those waiting for whatever reason whether the market takes those down or the they stop growing and everything else comes up you're likely to see a scenario where the The Benchmark struggles because it's so heavily weighted in those few stocks if they don't continue to do well just a little bit of interesting Dynamic that's been playing out over the last few years any questions on that so I'll move ahead sorry there there was a second page to that handout if you just were curious about the individual companies and their waiting but I guess the only thing I'll point out is that the top three Holdings each over 10% represent a third of the of the large maret just compies Microsoft and Apple so let's get back to the the actual regular quarterly book then um I'm now on page number 11 down in the bottom right hand uh corner one of the things we talked about over the last well really couple years interest rates and how those have been changing for a good while we talking about interest rates moving higher um and we actually did see within the quarter even though the FED has not been raising rates interest rates did actually move up within the quarter The Gray Line represents where we I'm sorry the Blue Line represents where we were at the end of the quarter which is a little bit higher than the yellow line which is where we were three months ago L if you took this picture as of today we would have actually um you fallen down the page interest rates have have come down in the current quarter but through the period 30th we did see interest rates tiing higher now I'm going to jump to page number 14 and start to get into the plan specific information so we always review this page 14 it tracks the long-term history of your plan um and just as aind the the gray or blue bars down at the bottom represent your net cash bar so back in 1987 you had 11.8 million in the fund and then if you look at those gray bars along the bottom they actually do increase a little bit in the first 10 years or so and then in roughly 1990 or 1996 1997 somewhere in there they start to decline meaning you're paying out more in benefits than you're taking in in contri and now if you fast forward all the way to to June 30th 24 you've taken out all of that 11.8 million plus an additional $ 38.8 million or you know collectively about $50 million yet you've grown the asset from that 11.8 million up to 120.4 million and that you know in a nutshell That's The Sweet Spot of pension investment you build up the nest EG to the point where it grows at a faster rate than you're paying out that what we call negative cash flow right the growth of the money continues to pay all of those you know growing levels of of of payments which is and if you take this out another 20 30 40 years you're likely to see instead of 38 it's going to be 100 million and hopefully at that point your assets are 300 400 million they should continue to kind of separate from one another line um that we show here is the theoretical um okay Fess index that is set at the assumed rate of return so if you had been able to just earn the assumed rate of return each and every year you'd be at $106 million so by investing actively in the portfolio and doing all the different diversification methods and everything that the plan has you have an excess of about million on top of that return next few pages kind of slice and dice the asset allocation U I like page number 17 because it shows the priation from our Target uh investment policy and what you'll notice is we're we're generally pretty close over by about 2% in domestic Equity slightly over in international and then a little bit under in in both domestic as well as Global fixed income we did take uh some action last time to rebalance out of equity those differences were a little greater months ago so we did take some action to to bring those back in line um and generally speaking um we are we're pretty close to those Target weights although I do have a little bit of an update for you a little bit later where we're we're actually deviating a little more from what you're seeing here um due to recent performance so the next page is page number 21 of the report that I'll I'll kind of spend time on Al the the market environment and the plan performance was positive we earned 84 basis points versus The Benchmark of 1.6 six we were behind and placed in the 63rd percentile among the peer group we'll kind of get to some of that under performance in a second most important number on the page that second column in the fytd of the fiscal year to date again we operate on a October 1 to September 30th fiscal year so this report represents our N9 month number 16.1% just slightly Behind The Benchmark of 16.45 we're placing in the 27 percentile for the last nine months you've outperformed 73% of public funds around the country overall still a very good result um if you take it out over five years 7.3% slightly behind that 7.9 placing right in the middle 52% as we move down page we start to look at the individual components we have the Vanguard Total stock our Index Fund did exactly what it's supposed to replicating the index and notice that fiscal year-to date return 27.4% really phenomenal out for for nine months all spring um nice return 5.3% but that was behind the policy of 8.3 one of the reasons for the deficit at the total fund level but for the fiscal year 39 versus 37 so they've done nicely over the last n months in total but you will notice some underperformance over the longer term we we've talked about them multiple times um they were in know six months ago maybe nine months ago they came in and did an update presentation for us