well good morning everyone um it is 10 o'clock and we will call the February 8th 2024 meeting of the LCS board to order uh item number two is a resolution for our ERS manager Regina story so I'm going to head down in front and I'm going to let the secretary read the resolution whereas Regina story was hired on July 10th 2020 as the retirement system manager for the Oklahoma City Employee Retirement System and has been serving the retirement system members in that role for over three years and whereas prior to becoming the retirement system manager Regina held positions in the utilities department City manager's office and City auditor office between 2011 and 2020 and whereas Regina assumed the retirement system manager position and was afforded very little training yet embraced the full responsibilities of the position and with her dedicated staff facilitated a smooth transition from the previous manager and whereas Regina holds a bachelor's degree in economics from the University of North Alabama and a master M's degree in public administration from the University of Oklahoma and brought her financial background High business Acumen and professionalism to the position and whereas during Regina's tenure the Retirement Systems assets under management Grew From $766 million to $865 million the number of retirees Grew From $1,685 to over 1,750 all while funding level all while the funding level has gone from 98% funded in 2020 to 101% funded in 2023 and whereas Regina demonstrated her dedication to the system by staying apprised of pension topics through the attendance at various educational opportunities provided by professional pension organizations and whereas Regina has always been dedicated to the sound management of the system to ensure that city employees have a sustainable retirement and are well served and whereas Regina and retirement system staff have greatly improved the level and quality of customer service afforded to all retirement system members both active and retired and whereas Regina has performed her duties as Retirement System Manager with excellence and in the best interest of the members now therefore be it resolved by the trustees of the Oklahoma City Employee Retirement System that they do hereby recognize that the contributions of Regina's story be acknowledged and that she be commended for her many years of dedicated Public Service all all right uh chair I'll entertain a motion to adopt the resolution have a motion a second please record your vote I'm going vote a resolution is adopted well um I've been watching the days on my calendar in my office not looking forward to it today I have to admit I flipped the calendar to February last week and I realized it was only a week away so poo poo on that um hey I have to say that that um you know after Renee had been here for well over 25 years um Regina came in E even though she was a board member being a board member you have really no idea of the granularity and the specificity and the detail that's involved with being the manager and to her credit she stepped right in and absolutely did not miss a beat did not miss a beat and and I've told her before that that even though I'm a department head here there are days and times when I take this job as chairman much more seriously than I take my job as a department head because a lot of people out there that need to get paid every week every month rather and and all the all the documents and having to deal with with Jason and the attorneys and everybody else it just it her being there and stepping right in just took a huge burden off of me and I never worried about anything ever getting done or even more importantly getting done correctly so um I want to personally thank you because you have done you've made my life a lot easier and it has been a total Joy working with you and I wish you the best and your new endeavors so I don't know how I follow that um a couple of you may not know that I did serve on the board for five years as an elected trustee and sat in Doug dallar spot um so this is something that I very much have a passion have had a passion for um and I don't know how many of you know that I had Financial Services background or any of that in the private sector but um it has been my joy and great privilege to serve in this way um but I do have to say the only reason that the wheels didn't fall off the bus were because of Mary Ellen Leighton being there when I stepped in and she knows all the how the sausage is made and has told us all how trained us all mike um has definitely stepped up with this last few months with me leaving I've just had to delegate a lot of stuff and he's been excellent in stepping up to um just handle a lot so the excellent staff comment in here is definitely true um also the treasurer's office Matt bogs isn't here but um he was going through a similar transition when I was like a lot there were just a lot of changes going on at that same time so I feel like we went through a trauma together in some ways but it was he was a great partner his whole staff has been just excellent to work with um to make sure that our retirees get paid that's our number number one priority with a small staff all the other stuff can fall by the wayside but we have to make sure those retirees get paid that's our top priority so um it's bittersweet is all I've got to say and thank you guys for this very sweet resolution and if you're available 2 o'clock today basement of 