favorable because the June 30th number is the most important one from a funding perspective.
Manager Performance -
Rates were trending sideways but there is a higher coupon.
Domestic Equity was up 40 basis points.
International Equity was approximately 40 basis points ahead. Invesco continued to deliver
Real assets were up 1.5% and the benchmark was up 1.3%.
Executive Summary -
Fiducient Advisors recommendations/comments:
Asset Allocation - 2023 Capital Market Assumptions & Asset Allocation. Fixed income remains
an important part of a broadly diversified portfolio and can serve to temper portfolio volatility.
The restoration of higher interest rates in 2023 is expected to generate higher returns for the
portfolio’s fixed income allocation.
Given the plan’s 6.25% discount rate and strong funded status, the Retirement Board may want
to revisit the portfolio’s allocation to fixed income in light of higher rates and expected returns.
Based on Fiducient’s modeling, a 10% increase in the portfolio’s allocation to fixed income
serves to deliver attractive risk adjusted returns.
Fixed Income Portfolio - Suggestion to further consider reducing the allocation to the BlackRock
Strategic Income Opportunities to 2.5% and reallocating those funds to the intermediate
strategies to get duration and higher credit exposure.
Given the current environment of inflation both domestically and abroad as well as the
likelihood of Federal rate cuts portfolio allocations to broad real assets will be important.
Suggestion to modestly reduce the allocation target from 5.0% to 2.5% and to use the proceeds
to increase the portfolio’s allocation to fixed income given the return/risk tradeoff.
The Board agreed to make the following changes within the current target ranges:
Reduce the BlackRock position by 2.5 % and reallocate those funds to other fixed income
Reduce the Real Asset allocation down to 2.5% and reallocate those funds to other fixed income
APPROVAL OF MINUTES
Motion to APPROVE Regular Meeting Minutes from April 18, 2023, as written.