you've heard from them um but I also have some additional information or material to talk about as it relates to them because some other changes um in addition to just the performance we also have J income outperformed they were down 1.8 but their Benchmark was down 2.2 and then eat Vance our small manager again was down 3% but their Benchmark was down 4.27% it did slightly outperform but it certainly was was negative in terms of the p and you can really see that disparity between the Vanguard Total stock and the all spring portfolios the core and growth is where we saw positive results value and small cap is we the negative results on an absolute basis next page gets into our International equity and this is where we also had some further underperformance um each manager actually did a little bit worse DFA was down a half a percent versus 96 basis points Euro Pacific was down 23 versus a positive 1.17 and then the wcm focus was down 1.4 versus a posi although on a fiscal year-to dat basis certainly a number of those returns are better but not quite keeping Pace with the the us then we've got our fixed income portfolios we got the bared shortterm which was up 107 for the quarter versus 95 and then the Saw Grass portfolio 17 basis points versus 15 essentially in line but what you you see there is the impact of that that increase in interest rates that we saw with the they did have a positive return but it was impacted by that that rise in interest rates and as a reminder we did allocate some money we took some money out of equity last last time and put it into the fixed income portfolio of the Saw Grass so kind of in this quarter in that short period that did hurt a little bit but you will see um I'll kind of update you through July we're starting to see some much better returns out of of fixed income um as you move down to the bottom we do have the pinco Diversified income or non us exposure they did very nicely it were up 55 basis points versus a negative 1% uh and then the last piece the JP Morgan real estate portfolio is up 1.3 versus a negative 64 B point so relatively speaking they did very well although you'll notice for the 12 months they are behind more down 12 14% excuse me versus 99.6 as a sort of a general commentary it seems like this quarter or perhaps next is looking like it's kind of the bottom of that the real estate cycle barring any other kind of big shocks looks like we're going to be getting an interest rate cut next month 25 50 basis points we'll see but that should help a little bit in terms of the real estate portfolios but even without that they kind of the rate of decline has been slowing um J Morgan obviously did well ahead but the the group of those managers a lot of of numbers closer to zero flat so kind of expecting the next quarter or two to start to see a resumption of positive return on so let me pause there see if there's any questions comments anything that I skipped over that you'd like me to expand on okay well now this is not in the presentation because it's all kind of up to date um but we did actually just this morning I don't chance to send it out yet probably not so in your inbox if you haven't already seen it we did put together the July flash report um and just high level for the month of July we were up 2.1% slightly ahead of the policy which is up 2% which brought our fiscal year-to date return to 18.4% so obviously fantastic I also ran the plan assets as of today and we're up an additional 6 million on top of the July returns which equates to um roughly 1.4% so if you add the 1.4 on top of the 18.4 you get to somewhere in that 19.7 19.8 or so as of today on the fiscal year today was call it five weeks to go in the year so lot of absolute good performance in the June 30th report in terms of of our soon grade but it's gotten even better since then with that we did have about a I mentioned back in the June 30th report we were overweight to equity by about 2.2% now as of today we're actually over by 2.8% and a little bit more International so still well within the normal ranges but we have increase that Equity exposure because of that performance that that has happened I also was referencing Saw Grass just to give you an idea just for the month of July the Saw Grass portfolio was up 2 and a half% kind outpacing the overall portfolio Equity portfolio no I mean it it didn't it's not enough to be to to be significant total fixed income is sitting at 30.9% but but still overweight the overweights on the equity side we were underweight so it you know instead of being 2.2% it might be 2.1% underweight but it's it didn't take us from okay um so one thing that I just wanted to we are well within the normal ranges of of the investment policy not even you know approaching the the maximum but we are sitting here after 11mth period of the fal year where some of those Equity portfolios are up 30 29 type percent we already took some of those chips off the table last time and rebalance now even closer to the end of the fiscal year we are overweight to equity byx mil that's kind of what works out to be at today's dollars so I wanted to to float the idea of maybe taking a few more of those kind of chips off the table if you will a little bit more of that overweight also with the prospect of of interest rates coming down it seems like there there could be continued favorable performance out of out of fix income as well so I wanted to to to mention that as a possible rebalance and or Cas we've kind of been doing that you know periodically again it most of the time we've been doing this we've been five six% overweight we're only sitting at you know 3% 3.2% in total like