# Police & Fire Pension Board Meeting - May 13, 2026 > Auto-transcribed civic record · Board · May 13, 2026 - **Permalink**: https://meetings.lexingtonky.news/meeting/6769 - **Source video**: https://lfucg.granicus.com/player/clip/6769?view_id=14&redirect=true - **Date**: 2026-05-13 - **Body**: Board - **Last revised**: May 13, 2026 - **Length**: 13,975 words - **Speakers**: Mayor, Chair > ⚠️ **Auto-generated content.** The transcript on this page is the Granicus stenographer's live closed-captioning track, captured at the time of broadcast (typos and broken sentences common). Speaker labels come from the same track. Structured facts were extracted with GPT-4o; the narrative summary was written by Anthropic Claude Sonnet. Verbatim wording and speaker attribution may contain errors. See [methodology](https://meetings.lexingtonky.news/about/methodology) or [report a correction](mailto:editor@lexingtonky.news). --- ## Meeting Overview The Lexington Fayette County Urban County Government Police and Fire Retirement Fund Board held its meeting on May 13, 2026. The board worked through 7 agenda items during the session, taking a total of 12 votes and hearing 1 public comment. Key actions included the approval of the April meeting minutes, new business items, and service retirements and disabilities, while the Treasurer's Report, Subcommittees update, Presentations, and Callan Quarterly Report were received as informational items. The meeting also included presentations, among them a Callan Quarterly Report briefing for the board's review. ## Attendance The following members were present at the May 13, 2026 Board meeting: - Chad - Susan - Tommy Puckett - Jonathan Cole - John Minima - Ronnie Bastion - Billy Ray Morgan - Robert Somers - Betty Begly - Jennifer - Katie No members were recorded as absent or late. ## Votes and Decisions The Board took the following actions at the May 13, 2026 meeting, all by voice vote: - **Transfer letter and manager's mix:** Approved by voice vote. [timestamp: 0:04:28] - **April minutes with correction:** Approved by voice vote. [timestamp: 0:06:08] - **Ghost time purchase:** Approved by voice vote. [timestamp: 0:06:40] - **Widow's annuity for Charlene Summers:** Approved by voice vote. [timestamp: 0:07:10] - **May disbursements:** Approved by voice vote. [timestamp: 0:07:43] - **Service retirement of Captain Joseph Sexton:** Approved by voice vote, with 2 nays recorded. [timestamp: 0:08:13] - **Service retirement of Officer Ronald Corbrough:** Approved by voice vote. [timestamp: 0:08:44] - **Jonathan Cole disability application:** The Board approved sending Cole's application for permanent and total disability to the appropriate doctors for review. Passed by voice vote. [timestamp: 0:09:16] - **John Minima disability conversion:** The Board approved sending Minima's application to convert his temporary disability to total disability to the appropriate doctors for review. Passed by voice vote. [timestamp: 0:09:50] - **Ronnie Bastion's medical reports:** Approved at the appropriate rate by voice vote. [timestamp: 0:09:50] - **Real estate asset transfer from J.P. Morgan to LaSalle:** The Board approved moving all assets from J.P. Morgan real estate to LaSalle. Passed by voice vote. [timestamp: 2:21:36] - **MFS contract:** The Board approved issuing a contract with MFS, with the vehicle decision to be made at a later time. Passed by voice vote. [timestamp: 2:37:04] All twelve motions passed. The only dissent recorded was 2 nays on the service retirement of Captain Joseph Sexton; all other votes were unanimous. No mover, seconder, or individual roll call votes were recorded for any item. ## Public Comment At the Board meeting on May 13, 2026, the public comment portion of the meeting included the following: - **Condolences** [timestamp: 10:22]: The Board offered condolences to the families of Billy Ray Morgan, Robert Somers, and Betty Begly, acknowledging their service and legacy. No additional public speakers or topics were recorded during this portion of the meeting. ## Contested Items - **Selection of Core Plus Manager:** The board faced a contested decision regarding the selection of a core plus investment manager, with the choice coming down to two finalists: J.P. Morgan and MFS. The item resulted in a split vote among board members, indicating meaningful disagreement over which firm to award the contract. The board ultimately voted to issue a contract with MFS as the selected core plus manager. ## Treasurer's Report [timestamp: 03:56] Chad presented the Treasurer's Report to the Board. The presentation included financial reports covering fiduciary net assets as well as fund reconciliation activity. The report was informational in nature, and no action was required from the Board. No additional details regarding specific figures, concerns raised, or debate on this item are available from the meeting record. ## April Minutes [timestamp: 04:59] The board took up the April meeting minutes for review and approval. During the discussion, a correction was identified in the draft minutes: **Tommy Puckett** had been incorrectly marked as absent, when he was in fact present at the April meeting. This error was noted and addressed before the minutes were finalized. The board approved the April minutes as corrected. ## New Business [timestamp: 06:08] The board took up several items under New Business, all of which were approved. Susan presented the following items for board consideration: - **Ghost Time Purchase** — The board reviewed and approved a ghost time purchase request. - **Widow's Annuity** — A widow's annuity was presented and approved by the board. - **Disbursements for May** — The board reviewed and approved the disbursements for the month of May. All items under New Business were approved by the board. ## Service Retirements and Disabilities [timestamp: 07:43] The board took up the agenda item covering service retirements and disabilities. Susan presented the item, which addressed retirement applications and disability cases for several individuals. Following the presentation, the board approved the service retirements and discussed the disability applications. No additional detail on the specific individuals involved, the nature of any concerns raised, or the outcomes of individual disability applications is available in the meeting record. ## Subcommittees [timestamp: 12:31] The Board received reports from its subcommittees during this portion of the meeting. Tommy Puckett presented updates covering two subcommittee areas: continuation of benefits and legislative matters. The reports were informational in nature, with no votes or formal actions taken as a result of the subcommittee updates. No additional detail on specific findings, recommendations, or concerns from either subcommittee is available from the meeting record. ## Presentations [timestamp: 14:08] The Board received presentations from J.P. Morgan and MFS covering their respective core plus fixed income strategies, including discussions of their investment approaches and performance. Key speakers during this portion of the meeting were Katie Hammond and Josh Marston. The presentations were informational in nature, providing the Board with an overview of how each firm manages its core plus strategy. No action was taken as a result of these presentations. ## Callan Quarterly Report [timestamp: 2:04:55] Jim O'Connor presented the Callan quarterly report to the Board, covering performance and asset allocation. The presentation was informational in nature, and no formal action or vote was taken as a result. No additional detail regarding specific performance figures, asset allocation percentages, benchmarks, or concerns raised during the discussion is available in the provided materials. --- ## Decisions - **Motion** — passed (0-0): Approve the transfer letter and the manager's mix - **Motion** — passed (0-0): Approve April minutes with correction - **Motion** — passed (0-0): Approve ghost time purchase - **Motion** — passed (0-0): Approve widow's annuity for Charlene Summers - **Motion** — passed (0-0): Approve disbursements for May - **Motion** — passed (0-2): Approve service retirement of Captain Joseph Sexton - **Motion** — passed (0-0): Approve service retirement of Officer Ronald Corbrough - **Motion** — passed (0-0): Send Jonathan Cole's application for permanent and total disability to appropriate doctors - **Motion** — passed (0-0): Send John Minima's application to convert temporary disability to total disability to appropriate doctors - **Motion** — passed (0-0): Approve Ronnie Bastion's medical reports at appropriate rate - **Motion** — passed (0-0): Move all assets from J.P. Morgan real estate to LaSalle - **Motion** — passed (0-0): Issue a contract with MFS with vehicle decision later --- ## Full transcript Mayor: May 13, 2026. good morning, everyone. Today is MAY 13, 2026. And I would like to call to order the lexington fayette county urban county government police and fire retirement fund board. And it looks like we do have a quorum. So the first thing up is the treasurer's report. Chad. And the letter of transpfeffer. >> good morning you should in your packet the various financial reports comparing fiduciary net assets fund reconciliation activity. The value of the plan as of yesterday morning Which compares to last month thank you. And there is a letter, I believe in our pact packet here. So could I I have a motion to approve. >> motion to approve the transfer letter and the manager's mix. is there a second? >> second. any questions for chad? All right. All those in favor say aye. >> aye. is anyone opposed? Thank you, that motion passes. Thank you very much. Next up we have the APRIL minutes. Which were in your packet. And I will ask if there are -- let's get a motion first. Could I have a motion to approve. >> motion to approve. >> second. thank you. And now, are there any corrections I'm sorry, do you have a correction. >> there is one correction. I was here and absent at the same time. which were you? >> I said the same thing. Which one were you? for the record and the public, where is the correction and what is it? >> it lists tommy puckett as being absent and he attended. So we need to mark tommy as not being absent. okay, very good. That's on the first page. >> yes ma'am. okay. Are there any other corrections? I see that it is hard to be absent and present at the same time. Are there any other corrections or additions? >> I'm very good. All those in favor of approving with the removal of absent. All those in favor say aye. >> aye. is anyone