The meeting prominently focused on an update to the investment policy statement, driven by new state legislation prohibiting direct investments in entities boycotting Israel. Mitchell Brennan presented this critical amendment, seeking board approval to incorporate the required language, reflecting compliance with state mandates. The motion to accept the changes passed without opposition.

Investment performance and market conditions formed another major part of the discussion. The Capital City Trust report, delivered by Dwayne Madrin, highlighted the pension fund’s asset allocation, including a moderately aggressive portfolio with 62% in equities, 30% in bonds, and 6% in cash. Madrin reported an impressive fiscal year-to-date return on equities of 14.78%. However, he cautioned about ongoing economic uncertainties, such as inflation and labor market volatility, which could impact future returns.

Brennan and Madrin together shed light on the broader market landscape. Brennan detailed a market rally since late September, with a 40% increase from previous lows, while Madrin pointed out the substantial capital expenditures by tech companies in artificial intelligence, impacting overall stock performance. Brennan highlighted the “magnificent seven” tech giants—Nvidia, Alphabet, Apple, Microsoft, Meta, Amazon, and Tesla—driving market trends, though he noted that only Google and Nvidia were currently outperforming the S&P 500. Concerns about high market valuations, especially for large-cap tech stocks, were also raised, as the average price-to-earnings ratio for the S&P 500 had reached 23.

The board expressed interest in the pension fund’s positive performance over the last quarter and fiscal year. The fund earned $868,000, reflecting a 6.1% net return, surpassing its strategic model. Notable performers included small-cap funds and convertibles, with the latter increasing by over 10%. Over the fiscal year, the pension plan earned $1.6 million, placing it in the top 10th percentile among public pension funds nationally.

Attention then shifted to the labor market’s health, with signs of weakness becoming evident. Unemployment benefit claims had reached a cycle high, and rising delinquency rates in consumer loans were concerning board members. The end of a federal student loan moratorium had seen delinquencies surge from 1% to 13%, potentially impacting consumer spending and economic growth.

The board also addressed tariff policies, noting a decrease in the statutory tariff rate from 30% to 19% and ongoing legal challenges. These factors, along with the potential stabilization of tariffs, were seen as elements that could influence economic conditions moving forward.

Administrative matters were discussed, including the introduction of operating rules for the Police and Fire Plans, the pending decision on a fixed multiplier by the city council, and the completion of a successful sock one type two audit. The board reviewed benefit approvals, income statements, and financial reports, all of which were accepted unanimously.

Training and education requirements for board members were also on the agenda. The board considered membership in the Florida Pension Training Association and discussed the need for a trustee vacancy advertisement, emphasizing the city’s responsibility in appointing a replacement.