it's a it's a it's a smaller overweight so there's there's not really the need to do it other than again just looking at an equity portfolio that's up 30 plus percent and just just considering maybe taking a few of those dollars off although if you want to do that because we're worried that we're going to in that will be outside the boundaries I just assume take those that grow and then shift it fix leaving the chips on the table gambling metaphors nut what we're supposed to be doing but so yeah I uh there's every reason to believe that things are going I agree do you have any sorry ask pre weeks approaching an election is there any statistics on volatility and anything that could provide any guidance I didn't I didn't bring anything um we have a chart I happy to send this out after the meting that kind of looks at all the different scenarios incumbent wins but the Congress changes hands or the incumbent in the White House you know loses and and Congress stays or changes hands you know all those different scenarios um 12 months later essentially you aage them all different but some are morei than others change in terms you mentioned volatility it will be I'm Fair certain of that especially until the market thinks it's identified who's going to win that that's fairly typical of the election year cycle you have a lot of choppiness until the market thinks it's identified who's going that isn't until early November other times it's it's earlier on but if and when that happens if there if there's a change if the if it's perceived that the incumbent part is going to lose and the Challenger if you will is going to win then may different you start to see a rotation you know in this case if it's a Democrat that loses in favor of Republican maybe defense Industries and a few things like that will tend to do a little better as opposed to you know Heth maybe some of the other sectors do a long time since we had somebody like Donald Trump but not normal in terms of democrat versus Republican so it's everything in in the short run you know there's going to be I use the word volatility I would expect a lot of volatility but you know two years from now 5 years from now the driver is going to be economic growth that's really what what the market performance will be measured on long term you know Market sentiment based on who's going to win not going to win it'll it'll make the roller coaster go up and down but the real question is we've got obviously inflation cooling the FED talking about needing to to cut rates here pretty soon and negotiating that the term that's out there is the soft land right can we can we temper inflation get that down to normal without causing a recession if that happens and the market can kind of stabilize and then continue to move higher then it's positive if the if the FED overshoots things with the higher rates and they cause us to go into recession then then obviously that's going to that's going to be the bigger impact in terms of securities prices and whatever two years from now three years from now less so kind of I was in a meeting this morning and they the same discussion came up and similar to what you're saying that's not necessarily because no one's projecting any austerity measures or plans so that it's not really going to impact the market per se but there will be a lot of rockiness but they did talk about the misery misery index is that what it's called there is yes there is and that's a combination of inflation Andy you know and what unemployment so that's more of a predictor of how the election will go based on that right so that's that is a real thing it is a real thing I I don't know what it's what it's forecasting or what it's suggesting both unemployment and interest rate I mean inflation are relatively low historically so so according to that if it's just that simple then it's it's fairly strong level right you know I'm teaching stats class now and when You' got data from here to there logical to kind of project it out but if something dramatic changes here you know then all that is just out the window just in a new reality not unlike Corona virus you know that the markets didn't see that coming and so similarly massive tariff increases or who knows what what could happen China Taiwan there's any number of of geopolitical type things that can can cly throw the entire thing but but absent one of those kind of shocks to the system you know again I think the primary drivers is ultimately just going to be economic growth and activity and and really what we're looking at is generally continued strong corporate earnings you know resilient consumers in spite of you know elevated interest rates and all of these things but with the prospect that things cooling down inflation coming down will that bottom out and and kind of stabilize or will turn into a much slower situation ultimately recession as of right now most of those indicators kind of show Soft landing and posit which is partly why the market has been so strong the last six weeks more of that data has kind of been showing that that sort of softer Landing scenario as opposed to recession any other questions on any other quarterly materials update materials okay then the other item we a separate um hand out so we talked about all spring I'm minute a few minutes ago they were in again not too long ago that in um in late may they made an announcement that one of the longtime portfolio managers Tom retired effective sometime um which by itself is not a surprise he part of the team for a long time um and I should also mention that you know due to Performance you know we had been kind of scrutinizing the portfolio already