420 West Main we're going to have a little reception for Regina so hope you can all attend Mr chairman can we make some remarks as well i' yeah I'd just like to thank Regina for your service for your friendship over the years and and certainly wish the best and really appreciate all you've done for the city thanks Mr CH chairman I'd like L say I'm so sorry uh Regina we started very similar time frames um and so being able to bring me in get me up to speed um you've been an incredible partner and I wish you all the very success in your next adventure and Regina we we we made a lot of sausage together ourselves so before you you came over here and so you've been a joy to work with and I'm really uh it's a blessing to call you as a friend and um you're a true public servant and I appreciate your your your attitude and your spirit U when she worked for me she always was looking to learn more she's she's a constant educator and I know that's what I always appreciated about her and uh just thank you for your service best of luck and uh you can always come back Regina Regina I want to thank you for your service also um for those that don't know I am the representative of the retirees and I want to say how much we have appreciated you and how much of the time I've been told by retirees how they appreciate the service that you and your office have given all of us thank you I don't know if I'm on here I just wanted to say you just really appreciated your time in our office too and really appreciate everything you've done since you've been in the retirement system just a great great person great great work worker and good luck anyone else okay I didn't get a chance to work with you very long but when I first came on and was appointed to this job I met with Gina over there and she gave me a stack of books and stuff she looked at said don't worry about that J I figured what I got myself into but she said you work up to that so regit I didn't a chance to work with you long but wish you well on your next adventure Regina thank you you uh likewise with Bruce you know I've been here for about a couple years now and you really helped me get started I had no idea what I was doing at the beginning but thanks for making sure that you know I at least found my seat thanks okay item number three is to approve the minutes of the January 11th 2024 meeting I have a motion in a second please record your vote item is approved item number four is the consent docket we have two items we can take with one motion have a motion in a second please record your vote item is approved item number five is to ratify approvals I have a motion in a second please record your vote item is approved item number six on the agenda is to approve the claims docket I have a motion in a second please record your vote item is approved item seven is to approve the following applications for service retirement have a motion in a second please record your vote okay we have a motion second let's vote again on that on item number seven please have motion a second once again appr your vote there we go item is approved item number eight receive report of death authorized payment of the $5,000 death benefit and authorized secretary to make necessary changes to conform on the following have a motion in a second please record to vote item is approved item nine is to receive report of death authorize secretary to make necessary changes to conform on the following we have a motion in a second please record your vote item is approved okay item 10 is items for individual consideration item 10A is approval of sending attendees to the International Foundation of employee benefit plans training program to preserve the certificate of achievement in public plan policy CH under a motion have a motion a second please record your vote item is approved item 10B is personal services contract with Gina Jordan for the retirement system manager position um as I mentioned last meeting uh we had started interviews we'd used the national recruiting firm and uh was some help from the HR department we received a number of applications U we did interviews one afternoon Regina myself and Amy um Miss Jordan currently works in the HR department for Amy she has uh worked for the city well over 20 years I've got to believe she uh she's uh she did a real great job on the interview uh she uh she's a very detailed oriented person and uh we negotiated the contract with the help of uh the municipal counselor's office so contract is here for your consideration she is her first day is actually not until a week from next Monday she's out she's had some surgery but she's working from home so um that's why you see the effective data as it is on the contract so anyone have any questions chair I do I just want to um just again Gan has worked in our department and many of you all know that we've gone through um a core HR System with Oracle we went through the the transition um last summer and if it weren't for uh Gina's you know backend insights on how to be able to get the system set up um do dilligence just make sure that everyone got their benefits was able to go to the doctor I'm I know that she'll do an incredibly good job um and really appreciate uh regene is assistance and helping her get onboarded um and get up to speed um with so that we continue to have a smooth transition but um really appreciate uh Gina's recommendation she's a strong candidate okay thanks Amy okay CH I entertain a motion