Board of Investment Commissioners | Regular Meeting | March 26th, 2026 | 12:00pm

How you? Hello. This is

our first livestream for Infantix.

Okay. Alright. K. It's 12:03 on a call about March 26 meeting of the Board of Investment Commissioners. So order, please, and ask the person to roll call.

Chairman Mayor Smiley? Present. Vice chair, Woman Silberier? Present. Mister

Husband? Present.

Councilwoman Ryan? Present. Mister Costello is absent. Mister Hersch is also absent. Mister Winkelman?

Here. Great. Five. Present, we have a quorum. Wonderful.

Welcome, everybody. We're joined again by our advisers from Siegel. They have both monthly reports, but because we didn't have a meeting last month due to social circumstances. We also have a little bit of year end summary to go through. And then pending the will of the commissioners, we will have a potential vote in Item three in respect to a small rebalancing decision.

So we're joined by Rosemary Gillette and Peter Sullivan, and then we'll turn it over then for item one, investment performance analysis takeaway.

Thank you very much. So within the investment performance analysis agenda item, Rose and I anticipate going over the quarterly performance as of the end of last year. I'll on the quarter and the year, do a little bit of analysis and performance on a peer group basis. After that, we will go over the performance of the ERS as of the end of February and end of a discussion of of the chest performance. We do have a very small kind of pro form a recommendation to make for the VRS that shouldn't take very long.

And I'll start with the City of Providence Board of Investment Commissioners. If you could flip to in lower right hand corner, there's page 23. Again, this is our attempt to, synthesize a couple 100 pages of analyses and then easy to hand out. So on page 23, you should see total plan, all public DB plans in the upper left hand corner. So what we want to do is focus on the total plan return as of the end of the fourth quarter.

We had a 1.3% return for that quarter, and we had a 13.6% return for the one year. If you look at the twelvethirty one numbers, we're looking at the performance of the total plan, net of all fees, and comparing it to other defined benefit plans in the public space. In the parentheses, you actually see your peer group ranking. So the lower the number in the peer group parentheses, the higher or better we have done relative to peers. And taking a snapshot, focusing on kind of the year end one year, I'd highlight that we did have some strong returns from an absolute standpoint.

One year is 13.6%, which is ranked just around median for the year. 13.6% is a strong absolute return. I just recall that we're looking for the pension based on its asset allocation to offer somewhere between a 6.8% and a 7.5% return in any given year. So we had very strong results on a one, three, and five, seven, and ten years, which really exceed our expectations for portfolio performance in just very absolute returns, in absolute terms. For this last year, again, we have like a medium length return relative to the peer group.

But I would highlight on a three and a five year basis, you're outperforming about 90% of public defined benefit plans measured by return. That's a very good outcome. On a seven and ten year basis, you're around median, which is not a bad outcome. It is highly influenced, by the performance of the portfolio. On the next page on where we look at calendar year numbers.

2020, it was a a very difficult year historically for the portfolio. Don't know, but there was a lot going on in 2020. That cool. Yes. Just keep in mind where your rankings kind of move from extraordinarily high to medium, it's largely influenced by that one year, 2020.

If we look at the portfolio's performance versus its benchmark, there's a little bit of underperformance on a one year basis. But we're benefiting from some strong, consistent outperformance versus your policy benchmark in four out of the last five years.

And if we look at the bottom of that page, you can see the population. So there's over 1,000 public plans here. Obviously, it fluctuates over the years. So you're looking at other public pension plans to compare yourself to. So this is a great universe.

You're not going to always be top decile every year. It's going to fluctuate, but you've done extremely well in this portfolio.

There are lots of ways to measure the performance of the plan. There's multiple kinds. And again, I'm highlighting that the most important ones, absolute versus your expectations, we have a good performance track record here. And again, in line or much better than Pearson. If we build one more page, I'll draw your attention to the left scatter file analysis.

It's three years annualized return versus annualized standard deviation. So in simple terms, we've highlighted that your returns are very good relative to this peer group of public plans. There's over 1,000, as indicated by each one of those little dots. To the extent we're above the horizontal line in that cross here, it means we're outperforming the median public plan. What I want you to highlight here is vertically.

You'll note what we're measuring is the risk in your portfolio. Right? How much for every bit of return, how much risk are we facing? Are we incurring? It's a cost benefit type analysis.

And what I want to highlight here is you're outperforming peers by having risk that's very much in line with a public DB plan. It's a little bit higher than the typical median fund, but you're being well served with the additional better performance. And it also tells us that we're right over our skis in the amount of risk that we're taking in the portfolio. Really good to look at at least once a year, which is why I'm spending time on that. Okay.

I'm gonna I'm gonna skip, if you wouldn't mind, two pages. In the lower right hand corner, please, you'll see page 46. Okay. And what I'm endeavoring to do kind of like in this annual quarterly kind of recap and update on performances, I want to highlight the performance of your active managers in the pension plan. And then broadly, Rose and I were talking about it this morning again.

What is remarkable about your performance is the consistency of your active managers' returns Since inception, they've been positive. You've had a consistently good performance relative to benchmarks. There's been a good contribution where you take active risk. And I'm just going to spend a couple more minutes just highlighting what that means relative to peers. So on page 46, we're looking at Robeco, which is Boston Partners' Maycap Value.

Interestingly enough, we have outperformance for this manager across one, three, five, seven, and ten years. Great. Nice to have. We don't expect that to always be the case. But you'll notice in the parentheses that we have relatively small numbers between fifteen and twenty.

