HomeMy WebLinkAbout2024-02-22-RB-minMinutes of the February 22, 2024 Retirement Board meeting:
Present: Robert Cunha, Joseph Foley, Alan Fields, Frederick Weiss, Michelle Malone and Jim Condon
Absent: Carolyn Kosnoff
The Lexington Retirement Board met remotely through Zoom tele-conferencing. The Town Clerks Office
posted the meeting, which included the information for any interested party to join the call. Robert
Cunha, Joseph Foley, Alan Fields, Frederick Weiss, James Condon and Michelle Malone were present for
this meeting. Robert Cunha called the meeting to order at 8:30 am.
The Board accepted the 022924 Warrant and the February payroll. The January minutes were reviewed
and approved. The Financial cashbooks were unavailable at the time of the meeting.
Robert Cunha reviewed the February agenda with all Board members and staff in attendance.
It was noted the Retirement Board received three (3) distributions. A White Oak distribution on
12/28/23 in the amount of $13,133.00, a Golub distribution on 01/29/24 for $143,335.00, and an Angelo
Gordon distribution 01/31/24 for $180,177.00.
The annual COLA discussion and approval vote has been tabled until the March 28, 2024 meeting.
Marianne Reamer submitted the necessary paperwork and request to the Board for a service purchase.
She seeks to buyback two (2) years and four (4) months of service from her time working as an
Instructional Assistant with LPS. Total cost is $12,351.05. Robert Cunha made a motion to approve the
buyback, which was seconded by Joseph Foley, and unanimously approved by Fred Weiss and Alan
Fields. James Condon will notify Ms. Reamer of the decision and the payment process.
Stephen MacLellan and Henry Juang presented the Meketa update at 8:38 am. The portfolio balance as
of January 31, 2024 was $220,693,986.00, down slightly by $71,752.00. The month of January was a
mixed bag, nothing out of the usual. Domestic Equities were up 2%, while International Equities were
down 1.6%. Global Equity Assets were off by 2.5% and Fixed Assets remained flat. One note is the
Fidelity Contrafund remains up and working well for the portfolio in this growth market. It is up 36%
over the past 12 months. Stephen went over some quick points within the market as of late. Major
central banks have largely paused interest rate hikes. The expectation this year is for banks to cut rates.
Inflation pressures have receded in most countries, but uncertainty remains. China has moved further
into deflationary territory in January 2024. The Bond market experienced selling pressure over the past
month, but finished January relatively unchanged. Key issues in 2024 will be the path of inflation and
monetary policy, China’s economic disorder & slowing growth, many looming elections, and the wars in
Israel and Ukraine. Lastly, as of December 31, 2023, approximately 2.6% of the total Fund was invested
in fossil fuels. His presentation wrapped up at 8:57 am.
Peter Kenny and Megan Chadwick presented the Golub review at 9:00 am. Currently, Golub has over
$65b in Capital Under Management with offices located across North America, Europe and Asia. Their
focus is on First Lien First Out senior secured floating rate loans via private equity sponsor-backed
companies with $10m - $100m of EBITDA. They seek to generate consistent net returns and current
income by maintaining low defaults and credit losses. In 2023, the strategy performed well with 13%
net returns and zero defaults. The national default rate was 3.8% in 2023. Ninety percent of Golub
customers are repeat customers for their loans. They focus on the companies they trust to being in
business for a while. Peter spoke briefly of the new product we are heading toward in 2024. The Golub
2RI Fund, which is a rollover fund. Expected returns over time are pegged at 10.5 to 13.5%. The annual
cash yield is projected around 3.2%. The presentation wrapped up at 9:30 am.
Eric Bachman & Andy Mark from PIMCO joined the meeting at 9:31 am to introduce themselves and
their Private Income Fund. PIMCO’s main area is focused on Private Lending and Real Estate. The two
combined total just over $116b in AUM’s, with RE over $65b. PIMCO income generation targets 8-12%
income-drive net returns & 6-10% income distribution. Their goal is having a consistent cash flow
generation. The portfolio is highly diversified in residential lending, commercial real estate, specialty
finance, and corporate special situations. Andy spoke of their Evergreen Fund. This fund would require
a minimum of $10m to enter. It would require a 2 year lock-up before liquidity could begin. Just under
80% of the holdings are secure in the Capital structure. Andy wrapped up the discussion at 9:58 am.
The Acadian review began at 10:00 am with Geoff Skillings, Colin Pascoe and Charles Johnson. Geoff
began with the highlights from 2023. Very strong alpha year for Acadian, especially the past seven
months. Exceeded benchmark projections due to some portfolio adjustments in the macro
environment, such as IT sector and Industrial holdings. The 3rd and 4th quarter delivered active returns
on the adjustments. On a down note, Geoff and Charles did mention some pitfalls, such as being too
overweight in China. China has been underperforming for some time now. However, Acadian managers
were opportunistic that China would rebound quicker than expected. That has yet to happen. The
other issue was Acadians holding in the Oil & Coal sectors have hurt the fund, especially with commodity
prices dropping the past few months. Fortunately, the restructure of the portfolio and adding some IT
sector has been positive, especially with Artificial Intelligence (AI) becoming hot in the field. Acadian
also added funds to their Consumer Discretionary portfolio, which has been paying off lately. They
wrapped up the presentation at 10:27 am.
The Board took a moment to review the PIMCO discussion from earlier in the meeting. The main focus
was on PIMCO’s belief in private credit with lending into mortgages. Some find it concerning now and
going forward in 2024.
Meketa plans to invite Blue Owl or Meubergher to the March 28, 2024 meeting.
Robert Cunha made a motion to adjourn the meeting at 10:50 am, which was seconded by Joseph Foley,
and unanimously approved by Fred Weiss and Alan Fields.
The next Retirement Board meeting will be held via Zoom on Thursday, March 28, 2024 at 8:30 am.
_____ __________________
Robert Cunha, Chairman Alan Fields, Appointed Member
Carolyn Kosnoff, Ex Officio Member Joseph Foley, Elected Member
Frederick Weiss, Appointed Member