on item 10 B you have a motion to second please record your vote there we go item is approved item 10 C is to receive the quarterly investment report good morning Jason good morning well I'd be remiss if I didn't Echo the all of the board members comments about Regina before I get started but you you are and um I'm we're very pleased about that that we get to continue to to to work with you you know I'll say um in the the the 30 years been that have been doing this and we see uh people come and go often and it's always um we're always just a little bit nervous as to what what that's going to bring and what level of involvement we're going to have to have certainly was very excited when Regina came in as as the manager uh here and her level of conscientiousness and concern about the the every detail uh was is really something that we don't see uh with with everybody that we work with and I I I really commend you for that from just the organization of board meetings to thinking about decisions or things that we're presenting and to the level of detail that you organized the the most recent uh public fund conference which I think a lot of people don't realize the the work that goes into that but uh we'll we'll miss you here I'm I'm happy that we'll all get to continue to to work with you um so I'm going to go through the the quarter report this morning I know we've looked at these numbers I'm going to go through in a little bit more detail just pointing out a few things on on overall portfolio but um if we turn to uh slide eight back one um what what this this slide is showing is is Broad asset classes that your were invested in not everything it doesn't include the uh less liquid or alternative strategies like private Equity Real Estate and the the long short Equity but we're from left to right on this slide we're showing the light blue bars is the return for the calendar year of that for that asset class calendar year 2023 and the dark blue bars is the the last 10 years and you'll note on the far left large cap us Equity last year was up to 26.3% significantly outperforming everything else it was turned out to be a pretty good year for equities across the board double digigit returns above expectations small cap was up 177% non us developed markets were up 18% uh Emerging Markets up a little under 10 that said all of those are 8 to % behind large cap us Equity so pretty big dispersion what you don't see on here is uh real estate real estate was the worst performing asset class last year down uh down almost 133% which is a about a 39% differential between large cap and real estate so so pretty significant and we know things e and flow I I'm pointing that out because as we look at short-term peer group uh rankings your peer group rankings have have dropped down a bit uh compared to the universe of other investors with 55 to to 70% in equity most of that is in if you had more us large cap the more you have in that the better you're going to look if you're more Diversified you're not going to look as good right now that said on an absolute basis the portfolio was up uh for the fourth year in the last five years double digigit returns the return of the portfolio was over 11% so on an absolute B basis very strong even if you look at the last uh decade ending December of 2023 large cap US Stocks have really outperformed everything um and within that it's highly influenced by the last year in large cap growth MEAP growth and a handful of stocks that have exposure to potential developments and artificial intelligence we're seeing a bit we saw a bit of a broadening out in the market in the last two months of the year where small cap really bounced back uh small cap in the last two months of the year was up 21% in November and December if you look at that one-ear return for small cap up 177% obviously before that small cap was negative 5% and it's actually sold off a bit this month we do think diversification will still pan out this is a we're at a point in time where Mega cap handful of names have have outperformed but that's um just felt that that was something to highlight if we look at the next slide this is really I think more interesting than anything because a lot of people say well what do you expect to happen um last year coming off a year where the SMP 500 or and stocks in general were down I think we showed you some slides that the expectation s would be a reversion to the mean that we'd see a bounce back the following year and that's not surprising the the data would indicate that most of the time stocks are up and what this is showing is going back to 1926 so that's uh 97 years 71 out of 97 years the S&P 500 has been positive so to say that we're going to have a a bounce back after a downturn it's the likelihood is it's pretty probable because most of the time stocks are up but what I'll focus on is if you look on the far right here this is most of the the most frequent uh occurrence in US large cap stocks is a return of greater than 20% Which is what we had in 20 uh 2023 uh there's been 36 times since 1926 that the S&P 500 has been up more than 20% last month we did asset allocation analysis our our Capital Market assumption for large cap stocks is is 88.6% that's below well below 20% it's below the average return if we averaged out all the years from from 1926 to 2023 and that's just because of where we are in the cycle it's still up a little bit uh from from where we were a couple of years