opposed? All right that motion passes. And next on our agenda is new business. And I will ask susan to just roll us right through that. >> yes mayor. Item one is ghost time purchase I need a motion to approve. >> motion to approve. we have a motion and a second. Is there any comment? All those in favor say aye. >> aye. is anyone opposed? that motion passes. >> sigh tem two is widow's annuity for charlene summers. I need a motion to approve. >> motion. >> second. any discussion? All those in favor say aye. >> aye scwhrm is anyone opposed? All right, that motion passes. Item three are disbursements for MAY listed on your agenda. I need a motion to approve. is there a motion. >> motion to approve. >> second. any discussion? All those in favor of ar of approving say aye is anyone opposed? That motion passes next we move to service retirements and disabilities. We have service retirement of captain joseph sexton service retirement APRIL 23, 2026. I need a motion to approve. is there a second. >> second. Any cushion? -- any discussion? All those in favor say aye. >> aye. any opposed. >> no. we have two no votes. And that passes. If you will go ahead and continue. >> next is officer ronald corbrough division of police, APRIL 16, 2026. I need a motion to approve. >> motion to approve. >> second. thank you. And there is the second. Commissioner any comments on the motion? All those in favor please say aye. >> aye. anyone opposed? That motion passes. >> next on the agenda are disabilities. Jonathan cole division of police, application for permanent and total disability. I need a motion to send to appropriate doctors. do I hear a motion? Is there a second? Okay. Any discussion? All those in favor please say aye. >> aye. is anyone opposed? All right. Thank you. That passes. >> next on the agenda is john minima division of fire, application to convert temporary disability to total disability. I need a motion to send to appropriate doctors. >> so moved. >> second. we have a second any discussion? All right. All those in favor say aye. >> aye. is anyone opposed? That motion passes. Next on the agenda is ronnie bastion, division of police. Medical reports are completed and distributed. I need a motion please. >> motion to approve set at appropriate rate. is there a second? >> second. is there any discussion? All those in favor please say aye aye glin opposed? That motion passes. >> next on the agenda are tributes. Billy ray morgan division of fire passed away 22, 2026. Robert somers, division of fire passed away APRIL 30, 2026. Let's pause a minute. We have service retirement, disability, tribute pts. I would like to open the floor to anyone who wishes to comment. >> thank you, mayor. I want to briefly offer our condolences to the families of those that passes away recently. Firefighter billy ray morgan gavin his journey with the fire department in JUNE of 1974 and retird in 2000. Primarily served on engine 9 and engine 17 and we are grateful for his service. Lieutenant robert somers, a little harder to find information on. He began with the fire department in 1966. Retired in the early 1990s. So we are grateful for him as well. Thn we also lost a member of our family who wasn't necessarily involved in the pension, but MS. Betty begly passed away this movement she was a long-time valued member of our administrative professional team and served for multiple fire chiefs and administrations. And she also leaves a legacy of public service. Her daughter jennifer recently retired from e-911 and her granddaughter, katie, I believe is an officer with the division of police. So we are offering our condolences to their family. yes, thank you. That is quite a legacy. does anyone else have any comments I would like to add my voice for the condolences to the morgan family. Robert somers, his wife, charlene is on our city employee pension board and I believe was a city employee herself. So we remember her extra with a little bit of extra because she is the currently the only former city employee serving on our board. And so I know this is especially difficult for her and I just want to say I appreciate our captain sexton and officer cornrough and their retirement and their service, what they gave to our community so that brings us to subcommittees, and we have amazingly enough reports from tommy puckett on continuation of benefits and legislative subcommittee. >> we have a meeting scheduled MAY 20 at 11:30 that we will be going over the work reports. People that are out that on disability looking for work so we will oversee those, look at them. See if there are any problems. so both committees are meeting, it looks like on the >> try to make it easier for everybody. all right, very good. Lieutenant able, do you have a subcommittee report. >> the fruits of our past subcommittee meeting which have been a couple months ago are going to come to fruition in a few minutes. That's all I've got. thank you very much. So we have our, let's see, our presentations so jupe is not able to be with us today so jim has it all. Everything we are doing from now on, I think we -- welcome, we really appreciate you. Usually the dynamic duo of jimmy john comes to meet you every quarter but it's just going to be jimmy today so we have got a packed agenda. I think first off what we want to start out with is a quick over view of the management search. If you will, can you please advance -- I can advance it. Okay. So what are we doing today, how did we get here? And what are we trying to accomplish? So a little bit of background. So in AUGUST of 2025, your fixed income manage open optmum is retiring after 30 years with the firm and its predecessor. Given his long tenure portfolio management, it was recommended the board have a replacement search and the board instructed us to do our work what john and I did, we start with the client. They're custom to your profile. So we create created client profile, a candidate profile so that the client profile, I think, is pretty straightforward listing everything about you and your plan and what you are looking for. The candidate profile has some minimum requirements that we are looking for to fill this mandate. So we worked closely with our global manager research group. Our fixed income specialist that spent 100% of their time researching investment management organizations and within the fixed income markets we canvassed our database. Brought the list down to a little bit more manageable size. And presented roughly brought out eight semifinalists approved by the search committee so that's made up of about a dozen senior consultants at callan and that's for quality patrol and to strip out any biases and bring the best thinking to all of our clients. So we then took those eight candidates and reviewed them with the subcommittee callan and the subcommittee reviewed the last meeting we attended in FEBRUARY and collectively identified our top two candidates who we recommended to prfnt to the board today. That's where we are listed in alphabetical order. J.P. Morgan asset management and mfs. J.P. Morgan is sitting behind They're going to be going first: the goal here is kind of keep the presentation to about 30 minutes, 20 minutes for prepared remarks and 10 for q&a. I will let them dictate how they want to see it. Keeping things conversational is nice if you have questions along the way, bring them forward or you can save them to the end, however you want to handle it. And when J.P. Morgan is done, we will bring in mfs to do the same thing and then we will debrief and get your thoughts and opinions. Does that sound like a plan. I think that sounds good. Any objections? Please go on. >> it's 9:17. I will let J.P. Morgan come up. welcome. >> thank you very much for having us. Appreciate the time to be here today and be in beautiful lexington. So thank you jim for the kind introduction. My name is katie hammond, I'm a client adviser with J.P. Morgan asset management. I work primarily with public pension plans in the south and have worked with you all for about five years now. My role is to help you invest on behalf of your beneficiaries and provide the full depth of the J.P. Morgan strategy for you. First and foremost I want to thank you for the long standing real estate investment you have with us. And we will be honor to expand our relationship into this fixed income asset class. Now before we get into the presentation on core plus, I wanted to zoom out and take a moment on J.P. Morgan asset management. We have had the honor of managing assets on behalf of public pensions for over 75 years. And are entrusted with $100 billion of public pension assets. Notably 3.4 billion of those assets are concentrated with police and fire pension plans like you all we really view it as a privilege to help secure the retirements of those that help keep us safe. Importantly we also have a great presence in the state of kentucky with 600 employees calling the state home, including over 100 in fayette county alone. Now, today we are going to spend some time on our core plus strategy that sits within our global fixed income commodities. Gfic throughout today's presentation. We have been managing fixed income assets for over 150 years and have grown gfic to nearly a trillion dollar business. At the end of the day, we view core plus as the ultimate reflection of the best ideas and insights from across that platform. Given the multiple leavers by which we can invest. Now one of our key strengths is our global platform I will spend a moment on page 3 discussing we have a deep deeply resourced platform with 320 investors located in six countries around the world. All these investors spend every day generating consistent outperformance across a range of strategies and this is a really critical component of core plus given that we are able to invest across the bond market so really our expertise across every sector is an advantage here. Deep research is at the core of everything that we do and that's fueled by a 480 million-dollar annual research budget which allows our career researchagist as to conduct over 4,000 issuer metings every year. And every single bond that we buy for our core plus strategy we underwrite in-house and underpinning everything that we do within gfic is a if I dish fiduciary mind set and focus on risk management. i will turn it over to everybody to dive further into core plus but this is great when it's more conversational so please feel free to interrupt us along the way with any questions that come thank you. Welcome. >> great and again thanks for having us I would give