our research team looking at them having extra calls things like that but as a part of his uh retirement announcement what all spring did is they took what we call the dynamic team which is the portfolio and and what Tom was was overseeing along with a group of people and another separate large cap growth team and they decided to combine them and a couple of the analysts from the dynamic team were kind of you know essentially replaced or or removed from the team as were a couple of anals from the other side and but the two teams have had fair Fairly dissimilar portfolios you know some overlap because they're both in growth but but only about half of the portfolio or so was similar and so with sort of the performance concerns that we've been tracking and now some sort of the prospect for some portfolio changes because of the different philosophies with these teams and not knowing how that was really going to play out our research team has made the recommendation to move on from the alate strategy and so this material in front of you is to begin the conversation to consider a couple of of alternatives to that all spring large cap portfolio before I go further I did want to to mention that alling iser um a fee holiday essentially waving their management fees at least through the end of the year for anybody that does stay on they're trying to I don't want paraphrase for them but they're trying to buy some time and get people to be comfortable um and of course they've offered to to come in and talk if if you'd like to hear from them and so on I just wanted to make sure that you were aware he must have been some guy this um so with that let's goad I'll just kind of be real brief in the book I've got four names that we're we're kind of putting forth to consider as replacement ideas um it's not on this page but just a for your information you're paying Offspring 66 basis points or 0.66% to manage the current portfolio so what you'll see is with the exception of aler the other names are cheaper and one additional little piece wins large cap growth um they actually offer a separate type of vehicle called a CIT that is actually even cheaper than what is shown here at 60 basis points so that's a separate account but they offer a CIT which could be for toal 35 basis points is what does it Collective Investment Trust think of it operates like a mutual fund um the only difference it it is a contracted vehicle so you have a contract for as which you don't they don't sign a contract but it operates in the same way the one thing that's actually slightly unique is this CIT can actually be purchased at your custodian sale of trust some cits you actually that the money leaves your custodian and you're you're buying into the investment at what CIT is custodian but this is a CIT that actually can be held cont is there amount of time that you're Contracting to what's the contract just the provisions of the of the actual cig how does that differ from the normal Mutual Fund mutual fund under the Securities Act of 1940 the prospectus is essentially the agreement and you can't modify it but a a CIT you have the ability to adjust some features so just to give you an idea in Florida usually you know the the attorneys in Florida will want certain Provisions about public records and things like that added to the agreement that that wouldn't be in place in the fund documents a mutual fund can't modify the perspectiv for for an individual client but a CIT they can have a side letter they won't actually change their document but they'll they'll sign a side letter can you know work on some of those Provisions that actually in the document so there's nothing in that difference that really has an imp on return no as Brandon jumped on immediately you know might be harder it's not going to be harder to pull money out correct it it it doesn't affect the portfolio it doesn't affect the returns anything like that it just sort of gets into some of the legal items and issues that's just an option that's an option we don't have to do that you do not have to otherwise it's separate is that simar to separate man yes so and I should say with all Spring right now you have a separate account so you have um a bank account at Salem trust that holds Securities and then all spring just does the buying and selling in that account but it's your account at Salem trust so hire a Winslow which is also a separate account you're effectively just changing who is buying and selling in that account same same structure aler is a mutual fund and so that is more similar to how you have the JP Morgan and some of our other other portfolios or other funds in the system where you're actually not get into sing trust is buying or selling into out of the fund based on your but if we were an individual a separate managed account would become a tax benefits and all sorts of correct sque things but that doesn't affect us correct yeah yeah you're not you're not going to do any tax tax loss selling or anything like that for any sort of tax benefits so but if we ever wanted to exclude a certain type of company it' be much easier to do it in a separate account than it would be yes AB although I think we're prohibited from doing that factor yes kind of gets you into a little bit legal gray area if you try to do something like that but yes um they're really pretty new for me um but they exist more in the 401K world I've seen them in 401ks a lot they're hard they're hard for me to work out because they're difficult to look up need special tools and you can't just type in the ticker symbol like you they've been around a lot longer in the institutional space for I mean they've