ago when we had really um increased valuation uh but we know we're going to while we have an expectation of around 8 and a half% over the next 10 years we're going to have some years that are really high and we're going to have some years that that bring that average down the next slide again more interesting than trying to be predictive but some might say if we had a big up year should we expect a big big down year when I was looking at that previous slide could one state that on the average over this 90 some year period um on the every you average 10.2 but then when you look at that 36 and 21 times you combine those to 57 you're over 10% your 10% are greater which means one out of every two years in theory you're going to be up you're 10% or more yeah okay and then you add the zero to 10 and that's what gets you to the 71 but um typically up years are up double digit returns more than they normally follow really bad years uh oftentimes we didn't highlight that but you could probably see that in there but the next slide is is an indication that that's not always the case Okay um there's been 20 times so looking uh at the last two columns again the 10 to 20% and the greater than 20% this is highlighting the years following a 20% upe so just because we were up 20% last year doesn't necessarily indicate that the following year is going to be a a down year or a lower return more often than not uh those neg zero toga1 years have followed and up 20 20% year but um we have uh over 20 periods 23 periods where you've had positive returns following an up 20% year the next slide and uh we we really talked about this last month when we looked at asset allocation but um I do think it's important just to recognize where we are in terms of yields while yields are up substantially from where we've been hovering for a decade since the financial crisis at around two and a half to 3% um today we're at um um about five or 4% on the 10-year treasury the yield on the Barkley's or the Bloomberg aggregate Bond index is about 6 and a half% so that's intermediate to a little bit longer term and you've got some credit in there and that's really what our cap fixed income Capital Market assumption is based on which is right at 6% we're while we're up considerably from where we've been the last decade we're not at historical highs that's to say we uh we don't think the the next turn is going to be further rate increases but from a long-term historical perspective we're right in line with what the average return on the 10 year has been going back to to 1962 taking out or actually below that now uh where the average yield on the 10 year was 5.9 and we're at about four right now so we're not at historical highs just as a point of reference um now if we just move to to your portfolio on slide one uh yep slide 14 I think this is always good to put put it in perspective in terms of dollars the the one-ear period was a a very good year uh you were up over 10% I think the actual return was about 11 something and uh return on investment in a dollar standpoint just under 90 million we heard the stats about uh Regina's Reign from 2020 to to now and the assets went up by about a 100 million had we not had the uh 2023 in there that would have looked even better but you see the three-year number which includes uh the big downturn of 2022 the portfolio has grown by 67 million and over the last 10 years uh almost doubled in in size on from a return on investment uh the portfolio return on investment has grown by close to 500 million over the last 10 years so at the end of uh the calendar year you stood at 8627 million uh the next slide just looks at the portfolio versus broad objectives in over five and 10 year periods I think a lot of times we get caught up meeting month to month talking about what ha what's happened recently most importantly is long-term results versus objectives so if we look out over the 10year uh we just dipped down at the end of calendar year 20 23 that 10year return has has ebbed down a bit because you're taking off some uh good quarters or months at the beginning U we're we're really getting a lot 2022 is impacting those numbers pretty significantly I think we're actually have come up a bit from where we were a quarter or two before so slightly below that 7% uh on a 5-year basis well ahead of that 7% hurdle and then all the other metrics are uh risk uh metrics well second one is relative to your policy index and relative to your policy index which is what the asset allocation would suggest we're ahead of that so your actual managers are adding value the the bottom three are risk metrics so the portfolio has been built to have a little bit less risk or less volatility uh through uh the the asset allocation uh as well as individual managers that may be focused on higher quality Securities uh are a little bit of a a loss protection uh philosophy within them we see that your portfolio on both a five and 10 year basis has a lower standard deviation than what the policy index would suggest a lower beta which is sensitivity to the direction of the markets so a beta of one would mean your portfolio is moving in line with the the policy Benchmark lower than one is what we're shooting for which means we're a little bit less sensitive to the direction of the markets and then that down capture number uh is an indication if the market and the market being your policy index is down how how much of that downside are you capturing