you a quick run down of my background. I have been with J.P. Morgan for 15 years. Started my career in our commodities group so the second I moved to london where I worked on our global aggregate bond fund global in nature and I came back to the united states and I have been working on our core plus bond fund ever since. Before I dive in I wanted to give a quick summary of what our core plus bond fund is. We view this as a fundamental piece of overall asset allocation and can serve as the ballast with extra yield. Like for bond funds we are going to be investing in treasuries, investment grade corporates and agency mortgages but we have the ability as a plus manager to invest in extended sectors that includes things like my yield corporates and emerging market debt. So really as katie mentioned in this fund, you are going to get the best ideas from all of J.P. Morgan fixed income. We have all the tools in the toolkit at our disposal. The fund utilizes a combination of both top down and bottom up security selection to come up with diversified source is of alpha and ultimately we will use interest rate risks or duration to head to the portfolio. We are knot going to take large interest rate bets but we will use that interest rate duration to hedge the portfolio. Two other things would I highlight at a high level is the team has over 25 years of average experience. Doing this for a long time and also the consistency of the results. The fund has delivered top performance over nearly every time period. Now we will dive into the details a little bit. This is our general philosophy starting from left to right. Core plus acts as a portfolio diversifier and the left side demonstrates this. These bars are looking at core plus returns versus the s&p. In instances where the s&p has declined. The s&p stocks are going down, core plus is serving as the ballast in your portfolio. The second thing is the middle part. We have disciplined yield advantage. So one of the advantages of investing in a core plus bond fund is the index, that gray line is really predominantly investing in treasuries, investment grade corporates, and agency securitized. Our fund can invest not just in those sectors but other areas of the securitized credit market so that's like asset backed securities or commercial mortgaged securities. And we can also is invest as I mentioned in high yield corporates and I merge market debt. When we put all of that together we can create a diversified portfolio even more diversified than the ag index which hence us outyield the bench index. The fund overtime has outyielded the benchmark by about 1%. That means if interest rates aren't moving and we are hovering along, you can expect the fund to outperform the index Last thing is we are trying to do this in a way that doesn't really increase the risk of the portfolio. And I think that's what the right hand side shows. So the bottom part of this is looking at our returns relative to the index. You can see that out performance. But probably even more importantly are the top numbers. This is our information ratio looking at how we perform relative to the index for every unit of risk we take. And these numbers are all in the top 5% of all manager is. So it's very, very strong risk adjusted returns. So this is the philosophy. We jump to the next page. This is our team. So the fund is run by kher, the cio of fixed income, every macro portfolio manager that sits in new york rolls up to her and the fund is structured with top down asset allocators and bottom up. The top down folks, we are in charge of the overall risk of the portfolio. The beta. How much do we want to al date to one sect -- allocate to one sector. how much interest rate risk do we want to take? How much curve risk do bee want to take? These are the types of decisions we will make. Once we allocate to a sector, we will have the right-hand side, the bottom up security selectors be the ones and the teams that actually pick the individual bonds. So, for example, we might allocate a certain amount to investment grade credit, vic on this team, he is going to be the one deciding should we invest in meta or google. Should we invest in goldman sachs or citibank. Now while they're separate groups, I don't want to give off the impression the teams are entirely siloed because the reality is there is deep conversations and value add that comes from both one example that always to mind when I go back to 2022, a lot of the top down kind of macro analysis, looking at high level trends, all suggested the U.S. Economy was going into recession. When we spoke to the bottom up securities selectors, the folks speaking to the cfos of companies and analyzing the balance sheets and asking the questions, they were telling a different story. Telling one of a strong consumer. Companies not laying off people basically companies that were going to be resilient. We took all of that together and it turns out in this scenario, the bottom up analysis was the correct one and this helped inform us in a way that prevented us from allocating the portfolio in a way that would have been too hedged against a resessions. That's how it comes together. The middle part of this what katie mentioned, we are supported by a team of over 300 investment professionals with deep, deep experience. So even if these ideas are not making it into the fund themselves we are hearing from the people on a day to day basis and you are getting the best ideas from J.P. Morgan fixed income. We are united by one common platform. Head of investment specialist, research, risk and trading. Every fund at J.P. Morgan utilize the same analysts and traders. Let's jump to the next slide this is sorts of how our idea generation feeds into portfolio constriction. There is a slew of meetings that take place at different cadences. One happens every quarter. This is our investment quarterly. You see that at the bottom of the chart. A meeting where all of the most senior investors and seconder heads come together present on their topics and come up with an outlook where we think the market is going to perform over the next three to six months. Think high level goal posts. Do we think it's going to be a good environment for risk or a bad one. It happens every three months we are going to be have strategy meetings multi-sector once a week and individual seconder meetings once a week as well. Think investment grade corporate team has their own meet. Top of that, core plus dedicated meeting where we take all of this and bring it together to come up with our portfolio construction. As I mentioned before a combination of the top down view with the bottom up securiies selection centered around common research language fqt. Everyone is thinking in tomorrows of fundamental analysis, quantitative analysis and technical analysis. Fundamental analysis meaning analyzing the balance sheet, seeing what leverage looks like. Seeing what the consumer looks like. Quantitative analysis is are prices rich or cheap, is all of this good stuff or bad stuff priced into the market and technical analysis. Are there more buyers than sellers out there? Is this a key level we should be buying? This is the research generation. And ultimately turns into the portfolio. Where we are allocating to different securities, different sectors, and different duration and the key part here that I would definitely highlight is the risk management. So we take risk management very, very seriously. And there are three pillars to that at J.P. Morgan. First line of defense is the portfolio manager that is going to be me every day I come in and make sure the portfolio looks the way I want it to look. we make sure that it is performing inline with expectations given the market moves. The second thing is we have an internal fixed income risk management team that will partner with to run stress tests, to look at different correlations if rates are going up, is risk assets like corporate doing well or poorly. We will use them for that. And we also have an independent risk team that is not related to J.P. Morgan fixed number. They report to J.P. Morgan chase. And they're looking at this from a completely different set of eyes running their own stress tests and we feel this is important because it makes sure that it's not just our own team looking at this but we have an independent kind of auditor as well. If you turn to the next page, this is how those ideas translate into actual positioning. It looks busy but hopefully it will become clear as I walk through this. The gist of it because we are a core plus portfolio we are going to be invested in some classes not in the U.S. Ag index. We are going to always have strategic positions that look different to the index. That's going to be, I would bring your eyes toward that yellow column, the big green overweight on non agency mbs, cnbs, overweight to securitize credit and with within corporate credit, we are always going to be under weight investment grade and over weight high yield because we think of kind of our cred it in a holistic approach and we are going to think of it all as one. The fact that high yield is not in the beverage mark means it is going to be overweight and we are going to fund it by reducing it a little. That's how the portfolio is always going to look. But then from there, we are going to tilt in certain directions. You can see a clear theme. Fundamentals are positive pretty much across the board. We think the consumers strong, corporations is strong. We are seeing literally the best earnings we have seen in years. Things look good. Technicals on the right-hand side. Always very strong. There is a lot of people that are willing to buyfully downtick in prices. They'll step in, additionally, supply is lower. So as corporate supplies come out, tends to push yields up and in this case we are past that. There is less bonds to go around. That's a good thing for technicalsment that means more demand, less supply. And on quantitative, this is just prices as I'm sure you know, you know, stocks are at record high. Likewise bond spreads are at record tights so all of this stuff is great. But a lot of it is in the price. So when we put that all together , we landed our bogses on the right-hand side versus where we are from a strategic normal. So you can see at the bottom. Two green dots on investment grade so we prefer investment grade corporates to high yield corporates at the moment that means a lower allocation to high yield relative to history. Again that's become spreads are so tight and we don't feel like we are going