been around for 20 plus years um but what you what you tended to have is 20 years ago if they had a mutual fund you know fund company they would offer separate accounts but there's some inefficiencies there with with having a lot of of separate accounts so you open a mutual fund to have you know a lot of investors in a single account that you can manage um but those would be you know 60 70 80 basis points that be more expensive and then a lot of Institutions like I'm not I'd like to be in a fund but I'm not going to pay 8 basis points so they started in my you know my estimate they started Collective vehicles more flexibility in pricing and they still had a contract sort of the direct relational aspect of it but it was another account that could have multiple investors and but it was significantly cheaper than mutual funds over the last 20 years the mutual fund prices have been coming down to the point where they're now a lot closer to in some cases it could even be lower than that c or separate accounts but also CIT they're doing other things where they can be held at custodians you know 20 years ago they would not be held at your custodian it was a separate kind of location so but again just a few different options there that could be explored you if you're interested in moving forward with wind you have a couple of different ways you get it a few different so if you go to page number two lot of numbers on here but highlight just a couple of things um if you look at the very top line the number of Holdings you'll see they range anywhere from 43 with clear Bridge sorry Windslow 42 is the most concentrated fewer than alling and they range up to 81 with with t price all Springs at 62 kind of right in the middle of that range the other thing to note is the the first line of the second section characteristics average market cap so is 287 billion is the smallest of the group they tend to buy smaller names than the others which range again anywhere from about 415 up to 815 billion dollar in average market cap the index is about 600 I'm going to skip the next couple of pages go to page number four two different graphs here that show the same information but this is to me this is the proof statement that a manager is buying what they're supposed to be buying okay so it's large cap across the top small cap across the bottom and mids in between and then value is on the left growth is on the right so if we're looking at large cap growth managers and I see a DOT down on the bottom left they're going to have a KN issue right means they're you know buying small cap value that's obviously not what we're looking for but what you'll notice is all of the plots are are firmly up in that Northeast quadrant all buying large cap they're all buying growth if you look at the left hand side of that page it kind of shows the average if you will and what you will notice again I mentioned alls spring is slightly smaller in terms of average market cap and you can see that graphically the blue dot is the lowest on the left hand side okay the other ones are all actually pretty tight to each other being fairly consistent in terms of that kind of growth to Value range as well as the average market cap as fairly tight dispersion next page looks at the performance um in kind of the traditional format the trailing uh year format one thing you'll notice if you go all the way out to the 10 year each of these managers is underperformed for 10 years I go back to what we talked about earlier with the concentration in Fang and the mag seven stocks being such a large component and such a large piece you know most managers have a a a maximum of say six or s% of their portfolio in any one stock so if the index has 11% in one stock in that stock does well they're going to strugle and so you really see that show up now in the 10 year now these managers have not underperformed for each year for 10 years but the performance in particular the last couple years has pulled down that longterm average um that you can see there if you're curious about the individual years you can see that on page we show the individual calendar years and obviously there are plenty of years where many of these portfolios are significantly better than the index and offices some period where they they are behind then the last thing that I wanted to to draw your attention to is page number 10 a lot of numbers here but I'm going to focus on the bottom half of page number 10 and really just a couple of lines so the first one is the third line down standard deviation so that's the common measure of risk and this is expressed as a percentage so what you'll see is all spring at 18% aler clearbridge and Winslow are in the 17s and T row is right there at 18 so so aler clear bridge and winds low slightly lower um volatility but not significant beta which is the next line down is a measure of Market risk so all spring is close to one 1.01 and then obviously a varying range between the other managers ranging from 102 down to 98 with clear and then the last two numbers that I like to point out are the up down capture ratios I describe this as the offense and the defense so when the up capture when the market goes up how much of that up does that manager capture right so ideally we want to up capture of 500% right the market goes up one we want to go up five um but anything kind of near or above 100 certainly is positive and then the down catcher how good is the defense when the Market's going down as a percentage how much of that down move are they going right so just as an example fall spring on the 10 year is a 102.2 down so if the market lost % they went down you know 