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HomeMy WebLinkAbout2020-09-24-RB-min Recap of the September 24, 2020 Retirement Board meeting: The Lexington Retirement Board continues to meet remotely through Zoom tele-conferencing during the Covid-19 Pandemic. The Town Clerks Office posted the meeting,which included the information for any interested party to join the call. All Board members were present for this meeting. Chairman Robert Cunha called the meeting to order at 8:30 am. The meeting began with the announcement that retired firefighter, Kenneth Kelley, passed away on the evening of September 22, 2020. Mr. Kelley spent over 27 years working as a dedicated fireman for the Town of Lexington. He was 81 years old. The Board accepted the 093020 Warrant and the September 2020 payroll. The August minutes and July 2020 financials were reviewed and approved. Bob Cunha reviewed the September agenda with all Board members and staff in attendance. It was noted we received a Q2 income distribution from White Oak Advisors for$31,277.00 Carolyn Kosnoff briefed the Board on a new Funding Scheduling for retirement. The goal is to be fully funded for year 2028. Board members reviewed the Appropriation Forecasts by Sherman Actuarial, which included the years 2026 and 2027. Based on potential budget constraints in town, Carolyn recommended we focus on the 2028 Funding Schedule. Bob Cunha made a motion to accept the proposed 2028 Funding Schedule,which was seconded by Fred Weiss, and unanimously approved by Joe Foley and Carolyn Kosnoff. Henry Jaung and Stephen MacLellan presented the Meketa portfolio update at 8:50 am. The overall balance of the portfolio as of August 31, 2020 was$191,089,691.00, up $7.3m from the prior month. YTD performance is up 4/9%, and QTD is 8.3%. The portfolio continues to work well with all Asset classes in place. At this time, no need to make any changes in the portfolio. Henry noted at the end of Q1, our balance was$157m.Then, as the pandemic wore on, markets very slowly rebounded over Q2 and Q3. This portfolio has rebounded upwards of$34m to put our balance sheet at$191m. Domestic Equities continue to be the driving force behind this rebound. Fidelity, RhumbLine, and Russell 3000 all posted gains over 13% in Q3. Expected returns for the year should post around 7%. As the US Election approaches, portfolio performance could sway depending on outcome. Tom Seftenberg and Chad Cleaver presented the Driehaus Emerging Markets fund at 9:15 am. Driehaus is an EM investment firm focusing on growth equity. They are fully invested in 80-110 holdings. Driehaus believes markets tend to misprice stocks after positive grow inflections. They focus on inefficiencies via a macro approach of research,then capitalize on the dynamics of the market.The research is limited to companies with superior business models and growth potential,thus hoping to generate excellent long-term shareholder returns. Driehaus uses a four point fundamental analysis process solely based on research in specific growth profiles that interest them. The topic of Asian Markets vs. US Markets was discussed. Chad Cleaver mentioned some issues China is having in recent months. The Pandemic is one major issue. Asia and US are trading as much. Localization in the US has been strong. People are staying home and doing projects on their own. This translates to people purchasing goods and products locally. Tom finished up the presentation with our Net of Fee Performance. The Driehaus EM class C is up 4.06% MTD, up 14.09%QTD, and 10.23%YTD. The presentation concluded at 9:50 am. Jordan Greenhouse presented the KAR small-midcap portfolio at 9:50 am. This firm will focus on high- quality business opportunities. They currently hold $37b in assets under management. KAR aims to achieve a return higher than the Russell 2500 index by using a portfolio objective that exhibits lower overall risk characteristics. They will buy at attractive prices and allow great returns on capital to be the driver of growth and income over extended periods of time. Some examples given were DocuSign,Thor, and Scott's Miracle Gro. Purchases like DocuSign became a real powerhouse during the Covid-19 Pandemic. With some many people working from home, it became necessary to have e-signatures for most document approvals. Another surprise during Covid-19 was Scotts. Once again, people were home and took up yardwork and maintenance on their own. Jordan mentioned KAR would not own stock above 15%. They tend to hold around 10%as a general rule. KAR did close out two strategies due to capacity restraints. Overall capacity for portfolio strategies hovers around 25-35 max. The review wrapped up at 10:15 am. Bob Cunha motioned to adjourn the meeting at 10:20 am,which was seconded by Fred Weiss, and unanimously approved by Alan Fields, Carolyn Kosnoff, and Joe Foley. The next Retirement Board meeting will be held on Thursday, October 22, 2020 at 8:30 am. The meeting will be held remotely via Zoom. Michele Joyeux and Tyler Herried from Golub Capital will present the update at 9:00 am.