compensated for taking that extra risk at this time. And similarly abs and cnbs is positive relative to history. Two sectors where we think the valuations, the prices on these bonds are not so rich. They're a little cheap. So we like to invest there as well. If you jump to the next page, -- excuse me. Since we are having a conversation. >> please. before you go on, on this slide that you just covered with the sector views, this is a rather simplistic question. I'm interested in how much of your investment is foreign investment we have a small allocation to emerging markets. You can see at the bottom it's neutral. Typically going to be 1.5% of the portfolio. When we invest in foreign investments we hedge it back to U.S. Dollars. We are not taking currency risk in the portfolio. So it's all reflected in the emerging markets. thank you. Are there any questions before >> thank you. As you mentioned you can see emd is a little closer to 2% now the index has a small amount. We are investing in slightly different bonds there from the index but you are going to get a small amount of emerging market exposure there. The other numbers I would draw your attention to in the top left hand quell um yield, the yield of the portfolio is 53%. Index is 4.6 so you outyield the portfolio by.7%. Again, what that means is if rates don't do anything, we have a higher coupon than the benchmark so we should expect to outperform the benchmark by about.7%. Duration, the second column, 6.14 versus 5.86 running an over weight in interest rate risks relevant to the benchmark. This is a hedge. If something goes bad we want duration on in the portfolio to hedge against things like investment grade corporates or high yield corporates going down in price in case there is a recession and last thingly draw your attention to at the bottom, where we are overweight and under weight. In total 20% of the portfolio is in securitized credit non-agency cnbs and abs and 8% of the portfolio is high yield credit. Actually lower relative to our history which is sometimes around 10. So if prices were to go down and spreads go up in high yield, we would look to add in high yield corporates so to wrap up on the next couple of slides just on performance. I think this is ultimately our proof statement. So this is looking at our rolling performance, five years. Each of those dotings a month. So at each month point in time if you look at our rolling five-year performance relative to the benchmark we have outperformed the benchmark in 98% of those times going back to MARCH 2011 so the key thing here is the consistency. The next slide looks at where the performance is coming from so each of these bars has a different asset class and I think the key takeaway here is the flexibility of our returns. We are not wedded to one return sector so we are market environment agnostic. If interest rates go up, we can pull one leaver. If interest rates go down, we can pull another leaver and we can really see this in 2022. This was a time when the fed was hiking rates, interest rates were going up fixed income performance in absolute terms was not that good. But we were able to outperform the index because we were short interest rates and you can see the blue bar was positive. Look at 2024 and five and the return is coming from different sectors. Coming from securitized credit, investment grade corporates, risk sectors. That was an viemplet where risks were doing well, stocks were doing well, bonds were doing well. We didn't need duration but the key here is it is not a one trick pony, but a portfolio for all different types of seasons. And the last thing and we can open it up for questions, this is our position across all time periods. Would I start at the top and you can see 1, 3, 5, since inception we have outperformed the index but critically at the bottom, this is a measure of volatility. We have the same volatility as the intext so that means very strong risk adjusted returns with the same level of risk. I will pause there. Would I just say in conclusion and we can open it up for questions there are three takeaways very, very broad toolkit. Best ideas across J.P. Morgan with deep research and it gives us many leavers to pull regardless of the market environment. The second thing is the depth and breadth of the team really allows us to uncover unique opportunities and come up with our best ideas. Lastly is the consistently of the approach. That's really important. We are able to deliver really strong risk adjusted returns regardless of the market environment that we are in. So hopefully that gives you a flavor. I'm more than happy to answer any questions as well. all right. Less start with questions -- let's start with questions. You just covered a lot. Surely there are questions. Tommy puckett? >> talk about fees. >> fees. >> happy to. Jim had indicated that the investment size would be roughly $40 million so investing into our co-mingled fund would be 25 basis point fee. But then as the account grows, there is possibility for fees to go down. So once the account would hit $75 million in size, fees go down to 20 and that happens automatically but just for the initial investment of 40 million or so, fees would be 25 basis points. >> and that is set in stone. >> that is what we are able to offer at this point. >> never hurts to ask. >> of course. other questions. Now is your opportunity anyone? >> how much do you have in investment grade bonds? And is there a failure rate or anything on those? >> investment grade bonds tend to have very, very low default rate. If you go to page, you can see the overall breakdown of the portfolio by rating. So in the upper right corner, I guess I should have drawn your attention to that one as well. But it's about -- let me get to the clicker. So it's about 45% triple a. 8% double a, 16% single a. So the cumulative high yield is around call it 10%. And it's really on in high yield corporates and a couple of specific E.M. Names that ourage -- our analyst really like. High yield is predominantly high yield corporate names. thank you. I don't see any other questions. We appreciate your time. Thank you very much for the opportunity. >> we covered a ton in a short period of time. So really appreciate the attention and opportunity. We would be honored to expand the partnership. Thank you again. we appreciate you both all right. >> super, well, I think that went well. They started at 9:17 and he ended his remarks at 9:37 sharp. He took to 20 minutes and left time for q&a and that's okay if there are not any questions. So we are going to follow a similar format here and bring in mfs in just a minute. So just take a 30-second breather here. I will go ahead and bring them in or maybe chad is. all right, thank you. welcome. Good morning. >> thank you. Welcome. My name is greg jones. With me today is josh marston, the lead portfolio manager on the strategy that we are here here to discuss today. So apologies. If you didn't hear me there. Greg jones. With me is josh marston portfolio manager on the core plus strategy that we are here to discuss. Thank you for your time. It's you know, as we were thinking about what you are looking to accomplish today, you know, I'm kind of breaking that down to two objectives as I think about it. One is selecting a stable and disciplined team that you can really trust over the long-term and then secondarily as you look to, you know, add an allocation outside of what a traditional core mandate allocates so a broader opportunity set within the bond markets and we think our core plus strategy is well positioned to deliver to that. If I could direct your attention to page 5 in the book. There are facts and figures about the core platform andly let you review at your leisure. What I want you to take away from this is mfs's structure. We are a bit different from some firms in that everything we do is built off one cohesive global perform. We don't -- platform. We don't have independent boutique teams operating in silos from each other. All 135 professionals are integrated into our global platform so josh managing our core plus strategy has the full weight and resources of mfs behind him. They're all contributing together as one collaborative team to help, you know, make him, help him to make decisions within the portfolio. We turn to the following slide, you can see our kind of full lineup of fixed income capabilities and what I want to draw your attention to is the upper middle of the slide where we have our U.S. Aggregate suite. We run $30 billion in U.S. Ag specifically core plus strategy we are here to talk about today. Shifting this mandate to a core mandate. You are looking for flexibility to invest in additional plus sector allocations we have market cycles together as a group. They have done so with a highly disciplined investment process over time and we have proven track record, particularly in protecting capital when markets deteriorate many will broadly allocate two plus sectors and hope they got the timing right josh is much more selective in the way he approaches this allocation. We will take risk within the plus sectors and we feel we are properly paid to take that risk with your capital and with we are not paid to take that risk, we will be patient and we will wait. And so having that discipline is what I think believes us to think this is a a strong mandate to meet the objectives for today. Josh is going to spend the bulk of our time walking through his process on how he approaches management strategy. My hope is by the end of the 20 or 30 minutes will you have a clear sense of why we are aligned in managing the strategy with you. So thank you. thank you. Welcome. Thank you. >> my name is josh marston and I have been at mfs for 26 years. I joined the firm the same month this strategy was launched so I have actually worked on it my entire career at mfs. As a portfolio manager I took over the lead role right in the middle of 2008, right in the middle of the global financial crisis. We have had a lot of different market environments over the last 18 years to manage through. So greg's point is the right one. This strategy is set up to draw upon the full resources of our fixed income department. I'm working and my partner, alex macky, someone I have worked with for 20 years. He and I as portfolio managers are working directly with thiblives across the different sectors of fixed income and I mean corporate bonds that would include high yield and high grade, mortgages, treasuries, emerging market debt, of which there is very little in this portfolio right