10.2 little bit more than the so generally speaking what you're looking for is a positive spread between up and down which again admittedly in this kind of group of large cap has been very challenged most of these numbers don't really all that say that straight compelling most of the time when you see a surge in different asset classes you'll have have a 10 point spread a 15 point spread between up and down and and long and ultimately that looks at a 10year number that this manager is you know 1% one and a half% ahead of The Benchmark but because of the challenges that we've talked about the spreads are are pretty narrow the versus down and all and when you go back to that that longer term performance it's showing Behind The Benchmark but one of the questions I often get is these managers can't outperform you're paying fees why not just go to an index it goes back to the concentration conversation that I was having earlier we unprecedented levels of concentration in particular in the growth index if we go back to anything that resembles normal or the average the index is really going to have a hard time yeah you're only going to pay four basis points or so to get it but you're potentially looking at significant underperformance because so heavily weighted in such a small number of stocks and to me there's a lot of danger in that again two years ago I would have said the same thing and here we are two years later and it hasn't happened you know it's only become more concent more concentrated but at some point I think that that has to change take you back to page six of course what is the what is the r so that is a pure universe so you know ranking all of the large growth strategies that are reported within this morning star universe so that's that's that's what it's representing and it's a percentage between one and 100 so number one is the best 100 is the worst and so those on page six those are individual years you see how the ranking was and then on page five is sort of the collective ranking so just as an example I'll use because that's the better performing of the separate account managers they're the 18th percentile so even though they underperform slightly over 10 years they still outperformed 82% of the large cap growth funds within that space typically we would expect the index to be somewhere around the 50th percentile over time last 10 years it's in the 50 again sort of speaking to it's it's very strong elevated performance that concentration chart if you just think about that you know meating to kind of the top of the Heap then the question becomes 10 years from now what is I tend to think it unwind and it goes back to something closer to normal but so so using that logic we should pick the worst performer first of all we like all of the managers so I mean but but yeah that certainly is a as a method of the um one of the arguments is for for a lower beta strategy you know again you had beta concentration some of that larger cap and conversely a name was smaller that's one of the things that actually alling they have been smaller which has been a detractor but again our our recomendation for for moving on is not because of their size it's because of Team element changes red flags go up when I hear the discounts from all spring and I like the diversity that Windslow offers they seem to be performing pretty well over the of time just page yep on the threee there signicantly outperformed the other Investments is that I mean can you take from that that during a downturn they at least they could stay out a down if you look at page number six you can actually see that play out so in 2022 they were down 30.6 versus The Benchmark of 29 so they were down more than the Benchmark but they were down less than all of the others so they did hold up better in that down market and then in 23 obviously the recover year they they kind of held their own they weren't the best but they they certainly weren't the worst um and then kind of the same story there's been more more variation here in 2024 it's only six months but at 21 for the the high end is at 29 for certain I don't mean to make you flip all the time but winds low you know longer term you know down Capt has been close to 100 so kind of historically speaking they've been down essentially as much as the market but in the last years I guess I'm like was you know you don't like all spring and you're giving us four you know kind of mediocre one of which looks better than the other four so I assume there's something you like you guys like about these four that they got potential correct again if we look if we had done this analysis two years ago and then you looked back 10 years you'd see a much different performance profile in terms of how performing so again just when we're taking this particular picture at this this point in time it's a little unusual from that but we we would expect each of these managers to outperform over time looking forward did I miss that John mentioned we go for the worst of the L that was sort of the contrarian you know contrarian there are like in every field of life there are incompetent players out there so but I assume you like you often you just the subt around the industry like you mentioned Su but you know something about these other four that even though they haven't exactly hit out of the par potential other and being down for over 10 years doesn't or I I see WIS is doing pretty well over 10 years and I like the 10 period because you know Market Cycles the last few years and certainly you know day to day quarter by quarter you know things change and they seem to have uh reasona well even if they're not rank you