Charles County Pension Board Quarterly Investment Review – November 13, 2025

The Charles County Pension Board met on November 13, 2025, at a time not specified in the transcript. The meeting was chaired by Devon (first name not given) and included board members Jay Dyer, Alexis Blackwell (by proxy), Wes Adams, Bill Jackson, Harry Matthew, Captain Dodge, and Krista (minute taker). Investment consultant Alton Pryor of Bolton, joined by Joe Stevens, presented the quarterly investment review as of September 30, 2025. The board also discussed the implementation phases of the previously approved asset allocation changes.

Consent Calendar

• Approval of Minutes: A motion to approve the minutes from the previous meeting was made, seconded, and passed unanimously without questions.

Discussion Items

• Quarterly Investment Review (Alton Pryor):
  • Economic backdrop: GDP growth continued; inflation at 3.1% (above Fed's 2% target); unemployment ticked to 4.3%; Bureau of Labor Statistics revised jobs data downward by over 900,000. Expectation of one more Fed rate cut in December 2025, with potential further cuts into 2026.
  • Capital markets: Third quarter 2025 was positive overall; international stocks (developed and emerging) led year‑to‑date; small caps rallied, partly driven by AI‑related companies; the “magnificent seven” large‑cap tech stocks (excluding Meta, Amazon, Microsoft) posted double‑digit returns.
  • Plan performance: Fund value reached $503 million (up from $466 million prior quarter). Quarterly return 4.3% (trailed policy benchmark); 12‑month return 9.84% (trailed 10.2% benchmark); 10‑year annualized return 8.62%, above the 7.25% discount rate. Contributions: $22 million from county, $6.7 million in benefits distributed, $65,000 in expenses. Funded ratio (GASB, as of July 1, 2024 data) was 79.99%, nearing 80%.
  • Manager commentary:
    • AB Large Cap Growth: Underperformed due to concentration in large‑cap growth stocks; no ownership of Apple or Tesla. Manager conviction maintained; context provided that the index has outperformed 95% of active managers.
    • American Funds EuroPacific Growth (international): Underperformed over the last three years; long‑term track record strong. Bolton has regular contact with Capital Group and is monitoring the fund.
    • T. Rowe Price Large Cap Value: Underperformed by 144 basis points for the quarter and 560 basis points for the trailing year (ending September 30, 2025). Manager trimming holdings and making new investments. Bolton recommended placing this fund on a watch list; the board agreed to monitor and expect an update at the next quarterly meeting.
• Asset Allocation Implementation Phases:
  • Phase 1 transactions (previously approved and executed) aligned public market allocations and raised cash for private assets.
  • Phase 2 transactions (private equity/real estate) are awaiting legal documents for review by board member Wes Adams. The documents were expected within a week of the meeting. The board discussed whether a formal vote was needed; minutes from the prior meeting did not reflect a vote on phase 2. The committee decided to proceed by sending a detailed memo to board members explaining the recommended transactions. If questions arise, a special meeting (possibly virtual) will be called; otherwise, a vote may be conducted by written consent or at the next quarterly meeting in February 2026. The cash available for these commitments is $90 million.

Key Outcomes

• Approved the minutes of the previous meeting.
• Placed the T. Rowe Price Large Cap Value fund on a watch list; Bolton will perform enhanced due diligence and report back at the next quarterly meeting.
• Established a process for approving Phase 2 asset allocation transactions: Bolton will provide a memo describing the transactions; board members will review; if no objections, the items will be advanced; if significant questions arise, a special meeting will be called.
• No new business was introduced.
• Motion to adjourn was made, seconded, and carried unanimously.