now. But our job is to work directly with the analysts, give them idea what our view is and goals on the portfolio and then with their best ideas highest conviction ideas, put the portfolio together bond by bond, so when we think about a multi-sector strategy, we are not thinking of little sleeves of high yield corporates, high grady merging markets but collectively the portfolio working as one with the goal at the end of the day to deliver the return that we were set out to as consistently as we can. So, you know, before I leave this page, I think one of the keys that I think we bring to this is the stability of the team, the team we work with on average have 17 years experience as analyst, 10 years at mfs. We have been together working this way for a long time and alex has been my partner as portfolio manager since 2019. But it goes way yonded that in terms of what our value proposition is. we are using all means a portfolio has to add value to the portfolio. But it's those areas that we think we have to and those are decisions asset allocation are we going to be in treasuries, emerging market bond, corporate debt, quality, high grade versus high yield, lower risk versus high risk those are allocation decision. And then secondarily, but just as important is security selection is the piece where we are working with the analysts to identify their best ideas and the best fits within the portfolio. That third piece is duration and yield curve positioning so that's making, you know, bets whether or not insurance rates are going to go up or down, the fed is going to cut more or less sooner or later. This is a part of this portfolio, but it's not the way that we seek to generate value consistently in a repeatable way. And in fact, here is a break down excess return 100 to 125 basis points on a gross basis throughout the year that 20 to 30% in that sector allocation piece, 20 to 30 in quality. 20 to 40 and I know it doesn't add up to 100 but it depends on the year. 20 to 40 for securities selection. And the duration in yield curve is a smaller piece of that. Soming we rely on, an important tool as fixed income portfolio manager is not going to drive our performance in any given year this chart is important for performance a little more than 10 years with the first quarter The the color coding, blue represents excess return of the contribution of excess returns through asset allocation. So that's combining the sector fixed income sector selection and quality. The gray is contribution from security selection. And the purple is contribution from yield curve and duration positioning. And there are a couple key takeaways here. One, the consistency of positive contribution both from asset allocation and security selection eight out of 10 periods here. This is our bread and butter, what we do well. This is where there are barriers to entry those that don't have the right structure or research team in place are less able to participate the purple is 50-50 in the world of investing, duration positioning is a less reliable way of doing it. It's the slot machines of gambling. And we are 50-50 and frankly that's what most managers are and when we are using duration, more of it has to do with protecting the portfolio in different ways in 2022 we thought interest rates would go up more than the market that was in part to protect the fact that the portfolio, even though we reduced risk had more exposure to credit markets than our benchmark. So it's a tool. The second take away from this slide is there are going to be years when we do not meet our benchmark n. 2018 and 2022 were good examples of that. Those were shocks in the market. 2018 was literally between christmas and new years credit spreads doubled. 2022, that was a lot going on there and credit spreads doubled there also. So we are not going to outperform in every environment but what we did do in each of those cases and this goes well beyond 20 six, -- 2016. We are protecting the portfolio as we are today, we don't feel like we are getting paid for the risk. And, yes, we MAY underperform modestly. The outperformance we have on the other side of that is asymmetric so when what I'm talking about is protecting to the downside but fully participating to the upside and you can only do that if you store liquidity and you are protecting and willing to act. I'm going to spend a couple slides going through the investment process. I talked about dialing up and dialing down a risk budget is the sensitivity relative to the market. It's going to perform better when the market performs better and worse when the market underperforms. There is a process for that as well as allocating the risk is high yield for attractive than high grade than treasuries and mortgages. I'll going to spend time talking about these processes. So when I'm thinking about it ising the risk budget or this sensitivity to the market there are four main inputs that go into making those decisions. There is the macro and the bottom up, together they form a fundamental view. In essence, this is a view what kind of economic growth are we going to have, is it a positive environment for the credit markets? Are is it a negative environment? Then we have technicals and valuations and I will go through each of these briefly. When we talk about macro, really talking about a traditional economic toolkit so thinking about real and nominal growth and what is missing there is inflation. So inflation is really the key. And I think we are going to have more of that than the market anticipates, the monetary and fiscal policy. What is the fed going to do. What is trump going to do. What kind of changes will we have to taxes? How is that going to filter into the economy? Tail risk right now perhaps are thest on important. Events that quickly change risk markets or the bond markets responding in a similar way events, trade disruption, geopolitical wars pandemics that type of thing we rely on the broader views on the economy but there are changes in the economy that happen in real time and if you rely on a print on G.D.P. Or unemployment to make decisions about the portfolio, you are probably late one of the things that we systemized is talking to the companies we invest in every month, every quarter, and we are asking them real time are you passing tariffs through to the consumer, are you not, profit margins decreasing, are you paying it. Slowing down the hiring with Those types of questions feed into our fundamental view technicals supply and demand is there more, right now there is not supply for the demand and that's one of the reasons with everything going on in the world credit spreads is the lowest in 25 years it should not be. Evaluations ultimately are we being paid for the risk that we are taking? I'm hinting to this but I don't think we being paid appropriately, as a portfolio manager, base case economy is going to continue to grow healthy clip 2% plus. Labor markets will hold in. Inflation is going to be a little higher but it's going to be okay but that's not the only possible outcome so I'm trying to construct a portfolio that performs in that environment but also if one of these tail events happen. Do we have liquidity so I can pivot or shift. That's what I'm going to talk about next. How does this all play into decision making about the portfolio and active decisions about sectors that would go into There is a lot going on with these two charts. The one on the left tracks, I think going back, I can't read it from here. it tracks the allocation to credit sectors by market value and this goes through covid, it goes through, you know, russia, ukraine, the start of that. Near recession we thought we were going to have in 2022 and The right hand side is the same thing but it's measuring sensitivity of the portfolio to changes in credit spreads. A better indicator of the risk that we are taking. So, for example, if we buy a five-year corporate bond, that is a lot less risk are 30 year corporate bond demonstrated on the right hand slide. It's less straightforward but I want to use that as a way to maybe walk through how some of the decisions were made in the portfolio over time. We just had an election, uncertainty about fiscal policy, monetary policy we got covid instead but you can see the dark blue high grade corporates, credit spreads, they want to have it by 400%. So what you are being paid to take risk that had been a little bit less than a percent at its peak was about 3.5% and these were for companies like bank america we were working from home two a year and a half to two years. None of us knew how long the vaccine would take or how long the recession would be. Brut I did know that these really high quality companies that could stand up for two or three or four years without having to access capital markets would survive, you can see a big push to the dark blue. Coming out of that the market recovered fully, the credit spreads went below what they were before the pandemic. High yield market was wider. We felt really good about the economy mostly because of what we were hearing from the companies we were talking to that's the light blue and pea green is emerging markets. We felt better about the economy opening globally so we stepped in and added a little bit. We hit the spike up. Beginning of the russian ukraine war. We stepped in and there were companies merging with other companies at just the wrong time rogers communication was buying the second largest telecomcompany in canada, they had to issue. A week earlier credit spreads were 1.5 above treasuries. On that day they were 3%. So we stepped in and bought selectively brought down risk and you can see another lump up, the recession that never came we felt better about the economy. We didn't think we were going to have a recession so we brought our risk in the portfolio to normalized levels. And then from there you can see there is a drifting down in credit risk. Everything is getting a little smaller, including high yield. You know, here we are credit spreads at the 25-year low. A lot of uncertainty into the world and frankly, waiting for the opportunity. It feels like these other opportunities. And I think the point here is that we have the discipline to reduce risk when we are not getting paid but we also are willing to step in when we are and those things are hard things to do at the moment but we have a history of doing that I'm going to skip to one more slide. Just to speak a little bit about performance. So on the bottom, the second to the last row on the bottom, that's the gross excess return for