top well and's if you if you kind of remove yourself from the numbers and you think if you were sitting at this table 10 years ago and you were looking to hire a manager and I said okay you know we could hire one and at the end of 10 years you're going to look back at your return and it's going to be 16.2% annualized for 10 years would you be okay with that i' venture to guess you all say yes the reason we're we're having kind of this conversation though is because the Benchmark did 16.3 play paid a lower fee to get that it's only sort of in hset but in in absolute terms the returns are there the 16% is even above what we would expect them to do long term right you expect 11% somewhere in that neighborhood for the for the large cap gr portfolio so they've done very well in absolute terms it's just that relative discussion because of what's happening within the index but on a go forward basis yeah I would expect they more normalized environment that that these Managers generally speaking tend to do better relative to to the peer group as well asex well already showed us they could be well down TR market so that's to me that HS tremendous value there there's I mean again we we like all of them but but when you when you get back to again if you're willing to consider the CIT that becomes the cheapest option well it's a it's a it's a cheapest but it's reverse we don't have we have that option on the table with them we may not have you said it's the cheapest are we negotiating with them no the CIT is the lower fee so at the at the 35 you said it was 35 correct so I'm separate account the C is quite a bit cheaper now just to give you an example like clearbridge separate account you'd have the ability to negotiate that I can't tell you what they would agree to but but they certainly you have that ability why not bring us more than I mean I get four but even over the if you do a fiveyear look at it we got one out of the top 25 ranks and the last year we got one out of the top five why are we looking at like I don't want to say mediocre but at the same time why are we not bringing someone that's consistently six or seven every because what is that based on there really haven't been and and the way you've been in the top 10 top five is to be incredibly not just concentrated but concentrated in the stocks that are the largest and have done the best most recently and so from a from a portfolio construction and risk management standpoint when our research team is looking at the long-term viability of a strategy that's not one that really plays out as a consistent performer because it's really hard to be right very small number of stocks you know consistently and so the best performers have been you know 12 13 14% of Microsoft 13 14% of some of these other companies and that's from a risk control standpoint that you don't really think that that's a proven sort of institutional strategy nor one that we think will do you know well for the next five or 10 years that those managers Shi their strategy to so if we stay right where we are then we do not pay fees fee holiday against through the end of the year calendar year correct maybe that gets extended or something but that's what they they've offered up to this point pretty close to the end yes it's really not that far away um so so again ask you know first off obviously we're we're recommending you move on we like all of these strategies but you know if you don't like any of them we can come back to you with some other ideas but if you if you you know liked any of these or had some interest in any of these then the question becomes how might you like to receed would you like to interview any of them hear from them your presentation otherwise or you in the past the last time we we made a changes on the value side you just made a selection we kind of just moved on we didn't but again if you'd like to hear from some of these different managers hear about their their process their their style and so on how many did you look at to come up with these four um in trying to think in our our research team sort of recommended strategies I think there's nine or 10 if I remember correctly and it was you know trying to create a little bit of a cross-section a few different you know Styles little def a little bit more aggressive in terms of bring that offering certainly some of the others interested it negotiate they can um so it's a separate account meaning you're signing a contract that's specific to that portfolio and so they have the ability to to negotiate or you have the ability to negotiate how you look at it as opposed to aler like that mutual fund that is what it is you can't you can't mutual fund Fe but clearbridge and Winslow on the separate account side you can negotiate but Winslow is probably going to negotiate Less on a separate account when they've got the CIT that's cheaper they said you if you're looking for a better fee go to the CIT um as opposed to negotiating on the separate accounts on but that certainly is still an option so it may will be the two options are I thought somebody else has something else they'd like to say or question I just want to throw out there that we don't have to wait three months we can always have a special meeting anytime you guys want so if you wanted them to come back with another option at the other option yourself does anyone of these jump out at you which one would be your choice and why I mean I'm I'm leaning between them I I lean toward winds Lo CD for fees you know that that's certainly that's the one thing that's guaranteed about about Investments we don't know what the Market's going to do but you but you know what