so think of it the easiest way to understand that is if the custom Benchmark is down 10% you're only down 9% you're capturing 90% of that over time by losing less your assets compound at a greater rate we used to always show the slide that if you start with $100 you're up 25% every year so you have no volatility you have uh you're going to end up with like $196 but if in year one you go up 25 year two you go down 50 year three you go up uh 75 or 50 you're still up or 75 you're still up 75% but on average it's 25% a year but that volatility is going to erode your assets and you're not going to have quite as much uh so that's a big factor of what we're looking for and how we're built this portfolio the next next slide is looking at the asset allocation at the end of the year we've made uh last month we reviewed the Strategic uh policy allocation and uh made some recommendations that will be reflected in changes that we're making to the policy today uh but you'll see we're basically at the end of the year in line with the broad targets of equity fixed income and real assets a little bit underweight real assets a little bit overweight uh Equity uh slight underweight to fixed income but if we include cash back in that we're right at that 20% the tweaks that were with within Equity uh a little bit of uh were underweight the target to private Equity by 6% as that was just increased a year ago uh from 10 to 15% and we we're continuing to ramp up toward that this shows this is the target the prior Target targets with 5% long short Equity that is going to zero and those uh dollars after redemptions from long short Equity will go to fixed income as we looked at last month fixed income expectations now closer to 6% uh will are rewarding investors uh at a much lower risk than and and much more transparent than than fixed income I mean than long short Equity now just going to the next page page and and looking or couple couple forward I'm sorry um one more uh looking at the the portfolio uh results not only relative to the policy index but relative to some peers and here's where I I I mentioned so if we look at the one-ear return over here on the right the oneyear return of the portfolio up 11.36% almost 11.4% well above that 7% hurdle rate trailing the policy index by about 1.4% we've talked a lot about this this year the policy index the PRI 15% in private Equity is represented by the S&P 500 in your policy index private Equity doesn't track public markets so we're assuming you have 15% more in large cap equity which is the best performing asset class when last year your private Equity was up um about I think it was like 2% um don't have to don't have to turn to that page but um private Equity [Music] return F five and a half% versus the S&P 500 up 26% over 10 years your private Equity is up 14.5% versus the s&p500 up 12% so over long term we're we're getting compensated for that in the short term it's a big deviation that's what's causing that relative to these peer groups if we look at the 55 to 70 that was up 15% uh so we're that's putting us in the 96 percentile versus that peer group this peer group is very broad all sorts of investors it's not just Pension funds it's it's a lot of investors a lot of smaller investors many of which have much more large cap Equity that's influencing that and the public fund peer group similar story we're a little bit behind we're we're closer to that uh there it is a similar story it's not just private equity and it's less large cap it's a little bit more real estate than the peer group the median allocation to real estate in that peer group is about 8% and so we're a little bit more than that uh the median allocation to private Equity is also about 8% which is where you are on an invested basis uh but I point out out the standard deviation looking at both at all periods 1 3 5 10 if we look at the standard deviation your standard deviation is lower in all periods than all of those other metrics uh an indication that your asset allocation is different you have a more conservative asset allocation and it's uh impacting the results relative to that peer group in this short period of time if we go out over 10 years your uh peer group rankings the most relevant being the public fund peer group ranking in the 44th percentile over 10year period so more higher return uh and significantly lower risk a standard deviation of 9.3 versus the median in that peer group of nine and a half and I think this is indicative of how this portfolio has has been built on the onee uh portfolio versus policy index being that are essentially the uh the private equity which didn't perform as well as the large caps is being weighted at the same or being being measured measured at the same what about in 10 years because the and you mentioned that private Equity has done better than the large caps over the last 10 years so by that virtue our total portfolio should be um High higher than the policy indust okay sorry I just I think I flipped those numbers uh around so that's where the 10 years you see that we have about 46 basis points higher return because of that is that it's not just private Equity it's it's some other things but yes private Equity is adding to the to that outperformance over a 10year basis okay great thank you so any questions on the portfolio before we move to a couple other action items I was okay I'm I'm I'm done with portfolio discussion I don't need to go through the January