each of these years I want to go back to a point I made earlier that we do not outperform every year but most years we did but that 2018 when we lost 55 basis points, it was followed by I think it says 195 covid year was a credit cycle by itself. We have been tested over and over again and my key is for you, for our clients, for others to know what you are getting with us and know that we will pull back when we are not getting paid and step in and add risk in the right places when we are. are you ready for questions? >> yes. okay, I thought so. I would like to ask one right off the bat on slide 16. I realize this is a mini version of what might be, what you might see in a bigger format. It looks like you on the emerging, is it the emerging markets that maybe you got out It isn't showing too much there at the MARCH 26 end. Is that true or are you still in emerging markets? >> we have some in emerging markets the position we have is glen core a global mining company that happens to get labeled emerging markets because its headquarters is there by and large we have reduced our exposure to emerging markets. I think, for the same, you know, we are being paid almost the same for emerging markets as U.S. High yield. I think U.S. High yield has less risk than emerging markets right now. >> that's what I was wondering. Do you know about what percentage you are invested in emerging markets? Right now. >> it's a little bit less than okay, thank you. >> and these are investment grade -- it's two investment grade global companies. Chair: okay, thank you. Other questions tommy puckett and rock vance. You had your hand up first. >> you mentioned inflation you thought in your opinion was okay but might get a little worse? Could you expound on that a little. >> weigh just had inflation print yesterday which was closer You know, my view on inflation before I ran -- before iran was that it was going to be higher than expectations close to the 2.5 to 2.75 on top of that, the supply side shocks and inflation coming through energy are going to push it up a little higher my concern has more to do with the fact that the housing market is a major contributor to inflation when interest rates went up dramatically in 2021 and 2022, mortgage rates went up by more than 5%. If you are building an apartment building, the economics of building that building with a mortgage and almost all institutional investors do so became uneconomic for a time and it virtually stopped. Rents stopped going up and they started coming down a little bit. I think we are about to hit a wave where rents are going to continue to go up because there is limited supply released to the market for the next several years. >> looking into your crystal ball, what do you think is happening in the future. Inflation is still going to go higher or do you think it is going to level or what? >> I think inflation is going to be higher but it's not going to be runaway inflation. I don't think -- whether it's 2.5 or 3 ultimately has more to do with how long the issue with iran goes and what the work arounds are in terms of getting oil to other parts of the word that aren't getting it. There have been some work arounds and that one of the reasons if you look at oil prices there are markets where you can lock in the price of oil a year from now or two years from now. Those oil markets are actually lower than they are today. So there is expectation that the iran situation is going to settle down but there are also work arounds my crystal ball is I think interest rates are going to be about where they are they have normalized. It's one of the reasons we see money coming into fixed income in the last couple of years because finally it makes sense it's investable. Crystal ball is murky largely because of the tail risks I was talking about we don't really know how things are going to play out with china and taiwan. We don't know if the U.S.Ing going to be involved in iran for a month or longer and I think it's going to be longer so it's the lack of a crystal ball and clarity and not getting paid for Frankly if you look at the chart on the right, they're the lowest they have been in this entire time series. My goal in the portfolio, so the way that we have been able to generate excess return this last year was having a yield advantage versus the benchmark. That yield advantage is about half of what I'm trying to create in terms of excess return. I'm giving some of that excess return to have a significant liquidity store, 30% of the portfolio could be deployed into credit. We are ready and waiting for the right opportunity. It's a long winded way of saying I don't have a great crystal ball and we are not getting paid% enough to really lean into it. You are into emerging market. How much failure rate do you have in those the lower investment grade do you have much of a failure rate on those at all no but there tends to be failure rates in emerging markets, particularly the lower rated higher than the U.S. Market. Which is one of the reasons you see very little representeddation of any green for last couple of years I believe our only position in emerging markets right now is glen core, an enormous mining operation. They're trying to get into rare earths and other things. There can be situations where, you know, whether it's gas fields in egypt or drilling rigs in brazil, we have seen patterns of default that have happened and it's more pronounced in emerging markets when it does happen. >> the important thing here, what are your fees. >> our fees. >> I can talk you through those. So what we propose for this mandate is our C.I.T. Vehicle and within that we have our founder share class of it that has a 12 basis point management fee and a cap of 2 basis points on other expense phos for a total expense ratio of 14 expense basis points. Callan has come to us and inquired about a separate account and I got approval to propose a 15 basis point management fee on a separate account if you produce every that vehicle. Those are the two options in front of you in the fees. >> we are looking at $40 million I think in investment? >> yes, correct. Mayor: Based on that asset value. Yes. >> okay. are there other questions. >> I have a question, mayor. commissioner hensley. >> we are not here today gentlemen because we didn't have a good product. We here today because leadership changed in that product. So can you talk a little bit about your succession planning and your tragedy? I know that you said you have the full weight of your massive team behind you but that ultimately leads to you all and so what is the plan for that. You have a well tenured team sounds like you have been working together for a long time so what does that look like for you? >> that's a fair question. So the slide I brought up, our organizational chart. Upper left-hand side you can see the multi-sector north america. Myself, alex macky, phil the fourth one in is canada managing canadian portfolios which I'm involved in manies and then rob hall who an ipm, a client facing portfolio manager not making investment decisions my succession planning includes alex oe of the reasons we have two portfolio managers on every one is for continuity and again alex and I have worked together for 20 years and I mentored him for five years as a pm, 2012 to 2017 before he joined me. So that's where you get the continuity and phil, I hired 22 years ago. He has got a lot less gray hair than I do. And he has been working with me, you know, the last five years as a co-portfolio manager and you know, we recently launched a core plus etf. And he works with me on that. So there are really think of us that kind of represent the knowledge base and the skill set two lacer of redundancy and I promise you I'm not going anywhere I appreciate that. I just don't want to do this again. >> I hear you. thank you, other questions? No other questions. All right. Thank you very much to both of you. We appreciate you giving your presentation to us. >> thank you. >> thank you all. so we have had our two presentations I'm not sure what you are thinking, jim. It seems like the board might want to discus this. >> do you want to do it now or do you want to give him a chance to give the first quarterly report? >> I would prefer if we can finish this. I know that he was going to give some highlights between the two. yes. >> that's what jim was going to do right now. And then once he gets finished then we can discuss and do whatever -- make a decision. okay, so you are going to give your highlights right now and that's great. Thank you. >> sibs it's fresh in our minds, why don't we keep going with the fixed income discussion and I just want to highlight a couple slides here. I don't want to rehash everything that has been said by these organizations but I think what we wanted to show you here is what the perspective fixed income composite would have performed like in these annualized periods. I'm sorry to interrupt you. Do we have this? I should tell you the name of the presentation. We have a lot of ducks here today. On page 3, we wanted to show you the perspective fixed income composite would look like. And keep in mind here, right, so the composite is made up of three managers, so 50% would be to siegel bryant hamill, your current for income fixed manager. The anchor of the composite. A third is in makay high yield fixed income. That both allocations will remain unchanged and then the 17% is to the core plus candidate. So you see we profiled these mixes using J.P. Morgan and mfs and when you pull all the pieces together, there isn't a big deviation between the two. Not surprisngly, right because two-thirds of the portfolio is made up of your existing managers and core plus complementary strategy is introduced, coupled with the fact that fixed income returns are generally pretty tight. Wanted to give you a sense here of what the composite would look like you can see there is an advantage when J.P. Morgan is introduced in the near term. Quarter one year a wash over a three-year period. J.P. Morgan has a slight advantage over a five year period and essentially a wash over the seven and 10-year periods we plot the calendar results here. I think the point is that you know, in shorter periods of time, you can see some deviations but over the long-term, we think we have two really strong candidates that bring complementary characteristics to the portfolio that are addive. I'm going to skip a couple of slides to keep things moving. You heard about our search process. You've heard about the organizations what I will say about