you're going to pay you know what you're you're going to pay right so so I lean that way and then again both of their risk profiles just a you know add or slightly lower standard deviation which along with a lower fee you know makes sense the the only kind of caveat if you will is they're they're both a little bit more concentrated um but again at 42 and 43 Holdings they're not you know unusually concentrated there are some managers in the space that only have 23 or 24 positions um is that 440 that that is saying that there are 440 large cor so so of the Russell the 1,000 companies that are in the Russell 1,000 every June 30th Russell decides how many and what percentage are going to be in the value and in the growth it changes every June 30th I don't remember what it was Prior you know the first half of the year but let's say it was 450 right so it always adjusts a little bit and what's really interesting is sometimes there there a company will be split between the growth and the value it might be 20% in in value and 80% in growth so if you take if you take the 1,000 growth and the 1,00 value and you add up those Securities you'll get more than a th000 it's not they're not completely split just between them so it's sort of an interesting methodology if you want to give yourself a real headache go and look how they classify them and they figure out is grow versus value it's it goes way more than that and it's it's a complete mess and it's ordering an arbitrary at the boundary line would be interesting to see interview brid see looks like they might have more flexibility I think I don't I don't mind that um but I don't understand why we don't throw the index in in the U discussion as well just yeah Vanguard Vanguard 1000 growth High shares whatever yeah I mean that that is certainly an option and I don't in the report I don't break it out because I includ the index that's essentially what you're going to get only differ is the the fee Associated I'm pretty sure the vard is four basis points for that so that that is certainly an option um I'll just say you know given what's happened in the last 10 years in the concentration and I have some some plans that their growth assets are 100% passive and my discussions over the last year and a half have been hey this is getting really top heavy let's talk about going active IND when you look at a book like this you're going to say why would I do that right I'm in the best performing thing at the lowest feed why would I want to be the index but again there's a risk that some are talking about but but it's not getting a lot of discussion how concentrated has become and really the index is going to come down to Apple and Nvidia and Microsoft do well the index will continue to do well those stocks don't and it's going to strugle it's so much it that SEL I get nervous with of that pop they had the past year that's just an anomaly it's not normal I think it'll level itself out but yeah an index is certainly an option I'm I'm not suggesting the re what percentage of our current Equity is in passive um we have a little bit more than call it 25 20% so we have the Vanguard Total stock which is as of today is at $18 million all spring was sitting at 17.6 JP Morgan right at 17 million and then Vance 12 the neighborhood 25 is passive but not side how would we like to to pursue not at all I'm sure people wouldn't want I don't know if everyone Minds having a special meeting just to see them so have happen sooner rather than later but I'm all for it because this is 15% of our portfolio so yeah prob be careful who we actually do it to I think at least CLE I like winds offers I like the fact that they they carried on times so just for clarification winds was the one that offered the CIT or was that at 35 FS clear Bridge we'd have to negotiate if if we can correct okay I make a motion that we have a meeting ands for do for that so in favor of that motion leave it with all spring until we can set that dat take that that is everything that I have for you today unless there any other questions thank you okay we have to approve the U performance report fir motion second motion soll George kler yes John McDaniel Lance yes de yes for motion second motion second John Patrick yes Matthew broi yes John gotilla yes Jason sir okay our Board second Nick Curry yes Dan Jon yes Christine Hoffman yes Brandon marma yes any yes all right report really not a lot changity first mons of down we talk about the but we do have some continu education coming up at conference meeting so at the next meeting I'll be bringing the calendar for next year this we switch to being the last Tuesday of each month how has that like for me to continue that for the next year schedule I think that's worked out pretty well except for uh we did want to talk about the next meeting in no year because it's November 26 so this week week of thanks just wanted put it out there see we needed to resched that we talk about still then as far as a date for the special meeting so I mean kind of keeping in on Pace with the same September one month from now basically that's to try get our business they'll make iten I'm not worried about that can we do mid mid October like before the next meeting spit um I can try that I will have to check with City Clerk and make sure the chers whatever else we could always have it at parks also vo we use we always have here we have option I'll shoot for Mid October and check with Council chers keep maybe 8 to 15th I'll other than just uh welcoming our our new Mr thank you for than okay motion second to approve report all in favor any more discussion MO I'm sure I'm sure there's a few things