Administration, Investment & Fiscal Management Board Meeting – September 22, 2022
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Administration, Investment & Fiscal Management Board Meeting – September 22, 2022
The Administration, Investment & Fiscal Management Board (AIFM) of the City of Sacramento met on Thursday, September 22, 2022, at 1:31 p.m. via teleconference. Chair Jason Bader presided, with members David Bach, John Colville, and Emily Combs (arriving at 1:52 p.m.) present. Member Manuel Leon was absent. The board reviewed and approved consent calendar items, received quarterly investment reports, and discussed board membership vacancies.
Consent Calendar
- Approval of Minutes (File ID 2022-01148): Approved the minutes from the May 19, 2022 meeting.
- SCERS Monthly Investment Reports: Accepted the monthly investment reports for April 2022 (File ID 2022-01525), May 2022 (File ID 2022-01526), and June 2022 (File ID 2022-01527).
All consent items were approved by a single motion with three votes in favor (Bach, Colville, Bader); Leon and Combs absent.
Discussion Items
- Item 5 – SCERS Quarterly Investment Report for June 2022 (File ID 2022-01528): Chief Investment Officer Stacy Hussey presented the report. The plan’s fiscal year return was -10.69%, with the final quarter erasing all prior gains. The portfolio fell from $297 million to $257 million during the quarter. Hussey compared the plan to CalSTRS (-1.3%) and CalPERS (-6.1%), noting those peers’ returns were boosted by private equity and real estate valuations not marked through June 30. On an apples-to-apples basis, the plan’s fixed income (-12.33%) and equity (-10.45%) performed between the two peers. Hussey also discussed the need to raise approximately $28 million annually for operating expenses, noting that $6 million was raised in August when markets were favorable. She estimated the plan’s funded status may drop from the low 100s to the low 90s. The board voted to accept the report (motion by Colville, second by Bach; 3-0-2).
- Item 6 – Segal Marco Advisors Quarterly Investment Performance Report for June 2022 (File ID 2022-01529): Michael Lyons and Jeff Nip of Segal Marco presented. They highlighted the worst six months for stocks and bonds in decades, with the S&P 500 down ~20% year-to-date and bonds down over 10%. The plan’s domestic equity composite outperformed its benchmark by 3% in the quarter, and the fixed income portfolio benefited from an overweight to the 7-10 year part of the yield curve, which experienced less severe price declines than shorter maturities. Over 10 years, the plan outperformed its actuarial assumption (6%) by about 1% annually. The board accepted the report (motion by Bach, second by Colville; 4-0-1, with Combs also voting yes).
Commissioner Comments – Ideas and Questions
- Vice Chair Colville reported that board member Manuel Leon has been unresponsive and that three individuals have expressed interest in joining the board. The board is awaiting confirmation from the Clerk’s office on whether Leon can serve another term. Colville will reach out to Leon directly. The board will revisit the matter at the next meeting.
Key Outcomes
- Approved the consent calendar (minutes and three SCERS monthly reports) by a 3-0 vote.
- Accepted the SCERS Quarterly Investment Report for June 2022 by a 3-0 vote.
- Accepted the Segal Marco Advisors Quarterly Investment Performance Report for June 2022 by a 4-0 vote.
- The board will reconvene on November 17, 2022, to review new actuarial (Bartel) reports.
- The meeting was adjourned at 2:06 p.m.
Meeting Transcript
Chair Staffis, ready when you are okay. Thank you. Uh good afternoon, everyone. Welcome to the Thursday, September 22nd, 2022 administrative investment and fiscal management board meeting. The meeting is now called to order. Will the clerk please call the role to establish a quorum? Thank you. Member Bach. Here. Member Combs is currently absent. Member Leon is also currently absent. Vice Chair Colville. Present. Chair Bader. Here. Thank you. We have a quorum. Okay. Looks like our first order of business today is approval of the consent calendar. Yeah, four items from last time. Are there any members of the public who wish to speak on this item? Thank you, Chair. We currently have no members of the public with their hands raised. I'll make a motion, Jason. Okay. First by John, do we have a second for the consent calendar? Okay. Looks like we have a motion and a second. Thank you. Member Bach. Yes. Vice Chair Coville. Yes. Chair Bader. Yes. And members Combs and Leon are absent. Motion passes. Okay. Now we'll move on to the discussion calendar, uh, which is item five, the SCRS quarterly investment report for June of 2022. Hi, I'm trying to share my screen here. So let me see if I can get that. It's not going to let me do that. Um, I'm gonna just actually focus. Turn my video on, guys. Um good morning or good afternoon. Um, I'm gonna focus on our quarterly report. And I just really wanted to go over if you have that in front of you, page six in the report. And I'm just gonna really talk about the returns for the quarter, and I'm gonna talk about some peer returns and then kind of come back to the state of the current markets with about one week to go in the fiscal quarter, the first quarter of fiscal year 2022. So on page that page six, you'll see that our fiscal year return was a negative 10.69%. And our quarterly return was in excess of that, meaning we lost all of the portfolio gains in the final quarter of the fiscal year.
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