these organizations these are large asset managers that are dedicated to the fixed income management teams. They have a lot of resources I think they employ similar approaches where you have portfolio, a team of portfolio managers that are kind of setting the broad risk parameters, the allocators, if you will, what sectors do we want to bring in and then they have large analyst pools they tap into to implement the portfolios so in some ways they're a lot alike but they do bring some different, again portfolio characteristics to the table that different wait themselves. I'm going to skip over fees in a moment. I will get back to that I just wanted to touch on performance and I'm on slide 10. Of the individual manager as of DECEMBER 31. So last quarter J.P. Morgan over the last quarter and last year similar to what you saw in the composites is outperforming the benchmarks and peers over a five-year period again I would call that essentially a wash between the two products that we have here I'm glad josh brought up 2018 and 2022. From a calendar year perspective because if you look at the five year number that includes the 2022 period where mfs did under perform so that is embedded in the result. So J.P. Morgan has an advantage there but will you see that mfs is in the top third of cop core peer. They protected capital over the five-year period but lagging J.P. Morgan over a seven and 10 year period talking about four and 10 basis points difference. So both strong perform areas, top quartile and top third of peers over this really long-term periods. I mention the calendar year performance. Josh touched on it. I think this sort of speaks to some of the characteristics which I will get into in a little bit. I think what we have observed from our analysis is that mfs does have a little bit higher standard deviation and higher downside risk, which you can see in 2022 where they underperformed the index but outperformed peers. J.P. Morgan did a better job of protecting capital in 2022. And 2018, where the market was essentially flat, you have J.P. Morgan slightly up about 8 basis points on a relative basis whereas mfs was down about a percent. So again, performing roughly in line with the peer group median not outsized results from a peer perspective but you can see the risk return pattern that is evident within their portfolios. I know I'm going really fast but again looking at the absolute risk of the portfolios over a five-year period. Mfs has a little higher risk characteristics, not drastically higher but riskier portfolio. I mentioned downside risk very strong risk adjusted return ranking in the top -- so I know I raced through that pretty quickly but it gives you a sense of the expectations that would you think the portfolios would react in certain market environments. And then just the last thing I wanted to touch on and I will open it up to questions and discussion is the fees the fees that they quoted in their remarks align with what they proposed in our search process. So J.P. Morgan 25 basis points all in. Their product and vehicle has been around a little longer so it does have the benefit of combining a little bit more traction within the institutional markets so it is a larger product. And at a higher rate whereas mfs still a pretty strong high water `mark there. They have had success in the retail channels. They're starting to have a lot more success in the institutional markets managing portfolios for clients just like yourselves and so they're being a little more aggressive with their fees so greg mentioned that the all in fee for the collective fund is at 14 basis points. Just to give you a sense of where the market is at for core plus managers, we would say the median fee as round 20 to 22 basis points all in so J.P. Morgan is above median in that regard so a little bit on the higher end whereas mfs comes in at a little more competitive rate but keep in mind the results we shared with you just a minute ago that is on a net of fee basis so that's taken into consideration when we look at them. From an analysis perspective but just wanted to walk through that with you. And then of course mfs has a separately managed account for roughly the same price. I think it's 15 basis points. A little higher with that, I will pause to see if there are any questions about the candidates. are there questions? And I believe I'm looking at our commissioner of law, I believe we are going to go into closed session to discuss this eventually. >> I provided MR. Puckett with a motion.% but right now are there questions you want to ask in open session of jim anything he went over. >> just for clarification on the slide that you provided us on page 3. Comparatively, what number did you use for the fees for mfs? Do you remember? >> we used the -- they led with the C.I.T. So we used to the C.I.T. Of 14 basis points. other that seems off by, you know, he said 15 basis points in total, right cit versus having a separate account it is I nominal difference 15 basis points does not take into account trust and custody fees which is about a basis point or two at most so call it 16 or 17. Still below what we see from a median fee perspective though. >> what would be the advantage? >> fees? >> the advantage is I know, I think what you are getting with J.P. Morgan and they mentioned this in their presentation, they have a long lineage in investmenting in the securitize ed part of the market. That means your commercial backed mortgage backed securities, residential mortgage backed securities, asset backed securities so those are, you know, car loans and credit card receivables, they have a specialty in that space. And that's one of the big reasons why they were included here is because their ability to not only allocate in that space but do so effectively. And one of the complementary strategies, you know, one of the complementary consideration is we have a core fixed income, we have a high yield manager below investment grade credit one invests in investment grade credit. What can we bring to the table that is not currently in the portfolio and both these candidates do it and do it well but I would say J.P. Morgan probably has a little stronger track record in that space and a little more specialized resources that they can bring to the table. >> what would be the advantage with mfs to have a separate or the co-mingled? >> the advantage in the co-mingled is a slightly more competitive fee founder fee remains at 14 basis points I guess the disadvantage of being in a pooled vehicle is you are a part of a vehicle that has other institutional investors as part of that. So that product can grow in asset and decline in assets if there are rough patches within the strategy and institutional clients decide to make changes then you will be part of that process where the outflows are higher than usual and you MAY become at some point an outside sized part of that collective vehicle we wouldn't let that happen necessarily but that's a disadvantage of any pooled vehicle whether it's a mutual fund or collective trust. Mutual fund are for retail investors. They tend to be a little bit more volatile, whereas a collective trust institutional clients like yourself tend to be more stickier assets. That's a disadvantage. I would say being in a pooled vehicle. This is an account managed specially for you and your beneficiaries so this would be custody that northern trust for your specific benefit, beneficiaries: it just comes with a slightly higher fee. But the guidelines will remain very similar if not identical. So it's not as if if you are in the collective vehicle keep in mind those guidelines are for all investors. Separate accounts can be customized but they would align with the collective trust. does that answer youre if. commissioner hensley has a question. >> I'm going to assume the answer is no but I'll ask in case. There is no conflict with our ongoing J.P. Morgan real estate investment activities if we were to move over to them in this new strategy at all? >> no conflicts. Same organization completely different teams. great that you thought of that. Other questions? All right. >> I move that we go into closed session pursuant to krs 61.810 to discuss this selection and award of a contract. all right. Is there a second? >> second. thank you. Any discussion? All those in favor say aye? >> aye. anyone opposed? All right. We will go into closed session back in the caucus room. So moved. Is anyone opposed. We are back in open session. And I would like to welcome back jim o'connor to give us the cal callan quarterly report and discussion. Okay. What are my time constraints because I can keep this to -- 15 minutes. I will do my very best. Okay. I think that's totally reasonable. So on slide one here, we have the performances fund highlights. These are all my talking points so I'm not going to sit on this slide. If there is one slide to take away, this is the place to do Set is the stage quickly. This is dated information but important to steak into consideration when we look at the performance of the fund and the manager this quarter we saw a challenging market. Broad stock markets were down globally and non-U.S. Small caps measured by the russell 2000 was up in the greeny emerging markets were essentially flat. Looking at fixed income, that was down as well, as I mentioned small basis points, anythin with a longer duration or interest rate sensitivity was down farther than that we talked about cpi, the headline a lot of it had to do with the supply shocks with the strait of hormuz being closed and specifically oil in particular was up quite a bit as part of the cpi, a big driver of the increase up again 3.8% so flags is climbing higher month over month and the consumer spending in the U.S. In particular seeing dislocation within that segment and driving consumer spending so with that back drop, I'm going to jump ahead a few slides to slide six just to keep things moving along here. I kind of talked about the highlights a couple things I bant to point out here is the performance within the s&p 500. We have the underlying sectors you see at the bottom there 6 of the 11 posted gains this quarter. energy was up 38%. That is in the orange there. Financial information technology down and healthcare down, consumer discretionary down as well you can see the performance differencement russell 1000 growth was down russell 2000 growth was down but value in particular outperformed growth this quarter, soming to keep in mind when you look at your managers outpaced the U.S. Market. I'm on slide 7. Apologize