Speaker numbers apply only to this recording.
The Providence Retirement Board held its regular meeting on October 22, 2026, receiving updates on pension fund and trust fund performance, discussing a proposed ballot initiative, and setting the next meeting date. The board approved agenda items related to fund performance and financial reconciliation, continued a rebalancing discussion, and heard legal guidance on a potential ordinance.
Pension Fund Performance Update: Julian from Singles (investment adviser) presented a detailed update on portfolio performance for September 2026. He noted that the 10-year treasury yield reached its highest level in decades, affecting bond markets. The S&P 500 was up 12.7% year to date, while the U.S. aggregate bond index posted a negative 2.6% return in September due to rising yields driven by inflation concerns, artificial intelligence infrastructure investment, and stronger-than-expected economic growth (GDP revised to 2.2% for Q2 2026). The retirement system portfolio achieved an 8.2% year-to-date return after a negative 1.9% return in September, generating approximately $49 million in gains. Market value stood at $677.3 million. Equity exposure was 67.4% (target 68%), fixed income 17.7% (target 22%), and cash 6.6% above target. Hedge funds contributed an 8.2% year-to-date return and protected on the downside in September. Julian also mentioned a search for replacement management for Renaissance International Equities via an RFP process.
Financial Reconciliation: Peter (Finance Department) reviewed the financial reconciliation, noting net contributions of negative $7.9 million (due to pension payroll) and capital depreciation of $14.3 million. The plan's total market value was $690 million at month start.
Discussion on Equity Managers: Board members queried the performance of small and mid-cap equity managers, particularly Robico, citing underperformance relative to indexes over the last three to five years. Julian acknowledged the concern and proposed reporting back with more detailed analysis at the next quarterly meeting. He also offered to update previous asset allocation reviews to address index vs. active management questions.
Trust Fund Performance: Peter presented an analysis of city trust funds, noting returns closely mirrored the plan index with slight underperformance of about 10 basis points due to overweight equity in a negative equity month. Active managers performed well, protecting capital. No rebalancing was recommended.
Initiative Ordinance Discussion: City Solicitor Jeff Dana addressed the board regarding a proposed ordinance that had qualified for the ballot. He explained that the law department had provided initial legal guidance (which had drawn some public criticism) and had engaged retired federal judge William Smith to produce an independent legal memo, expected by early next week. He offered to share both the law department's full analysis and Judge Smith's memo with board members. No vote was taken.
Chairman Mayor Smiley. Present. Vice Chairwoman Silver. City Treasurer Husband. Councilwoman Ryan is absent. Mr. Castell is also absent. Mr. Hirsch. Here, Mr. Winkelman is absent or present, three absent behalf for you very much. And that's Julian from Singles. Thank you very much. That should be the first document for you, and I'm just going to just give a brief update. Basically, in September, as many, if not all of you will know, was a very uh volatile period for the bond market. Uh and bond yields rose up, the 10-year treasury yield to the highest it's been in a couple of decades. Uh that affected the stock market and also the bond market. Uh equity returns are still positive, positive double digits year to date. Uh the SP 500, for example, up 12.7% year to date. Small cap stocks have given back some of their gains, but still double digit year to date returns for small cap stocks, international stocks have also been strong. Bonds, the U.S. aggregate uh bond index, which is made up of government uh government agency and corporate bonds, uh had a negative return of negative 2.6% during the month. And that's because yields rose. And there are a couple of tough reasons for yields rising. Number one, uh tougher inflation data related to the war in Iran, uh, and also just general inflation concerns and concerns in the bond market about uh artificial intelligence hyperscalers uh plans to borrow heavily to invest in artificial intelligence uh infrastructure and the so-called artificial intelligence or AI investment, kind of the swinging back and forth, depending on uh on what day the market interprets a strong potential future investment return from artificial intelligence. Generally speaking, uh technology stocks have still done well, notwithstanding some of the back and forth. One final reason I should mention on the note of optimism that uh bond yields rose is because the forecasts and reports on U.S. economic growth have shown that uh the U.S. economy, at least until through the second quarter, has been more resilient than expected. The Bureau of Economic Analysis, uh, the federal government uh up uh revised upward their estimate for GDP growth for the second quarter at 2026 to 2.2%. And what that really means for the bond market is the anticipation of stronger demand for capital. Again, that would push bond yields up. When bond yields go up, bond prices go down. So through all of this, uh, if you go to page uh the it should be the third page, page three, just an update on performance, both for the month, the year date, and asset allocation exposures for the portfolio, still a very strong return for the fund uh for the year to date period, 8.2%. That's the sixth column for the left top row. Uh that's after uh a negative 1.9% return in September, but still strong year-to-date gains. Also, I should mention it's shown elsewhere in our reports an 8.2% return has generated a little over 49 million in realized and unrealized investment gains, dividends, and interest. So good strong uh contribution to growth of the pension fund or the retirement system. The market value of the system's portfolio shown in the upper left-hand side, 677.3 million at the end of the period. And if we look down the year-to-date column, and I'll just stick with year-to-date to uh make uh make this report efficient, you can see still equities have been or stocks uh have been the primary contributor to the return of the portfolio, some underperformance from uh mid-cap and small cap value manager Robico, but their inception date return has been strong, and uh we still have uh a comfort level with uh RoboCoe, Boston Partners. If you go to the fourth page, you can see the fixed income returns, year to date negative 1.6%. Not that uh you're asking for the October, uh the October 20th report or October 21st report, but I can tell you that bond yields is have uh recently come settled down a little bit. So uh at least month to day, the bond portfolio should be giving you uh a modest gain, a little bit of uh recovery in in bond yields. Um, should also mention uh the exposure to equities was 67.4% of the portfolio. That was shown on the prior page.