2026-07-23 - Board of Investment Commissioners

00:00It's nice to first take roll call.

00:03>> Chairman [clears throat] Mayor Spivey.

00:04>> Present.

00:05>> Vice Chairwoman Silveria.

00:07>> Present.

00:07>> City Treasurer

00:09>> Absent. Possible meeting.

00:11>> Present.

00:12>> Mr. Costello is absent. Mr. Punish is

00:15absent. Mr. Murphy

00:16>> Present.

00:17>> Four present, three absent. We have a

00:18quorum.

00:19>> Wonderful. Thank you. Uh welcome

00:21everybody. Uh we've got our friends from

00:23Segal here today. Uh Peter and Julian

00:26and we're going to start with item one,

00:27investment performance analysis for the

00:29fund.

00:31Great.

00:31>> Good morning everybody. Good morning.

00:33Yeah.

00:34Uh if you go to the first document, it's

00:37analysis of investment performance of

00:38the Portland Employees Retirement

00:39System. Just going to

00:41touch on the market environment. We'll

00:43go into detail on the second

00:45presentation that we'll cover today. But

00:47page one just shows you that in the last

00:49month in June, kind of a mixed market

00:52environment. Uh a little bit of a higher

00:55uh inflation report came out uh for May.

00:57Inflation, you know, it was 4.2%.

01:00Uh a lot of that from energy prices. Uh

01:03subsequently, energy has been kind of up

01:05and down a lot in the uh conflict in

01:07Iran.

01:08Uh there was some selling of technology.

01:11We had magnets and salmon stocks at the

01:12beginning of the month. Bottom line is

01:15uh the indexes were mixed. Small company

01:18stocks did well. And if you go to page

01:21three

01:22three, which is the first page in your

01:23retirement system portfolio for the

01:25period ending June 30th,

01:272025, you'll see that despite the fact

01:30that uh fourth column from the left,

01:32that uh large company stocks uh were

01:35negative. The retirement system

01:37portfolio had minus ahead of its index

01:39at the fourth column from the left. End

01:41of the period,

01:45uh left-hand side of the left-hand side

01:48with a market value of 652.9

01:50million. So, diversification of the

01:53equity portfolio for our small cap

01:56stocks, international stocks,

01:58uh

01:59>> [clears throat]

01:59>> as well as large cap stocks,

02:02helped

02:03put otherwise might have been a choppy a

02:05month. And if you look at the

02:07sixth and seventh columns in moving in

02:10from the left, I know it's a lot of

02:11columns to count here. But let's dial it

02:13to numbers. The calendar year-to-date

02:14return for the calendar system portfolio

02:168.1%

02:18and your fiscal year return, that's for

02:20one year, that's the July to June fiscal

02:23year period 14.9%

02:26trailing the benchmark index

02:28for reasons that we've cited before and

02:30one of those reasons

02:32that's actionable is the hedge fund work

02:34that will be

02:36addressing in September. Restructuring

02:38that portfolio.

02:40But if you look at the return for the

02:42year itself, 14.9% very strong return.

02:45And if you look at the three and five

02:46year annualized returns, 14.2 and 8.1%

02:50respectively, matching the index and in

02:53case the five year return

02:55ahead of the index. So, strong 12-month

02:57period, strong six-month period.

03:00In terms of markets as we speak right

03:02now, the next

03:04big focus on corporate earnings and the

03:06conflict in Iran and the Fed and

03:08inflation. But strong period for the

03:10pension fund.

03:12I'm going to turn it over to Peter to

03:13cover the financial reconciliation where

03:15you can focus on

03:17the important fact of the actual dollars

03:20that were gained as a result of that

03:23investment return.

03:25And Peter make your comments as well

03:26shortly.

03:29>> So, I don't know page six in the same as

03:32fourth time.

03:33And then what I'm going to show you guys

03:35the monthly financial reconciliation

03:37portfolio. I do know that the plan

03:40started the month of June with

03:42a little bit over 646 million.

03:46There were

03:47net contributions of about 10 million

03:50and about 8 million

03:52in the month of June. The last time it

03:54was more

03:57than a lot of positive time period.

04:00You know, that was that we had a pretty

04:01strong positive returns to be expected.

04:04You know, how that broke down is

04:06about 875,000

04:09in income was received in the month of

04:11June. And we had a very strong capital

04:14appreciation month where

04:16the investment returns generated about

04:19500

04:21value. So, now that the month of June

04:24would be

04:25about 650 million.

04:28We'll probably get into this next month

04:31when we go over the quarterly results in

04:33greater detail, but

04:35you know, I would like to highlight it

04:37at the end of the fiscal year. You know,

04:38we started this fiscal year with

04:43a little bit over 526 million dollars.