the two big ones that stick out in the emerging markets china down% india 18%. You see in china a couple things going on there. Both of those make up a large part of the emerging markets. Value outperformed growth, so will you see that volatility in the market. Geopolitical things going on treasuries rose across the entire yield curve. The aggregate was down about five basis points so modest decline but I think what we saw here is sort of a risk off environment. U.S. Treasuries, the ballast, the anchor within the fixed income market outperformed whereas anything with a little bit of risk like high yield and anything with longer duration with the maturities out farther under performed this quarter a lot of results within the real estate market, so last quarter "the odyssey" index was up about 1%, 80% of that is made up of income and appreciation, while modestly positive, nice to see that in the green again up about Income has been a big driver, resetting of the market in terms of pricing. You see that reflected in the three-year period but if you look out over 10 years income is the largest driver of performance within real estate. With that, why don't we get into your portfolio on slide 10. We show the actual asset allocation and target allocation and what I will say here is the percentage difference is between the actual and the targets are very close and within your tolerance bands and your policy statement, and the fund ended the quarter at about a billion 1,04 million. On slide 11 here, we have our cash flow statement. I know it's kind of small on the page. We had to slink it down because there was a lot of activity we wanted to make note of in the last quarter within the portfolio. And a lot of that had to do with some of the repositioning that was done in international equity. So two things went on. A new asset allocation that increased the domestic fixed income target from 23 to 27 and there was a corresponding decrease in international equity from 23-19% so that was an outcome of asset liability study and then furthermore within the international equity composite, we had two new managers come in, baird, chautauqua and dfa who replaced bailey gifford and capital group emerging markets. As the international equity managers. And then acadian, we changed their mandate more of a developed focus to all country world so that included world and emerging market securities. Quite a bit of activity during what was a pretty volatile quarter. On slide 12, just going to give you highlights here. Last quarter. It was down 37 basis points. Performed roughly on a gross of fee basis. And you can see the composite results for the domestic, international and fixed income real estate and real assets so, how did the fund rank? Relative to peers we have that on slide 13. Despite being down 37 basis points, the fund actually did outperform peers ranking in the 19th percentile. So top quartile versus account public funds sponsored database. Over the annualized periods on an absolute basis, the fund was Lagging its policy target which was up 16% ranking in the 39th percentile? And you can see the longer term results there. Lagging modestly over over the three and five-year period with rankings mixed between a median and-like return as well 5s a fourth quartile ranging. Seven to 10 years better outperforming its long-term target and ranking the top third of peers. On slide 14, I won't get into every single one of these but the calendar year results. Outside of 2022 the fund has performed kuwait well since then outperforming its peer group in 2024, 2023 and out of covid-19 in 2021 and into covid-19 in 2020 and before 19 and 17 so pretty good results for the last 10 calendar years returns. On slide 15 year, I promise I will try to keep this as brief as possible, just a couple of highlights domestic equity as we look at it on a gross of fee basis, I have to zoom in here. Underperformed international equity did underperform as well. We have had some legacy managers that were on its way out. Domestic fixed income outperformed 1.6%. Driven by strong results with siegal bryant hamill as well asthma kye shields which finished up about 12 basis points. As you kind of go down the list, real estate was another bright spot up about 1.5%, again income generated within the strategies was positive. J.P. Morgan was up 1.7% and lasalle up 1 point%. Energy was the big winner this quarter in terms of an absolute result. This is a good reason to kind of point out why real assets are a good die veers fire within the portfolio. Pim pimco diversified assets we cans pose your to tips to commodities was the best performer up.5%. Only 4% of the portfolio acting as a good die veers fire it was additive within the public and non-U.S. Portfolios. I know I went through at that time quickly but happy to entertain any questions about performance, about the international equity transition. Whatever it MAY be. all right. Questions. on the quarterly report there are no questions it seems. >> I have one more update to stair with the board on slide 1 where we track the investment manager updates for your fund managers and one thing that was brought to our attention, so it would be last month was J.P. Morgans announced the fee credit program for the strategic% property fund, real estate fund that you are all invested in will come to an end at the end of the quarter. So JUNE 30 they also announced a new capital fee credit program for new commitments. Doesn't necessarily apply to you. But with the ending of the fee credit, again, you know, our recommendation has been to maintain to take advantage of the fee credit program and now that it is coming to an end what we would suggest the board do is put in a full redemption for those assets so then we can redeem those assets from J.P. Morgan and deploy those with 15 sal because the decision was made to replace J.P. Morgan with lasalle. I don't know if it needs approval but I'll stop talking now. I would think it does need approval by the board. >> yes please. does anybody want to make a motion that we can discuss about that. >> I make a motion that we continue with our original decision to move all of the assets currently in J.P. Morgan real estate to lasalle. >> second. so we have a motion and a second. To follow your recommendation. Is there discussion? >> mayor. chief wells. >> jim, does that motion cover what you need or does it need to specifically request a full redemption? >> I think a motion to fully redeem the assets as soon as the fee credit program expires would be what we are looking for. >> so moved any other questions about the motion? All those in favor of supporting this motion say aye. >> aye. is anyone opposed? All right that motion passes. Now. Jim, I'll ask you one further thing. Do you have information for us, which we might discuss in a closed session? >> I do. Chair: do I hear a motion to go into closed session? >> hold on one second. There is another item, jim. Did you want to handle. >> oh yes. Mayor: There was -- thank you for reminding us. >> so there was one more item on the agenda to discuss the price discrepancy regarding a security within your makay shields high yield portfolio. And whatly give a quick background on that. One of the holdings within the makay shields portfolio is currently unlisted it's a privately held debt instrument and there is a pricing discrepancy between what northern trust is valuing the security at versus what makay shields thinks the fair value market price is for the security. Northern trust has a policy that they file follow that applies to all their clients when it relates to how they value the security. So most recent was six years ago for those keeping track and that security price is higher than what makay shields has it valued at today. When these type of pricing discrepancies occur, with custodial banks and investment managers, often times they will come together and resolve the issue. Each bank has a little different policy on how they reach that figure. And what we are looking into is finding a way to resolve that discrepancy without the fund paying for a service that northern trust is offering. This has occurred with others this security has come up with other clients and custodial banks and reached an agreement using the figures that the manager value the price at at this point we are still working through the details much exactly how woe would go about doing that with northern but the fees they're potentially charging could be out of what kind of the market would charge for something like this so I can't say for certain what direction we are going to go yet. This issue has been el elevated at northern as well so once we gather for motion there we can tell you the best course of action of how to resolve this you will bring something back as a recommendation. >> yes do you have a question? >> how much money are we talking about approximately. >> a very small position. It's around like -- so it's about the portfolio value is about -- okay, so the shares held are about 2300 so the portfolio value is about 83 million so the latest vendor pricing goes back to APRIL 6, 2020 and they use external vendors to reach these pricing numbers and when I say they, this is northern. They have it valued at 300. Today makay thinks the fair value of that security is $40. will you be bringing back more information and recommendation. >> yes. okay, thank you.% no further questions for jim. So I am going to -- we will need a motion to go into closed session and then I'm going to give turn the chair over to chief wells and we will commissioner armstrong and I must leave but we will still just had a quorum. For the closed session and coming back into open session. So is there a motion? >> I move that we go into closed session pursuant to krs 61.810 to discuss the selection and award of a contract. is there a second? >> second. all right. All those in favor say aye. >> aye. is anyone opposed? All right we'll head to closed session. I move that we go back into open expwhretion second. >> we have a motion and a second any discussion? All those in favor? Aye. >> any opposed? We are in open session. I move that we issue a contract with mfs with the provision of at a later date we will figure out which vehicle we are going to enter into with them. Do we have a second? >> any discussion in all those in favor in favor of the motion say aye. >> nie. >> eye opposed? Motion carries. Thank you. >> can we entertain a motion to adjourn. >> motion to adjourn. >> okay. All those in favor. >> aye. >> we are adjourned. Thank you.