And what that is measuring is that if you it means that this manager's outperformed 80% of big cap value peers in the active space, which means your our decision to select this manager and retain it has proven to be a very good one over this past year and over the long term. The next page, we're looking at our other active manager, which is Robita, Boston Partners, Small Cap Value. And I want to highlight that Boston Partners in Small Cap Value did underperform its benchmark, the Russell two thousand Value Index, over this last year. It's by about 4% or 5%, mostly coming in the third and part of the fourth quarter. Notice that I'm highlighting underperformance, yet the performance of Boston Partners relative to other small cap value managers, of which there's a 135 that we're tracking, is well above median on a one year basis, around or better than median on a three, five, seven, and ten year basis.

What is that telling us? It's telling us that active management was challenged over this period. Matter of fact, eighty percent of active managers underperformed. And with Robeco, you have a manager that's done better than average and is quite quite honestly has offered a very competitive performance profile. I'm gonna move along a little bit.

If you advance one page, you look at Brandis. But I want to stop maybe on page 67, which is Loomis Sales. Loomis Sales is your only active fixed income manager. And we're comparing it against a very robust peer group of other managers and funds that you could have made investments in over this last ten years. And again, I want to give credit to the active management in fixed income as well as, active.

If you look at the performance, Ooma's sales in this particular strategy has outperformed 90% of active funds. And in doing so, it's also outperformed its peers and the benchmark. So, again, I don't expect to go through this, every week, maybe four times a year, three times a year, two times a year and discussing the pluses and minuses of retaining an individual manager. But as a whole, this focus on q four in 2025 is a is a good review.

And if you look on page 67, and this is on the other pages, and you look in the middle there where it shows you the risk summary statistics, and you look at the up capture and down capture. So this is exactly what you want from a manager is when the market is up, they capture more of the up. Right? So a 103% of the up. That's what that 103 means.

So when the market stays up 10%, they are up more than the market. Right? They're up, like, 13%. And then the down captures exactly what you want. So when the market's negative, they're only capturing 86% of the down.

Right? They're not capturing as much of the down. So if the market was down 10%, they might only be down 8.6%. Right? So that's exactly what you wanna see.

You want a manager that captures you don't always get it, but you want a manager that captures more of the up and less of the down. You have a good manager who are doing that.

Risk reward is quite good for Loomis, and they play an important role in your portfolio. Particular markets are negative. Equity markets are down. Luma sales is that manager, that part of your portfolio, and the asset class that will step up and protect capital in a down or negative market. Alright.

I think I will conclude my statements on Q4 twenty twenty five. Welcome any questions.

Seeing none, computer users are gone. All right.

So I'm sorry to make everybody read here. I don't have classes hard with me.

So it says monthly flash.

Monthly flash, city of Providence, employee retired, unit system, period ending 02/28/2026. Well, if you want to

Sure. I'm just gonna do a quick market update, and then Peter's gonna go through your results through February. But, you know, February, we had if you just remember back, we had, you know, jobs report. That was a little, you know, not as strong. So we had some inflation expectations that were were, you know, were higher than folks had thought.

We had the tariffs tariff issue that was in the news. So it was really the first time in February we had seen the S and P negative. This is the first time in nine months with a negative S and P 500 for The US market. So you could see that there on the bottom. The international markets were still strong because of the depreciation of the dollar.

The international markets have stayed strong as the dollar continues to decline. And you can see there was like a little bit of a reversal. We had seen growth stocks really be outperforming value stocks. We saw in this market in February, value stocks outperformed the growth stocks. We also saw small caps and mid cap stocks outperform, large cap stocks.

So, it has really set the landscape for you what you see in your portfolio. So Peter, I'll turn it over to you. If you go to page three of the report, we'll get into how your portfolio is doing through February.

So we did not meet last quarter, so let's start last month due weather. Generally, tend to focus on the one month return and the year to date return for the total plan. And again, we endeavor to present this performance net of all fees. So for the month of February, we had a 1.3 return versus the policy index of 1.3%. We had generally a flat performance in line with our policy benchmark.

We are showing some underperformance on a year to date basis and on a one year basis. I would tell you a year to date and one year basis, the underperformance is really driven not by our asset allocation, how we manage our risk, our position versus its targets over this last year to date and one year. It has largely been associated with really two primary sources of audit performance. One is we've held a fair amount of cash throughout the year, right, sometimes in excess of eight to 10%. We have reduced that throughout the trailing one year.

If you'll note, cash in the portfolio is really in a good position of around less than 1%. So it has been higher. That cash drag is very strong market where the portfolio and the policy benchmark has been up between 1415%. It was a big impact. The other source of underperformance and then we have been talking about this you know, over the second half of last year.

We touched upon it in in June as well. That is the underperformance of your hedge fund portfolio, which if you look on page five, has underperformed the composite index by about 10%. One thing to note about the one month and year to date is the hedge fund portfolio has outperformed on a one month basis, largely driven by a very strong return from a single manager Renaissance Institutional Equities, which outperformed with a very strong 5.1% return, which outperformed peers in the hedge fund space and in the long short equity space. So if we go back to kind of the total fund line, I would tell you that our domestic equity portfolio was very well positioned for the month and for the year to date. I think we had a a good performance versus the Russell three thousand.

You can see that we actually outperformed the Russell 3,000, which is the broadest market index that we use for benchmarking The US equity portfolio. So it's a strong performance there. We actually saw some good performance despite some challenges with the the cap and small cap value part of the portfolio. On the next page, your international equity portfolio for the month did very well, driven largely by the performance of Brandis Investment Partners, but also Fidelity Global XUS. That's that right mix of actively passive with Brandis offering that strong active return when when we need it.

And as a result, their international equity portfolio outperformed its benchmark and contributed at the top line. On page five, I and I'm sorry. Didn't ask you. It's it's page four. I'll let you start with that.

Page four. Page four. One back. Okay. My apologies.