report unless uh anybody wants to I was going to go over the two action items just one question real quick on that earlier you showed the 10e that we were above the 7% uh is that from a different time period now it's oh okay okay I think you're never mind yeah okay it just it's just right it's actually if we go back a couple last quarter and the quarter before I think we were down closer to six yeah um and it's bumped back up again um and if you go back uh to the end of 20201 we were closer to nine on a 10e basis 2022 really eroded that all right thanks okay uh let's go ahead and let's move to item uh D the monthly investment report real quick and then I was going to skip over that unless skip over yeah unless anyone has any objections over the ASAP for this month and let's move to item uh item e approve investment policy statement so uh the changes here are on page four and five and these just reflect the decisions or or the uh discussion that we had last month around the Strategic policy targets so this is modifying uh the policy lowering the overall Equity allocation from 65 to 60 and really where that's coming from is uh we're lowering the we're eliminating long the long short allocation it's going from coming out so it's not going to zero is just coming out completely which is effectively zero uh a slight tweak to to uh International and emerging uh the international is going up for uh to it we're going we're making sure that our us non- us allocation is consistent with global market cap which is about 6040 so when we add the large and small cap and the international merging together we're we're at that global market cap and then the fixed income going from 20 to 25 and keeping the the prata allocation among the underlying strategies is is effectively the same but the the because the percentage for a fixed income overall is going up uh those numbers change a little bit but this was this is purely reflecting the the mix that we honed in on last month and then the other change is on the next page which would be to your policy index that we measure against again just bringing this in line with with what we uh are doing so the S&P 500 does come down a little bit because large cap is coming down but private Equity will still be measured against that it's the 15% large cap 15% private Equity that over the long term we're measuring all of that against the S&P 500 uh the EM is coming down 1% um AI is going it's going up slightly that include that's the the non us and then the uh the bonds I mean actually that's the bonds that's going up slightly uh from 20 to 25% it's hard to read but the this is to mirror the changes to the Strategic policy okay anyone have any questions hearing n chel entertainment well I'm sorry we're going to take these individually but let's go on to item f and then we'll we'll uh okay so item f is uh to make a full Redemption from the K2 Ascent platform because our asset allocation we removing long short Equity now we have to take the administrative step to actually get out of it uh they have quarterly liquidity with uh 90day uh some of them the notice for the underlying funds is slightly different we've provided the do the withdrawal document to Regina and Paul and these would be effective June 30th but we need to get the Redemption in now for June 30 uh for most of them with the exception of One Fund which would be July 31 that said these redemptions are to for the a Redemption date the money coming back of these IND will each of the underlying funds have some unique um distribution Provisions so it won't all come back in July or August it's going to come back over the course of probably the next year and as that comes back we will reallocate it into the portfolio based on the target asset allocation so we're recommending that you put in a full Redemption from the K2 assign platform okay any questions on item F okay we're going to take item C through F individually so chair will entertain a motion on item C investment report you have a motion in a second please record your vote item is approved chair will entertain a motion on item D have a motion in a second please record your vote item is approved now item e have a motion a second for your vote item is approved and item F Motion in a second please record your vote item is approved okay item number 11 I had this was this really isn't on the agenda but I had just one more comment I handed out this uh table uh postco we've kind of gotten away from regular updates from managers coming in and I uh talked to the chairman and just thinking with a new manager coming on might be good uh to put a calendar out for the full year to bring uh managers in for for update so uh we're proposing this with your long only managers not all the private Equity managers that may not have a lot of dollars um having one manager in in March one in April skip May two in June that kind of complement one another one in July two in September and one of one in October so we'd have a few months where we wouldn't have managers few most months we have one two months we have two coming in so that makes the board meetings a little bit bit longer but I think we'd get through all of your managers this year uh your traditional managers okay okay item number 11 is comments from board staff and citizens again 2 pm today basement 420 West Main big reception good food cake and punch sure hear some hold on any other comments hearing none uh we are adjourned at 10:46