Book 1 Page 401 05-24-2024 8:15 a.m. MINUTES OF THE CITY OF SARASOTA POLICE OFFICERS' PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF MAY 24, 2024 Present: Vice Chair Ronnie K. Baty, Secretary/Treasurer Shayla Griggs, Trustee Tyler Rossnagle. Others: Attorney Scott Christiansen, Pension Plans Administrator Debra Martin, and Pension Specialist Peter Gottlieb. Absent: Chair Johnathan Todd and Trustee Joseph Jody" Hudgins 1. CALL MEETING TO ORDER: Presenter(s): Vice Chair Baty. Vice Chair Baty called the regular meeting of the Police Officers' Pension Plan (Plan) Board of Trustees to order at 8:15 a.m. 2. PLEDGE OF ALLEGIANCE: Presenter(s): Secretary/reasurer Griggs. Secretary/Treasurer Griggs led the Board and those in attendance in the Pledge of Allegiance. 3. PLEDGE OF CIVILITY: Presenter(s): Vice Chair Baty. Vice Chair Baty stated for the record, "We may disagree, but we will be respectful of one another. We will direct all comments to issues. We will not engage in personal attacks." 4. ROLL CALL: Presenter: Pension Plans Administrator Martin. Pension Plans Administrator Martin called roll. Chair Todd and Trustee Hudgins were not present. 5. PUBLIC INPUT: None. 6. APPROVAL OF MINUTES: 6.1. Approval Re: Minutes of the Police Officers' Pension Plan Board of Trustees Membership Meeting of April 26, 2024. Presenter(s): Vice Chair Baty. Secretary/Treasurer Griggs made a motion to approve the minutes of the Membership Meeting of April 26, 2024; Trustee Rossnagle seconded the motion. The motion passed unanimously (3-0). 7. RETIREMENT REQUESTS: None. 8. INVESTMENT PERFORMANCE REVIEW: 8.1. Presentation and Discussion Re: Frontier Capital, Investment Performance Summary for Period Ending March 31, 2024. Presenter(s): Greg Muiready, Head of Sales and Marketing, Frontier Capital. Greg Mulready of Frontier Capital (Frontier) appeared before the Board, introduced himself, and thanked the Board for its patronage. Mr. Mulready provided a firm overview as detailed on the Frontier Overview page of the materials. He explained that Frontier is seeing some modest outflows in the retail, mutual fund channels and inflows in institutional investing. Frontier is opening collective investment trusts, and the small cap strategy will open July 1, 2024; the Plan is eligible to join if it is interested. The minimum investment will be $1 million; the fee structure will be 90 basis points and expenses capped at 10 basis points, for a total fee of 1%. He asserted this is a modest decrease from the Plan's current fee. Turning to the Portfolio Performance page of the materials, Mr. Mulready noted the aberration of a 14.2% relative performance on a trailing 1-year basis, and advised it was the benefit of a confluence of factors. The small and mid-cap universes now favor stock-pickers, and Frontier is positioning the portfolio accordingly. Frontier offers small-, SMID-, and mid-cap funds which vary from growth to value, and its analysts cover the full spectrum of those offerings. Serving all strategies allows its managers to see options outside their respective strategy, as well as for strategies to share methods and processes which work for each strategy. He provided the anecdote of FTAI Aviation Ltd., as an example of how a stock doesn't fit neatly into a growth or value classification, and therefore Frontier's Small Growth and Small Value portfolios both hold the stock, and it has been a top contributor to the portfolio's performance. Mr. Mulready discussed how, as a small-cap manager, it invests in artificial intelligence (AI) when the most volatile Al companies are large cap. Modine Manufacturing provides air conditioning and cooling systems which are valued by the datacenters which host Al services; while Modine had been a value stock, Frontier now considers it to be a growth stock because of its volatility. He noted that Frontier also added Mattel to the portfolio; while the demand for Barbie dolls is apparent, Mattel has other brands it will introduce which are also expected to bring value to the company and portfolio. Portfolio Manager Greg Jiang toured Mattel's facilities and observed it has several potential movie franchise options and, over the last several years, it has made positive changes in retailers from the now-bankrupt Toys-R-Us to Amazon and Wal-Mart. Larry Cole of Burgess Chambers and Associates appeared before the Board; to his questions, Mr. Mulready advised that co-mingled funds should be available July 1, 2024, they offer increasing liquidity as they gain investors, and that Frontier is open to discussing its fee structure. The Board thanked Mr. Mulready for his presentation. 8.2. Presentation and Discussion Re: Burgess, Chambers & Associates, Quarterly Performance Report for Period ending March 31, 2024. Presenter(s): Larry M. Cole, Executive Vice President, Burgess Chambers & Associates. Mr. Cole commended Frontier for its strong performance and noted that the market dropped significantly on Thursday, May 23, 2024, when better-than-expected economic news was released. The market dropped because it has priced in the expectation, since October 2023, the Federal Reserve (Fed) will reduce short- term interest rates; however, as the economy appears to be strong, the Fed has not reduced rates, and the market dropped in response with the news that immediate rate cuts are not forthcoming. Mr. Cole suggested the Fed may not reduce rates until 2025 despite many analysts' predictions that 2024 could have as many as 6 or 7 rate cuts. The market