04:46We ended

04:47at 652 million

04:49over the course of the trailing 12

04:51months. We generated about 859 from the

04:55investment portfolio, 75 million in

04:58capital appreciation,

05:00our investment gains,

05:02and about 10 million or 10 million

05:04in income. So, that was a very good

05:07outcome for a fiscal year. I'll still

05:11finish this

05:12quarter, but I thought it was relevant.

05:14Any any questions about

05:17the financial reconciliation?

05:21One thing I would like to highlight is

05:23the portfolio dividend gains

05:25the month and the quarter of the year

05:27with that 519 million in cash.

05:30We are anticipating more of that cash

05:32from city national

05:34to come in in July and August. We will

05:37be paying those those dividends.

05:41Portfolio investments are attractive to

05:43us.

05:44So,

05:46uh that concludes conversation

05:48our discussion of the pension. Is there

05:50any questions? Otherwise, I will move on

05:52to the trusts.

05:55>> Seeing no questions, I'll take a moment

05:56for a motion to approve. Done.

05:58>> So moved.

05:59>> Seconded by the councilwoman.

06:00>> Sure.

06:00>> Those in favor say aye.

06:01>> Aye.

06:02>> Aye.

06:02>> Any opposed? We'll move on to item two

06:06uh with respect to trust funds.

06:08>> Okay, so we have the analysis of

06:09investment performance. It's been a

06:11steady progress through trust funds

06:13as you can see on page three.

06:18This is actually

06:19quite an easy discussion uh this quarter

06:21because the performance through the

06:22trust uh which we lay out individually

06:25and collectively on page three.

06:29Uh if you look at the month return,

06:30you'll see uh the summer returns between

06:321.6 and 1.8% and

06:35um on a one-year basis, you'll see

06:37returns in excess of

06:3921.6 largely in 22

06:43uh percent or more.

06:45These are very good returns consistent

06:47with our conversation discussion of the

06:48pension.

06:49Um there is some great news to report.

06:52Generally, the returns benefited from

06:55being overweight equity

06:57uh throughout the periods leading

06:58discussion with equity out performing

07:00fixed income. That led to added value.

07:03Uh risk management perspective, we've

07:05kept cash

07:06um right where it should be which is

07:08minimal and in line with the needs of

07:10each individual trust.

07:12Um and uh you know, risk management

07:14generally has has added value. Um in

07:17contrast, you know, or or support

07:19highlight,

07:20we employ a number of managers to

07:23implement the investment policy of the

07:25trust. Um active managers actually

07:28contributed a fair amount of value this

07:30last month, this last quarter, this half

07:32of the year.

07:33Uh other than that, uh things are

07:36positioned very well um for the sub.

07:39I'll stop there see if Are any

07:40questions.

07:42All right.

07:43Seeing none, I'll do Peter

07:46>> No, I I That would be fine.

07:47>> Okay. We'll take a motion to approve

07:49item two, the report on trust funds.

07:51John. Seconded by Councilwoman O'Brien.

07:53All those in favor say aye.

07:54>> Aye.

07:54>> Aye.

07:55>> Any opposed? The ayes have it.

07:57Um

07:58Peter, do you have something to add?

08:00>> No, that's it.

08:01>> Okay. Um

08:03Uh item three is our vote on lots of

08:05rebalancing. We do not have any

08:07discussion or vote on that this month.

08:10Motion to continue item three to the

08:12next month's

08:13uh agenda. Approved by John.

08:15>> Aye.

08:15>> Seconded by Councilwoman O'Brien. All

08:16those in favor say aye. Aye. Any

08:18opposed? The ayes have it. Uh I'll note

08:21to the board say um Sarah generally

08:24provides uh cash flow documents. It is

08:26not provided this month cuz there were

08:28no changes. We will have one next month.

08:30Um

08:31which will show um but I'll also say

08:34just out loud that uh in the month of

08:36July we will have made our full pension

08:38uh contribution. Now that the state

08:41reimbursement has come in from the state

08:42pilot fund uh and the finance team

08:45continues to do an excellent job of

08:46making that payment faster and sooner

08:48than ever. And then earning interest on

08:51early payments uh early in the fiscal

08:53year, which will come uh with our first

08:55quarter's tax receipts in August.

08:57>> Right.

08:58>> Does anyone have any other business?

09:02Seeing none, motion to adjourn.

09:04>> Motioned by Councilwoman

09:05>> Seconded by Councilwoman O'Brien. All

09:07those in favor say aye.

09:08Any opposed? We are