HomeMy WebLinkAbout2024-03-28-RB-min Minutes of the March 28, 2024 Retirement Board meeting:
Present: Robert Cunha,Joseph Foley,Alan Fields, Frederick Weiss, Carolyn Kosnoff, Michelle Malone
and Jim Condon
Absent: None
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, Carolyn Kosnoff,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 032924 Warrant and the March payroll. The February minutes were reviewed
and approved. The Financial cashbooks were unavailable at the time of the meeting.
Robert Cunha reviewed the March agenda with all Board members and staff in attendance.
It was noted the Retirement Board received a distribution on 3/21/2024 from White Oak Summit Fund
in the amount of$52,887.00
Robert Cunha asked the Board to discuss and vote on an annual Cost of Living Adjustment for our
retirees. Mr. Cunha motioned to approve a 3%of$15,000.00 COLA adjustment for FY 25'. This motion
was seconded by Fred Weiss, and unanimously approved by Carolyn Kosnoff,Alan Fields and Joseph
Foley. This approval will be effective July 1, 2024.
Jim Condon notified the Board that the Annual Benefit Verification Forms will be sent out by the end of
April. These are annual forms in which members must sign and notarize to avoid interruption of their
monthly pension payments.
Steve MacLellan and Henry Juang presented the Meketa update at 8:42 am. Steven began by
mentioning the Wellington and Golub paperwork has been received and confirmed by John Galvin at
PERAC. The portfolio balance as of February 29, 2024 was$228,316,360.00, up $7.6m from last month.
February was a solid month for the portfolio, as most asset classes were positive. Domestic equities
continue to perform well. They were up 7%for the month, and 9%for the quarter. International
equities rose to 3.8%for the month and now are positive for the quarter at 2.1%. Our overall portfolio
has not changes in recent months. The way it has been structured as done us well, despite interest rates
and a looming election this fall. Contrafund and KAR continue to perform well. Rhumbline is another
positive to note. Matthews and White Oak Summit need to be monitored, as they continue to struggle.
Fossil Fuel exposure remains unchanged at 2.6%.The presentation wrapped up at 9:05 am.
Jeffrey Ulsh and M.P. Hayden presented the Monroe update at 9:05 am. They spoke briefly on the
success of the SMID market and how the investments have performed overall the past year. Jeff noted
the Monroe has delivered an average spread premium of 105 bps and 195 bps in the lower middle
market compared to the broader middle market and loan market. The outperformance in the SMID
market gives Monroe the ability to be more selective due to a larger opportunity set in which companies
enjoy higher cashflow cushions due to lower leverage. Jeff gave an update on the Fund IV Unlevered
portfolio. The fund has netted just over 7.2%since inception. Over 124 investments have been
committed; 94%which are secure. M.P. Hayden gave a summary of Fund V. It offers investors a highly
diversified portfolio of first lien, senior secured, and floating rate loans to U.S. based lower/middle
market companies. Feel free to reference page 12 in the presentation deck for statistics. The Monroe
presentation concluded at 9:20 am.
Jon Freedman, Susan Kasses, and Parrish Smith presented the Neuberger/Berman overview of the firm.
Neuberger was invited to the meeting on behalf of Meketa to explain how they operate in the Global
Asset Management field. Neuberger is 100%employee owned with over 2,800 employees. They have a
96%employee retention rate. The Private Debt Fund V is a selective investment style centered around
capital preservation resulting in a 0.03%annualized default rate and 0.01% annualized loss rate since
inception. The Fund does zero investing with any product deemed unpredictable. It targets a range of
7%-8.5% in unlevered net returns; and 9%- 12% in levered net returns. Currently, Fund V has$17.8b
committed/invested across 220 companies. Neuberger mentioned some terms in the discussion. They
anticipate the 9-12% return on investment mentioned earlier. It would be 50 basis points on gross
assets up to 07/01/2025, then to 70 basis points. A four year commitment minimum that would age out
after eight years. Minimum investment would be$5m. Alan and Susan held a brief discussion on
Unlevered vs. Levered before the overview wrapped up at 10:15 am.
Robert Cunha and the Board members had a brief discussion on the subject of using Neuberger Berman
as a Private Debt manager for their Fund V opportunity. The feeling is Neuberger has consistently
performed in line with or above its targets returns with minimal losses across each portfolio. Their
competitive advantage comes from its ability to leverage relationships through its broader alternatives
platform as the primary channel for deal flow. Neuberger seems to find a way to be consistent with
minimal losses to investors.
At 10:25 am, Robert Cunha made a motion to add Neuberger Berman as our Private Debt manager,
which was seconded by Joseph Foley, and unanimously approved by Alan Fields, Carolyn Kosnoff, and
Frederick Weiss.
For funding purposes with Neuberger Berman in Fund V, Robert Cunha made a motion at 10:27 am to
sell off Matthew Pacific Tiger Fund ($4.1m) and move some funds from Fidelity Contrafund to cover our
$7m commitment to Neuberger Berman in the Leveraged Fund V investment strategy. This motion was
seconded by Alan Fields, and unanimously approved by Frederick Weiss, Carolyn Kosnoff and Joseph
Foley.
At 10:32 am, Robert Cunha made a motion to adjourn the meeting,which was seconded by Frederick
Weiss, and unanimously approved by Carolyn Kosnoff,Joseph Foley, and Alan Fields.
The next Retirement Board meeting will be held via Zoom on Thursday, April 25, 2024 at 8:30 am.
RhumbLine will present at 9:00 am
Wellington Opportunistic/Enduring will present at 9:30 am.
Robert Cunha, Chairman Alan Fields, Appointed Member
Carolyn Kosnoff, Ex Officio Member Joseph Foley, Elected Member
Frederick Weiss, Appointed Member