appears to be hypersensitive as it now reacts strongly to any comments by the Fed which seem related to interest rate cuts or Al. He has been anticipating a market rotation away from the Magnificent 7 stocks, which are all beneficiaries or commodifiers of Al, to the remaining 493 stocks in the S&P 500 as Al begins to revolutionize commerce. The Magnificent 7 still lead the market, although Apple and Tesla have struggled, and investors now to refer to the remaining as stocks the "Fabulous 5." Mr. Cole added that the Magnificent 7's influence in the market is waning; although they continue to lead the market, they no longer lead by as significant a margin as they had previously. BCA continues to Book 1 Page 402 05-24-2024 8:15 a.m. Book 1 Page 403 05-24-2024 8:15 a.m. anticipate higher interest rates for a longer period of time; the Board has capitalized on higher short-term interest rates by moving a greater portion of the portfolio into bonds. Mr. Cole again cautioned that, historically, the interest rate yield curve is inverted prior to a period of recession, and the current interest rate yield curve has been inverted for a few years. While this does not guarantee a recession, many analysts are expressing concerns one could occur. Mr. Cole advised that he will, again, recommend moving more money into bonds. International equities have performed well. There are no compliance issues to report. Turning to the Investment Performance - Net page of the materials, Mr. Cole noted the 1-year performance has been strong, while the 3-year average includes 2022 which was a significantly bad market for both bonds and equities, but not bad enough to significantly depress the 4- or 5-year averages. Pages 7 and 9 of the materials show a dramatic increase in the fixed income allocation from approximately 17% as of March 31, 2021, to almost 25% as of March 31, 2024, and his recommendation, which he will discuss later in the meeting, will be to move approximately $3 million from convertibles to bonds. On the Asset Allocation & Performance Net page, Mr. Cole reminded the Board that the percentile ranking is amongst approximately 1200 other public pension funds in the US. The Plan has generally performed well when ranked amongst its peers. Newton has performed well, while Granite has struggled to keep up with its benchmark; Mr. Cole noted that large cap growth active managers will find it difficult to keep pace with the cap-weighted benchmark which contains the Magnificent 7 and investment policy guidelines prevent such concentrations. Allspring appears to have rebounded from a challenging period. Frontier has outperformed its benchmark over every timeframe. Franklin Templeton, which has performed well Fiscal Year-to-Date and 1-year, was below average over the 3-, 4-, and 5-year timeframes but still outperformed its benchmark; Mr. Cole is not concerned regarding Franklin's performance. International Equity, Global Infrastructure, and Convertibles are performing well over the trailing 1 year. Real Estate has underperformed; the Plan has a redemption request in queue, however few payments have been made due to low transactions. Mr. Cole noted that JP Morgan has offered, through August 28, 2024, a 30% fee reduction to clients which keep their redemption requests below 20% of the total market value of assets. The Plan's currently pending redemption request is greater than 20% of the market value of assets, and Mr. Cole does not currently believe that the savings from the fee reduction is worth reducing the redemption request. He is reviewing the announcement and will address it again at a future meeting. Mr. Cole reviewed the Fiscal Year Rates of Retum, noting the Board reduced its expected rate of investment return assumption; he estimated that as of May 23, 2024, despite some gains and losses, the to-date return is approximately the same as March 31, 2024. On the Total Fund page, Mr. Cole reviewed the 5 Years Rolling Percentile Ranking - 5 Years. Mr. Cole concluded his prepared remarks and asked the Board to consider rebalancing the portfolio by taking $1.5 million from Advent and $1.5 million from SSI and reinvesting the proceeds in both NIS and Sawgrass. Trustee Rossnagle made a motion to approve rebalancing the portfolio as proposed by Mr. Cole; Secretary/Treasurer: Griggs seconded the motion. The motion passed unanimously (3-0). 9. UNFINISHED BUSINESS: None. 10. NEW BUSINESS: 11. ATTORNEY MATTERS: Attorney Christiansen reminded the Board that financial disclosures are due July 1, 2024, and must be filed through the Commission on Ethics' web portal. The form is legally due July 1, 2024; if à trustee does not file the form by September 1, the trustee may be personally liable for a $25 per day fine. Trustee Rossnagle asked if he must file a form by July 1, 2024, as he already filed a form when he started on the Board on February 1, 2024; Attorney Christiansen recommended he file another form. Vice Chair Baty and Attorney Christiansen discussed the filing process, noting that it is critical for trustees to start the process early in the event there are technical or accessibility issues to be resolved. 11.1. Presentation and Discussion Re: Second Addendum to the Operating Rules. Presenter(s): Scott Christiansen, Attorney, Christiansen & Dehner, P.A. Attorney Christiansen presented the Second Addendum to the Operating Rules and explained the proposed updates made. Trustee Rossnagle made a motion to approve the Second Addendum to the Operating rules as presented by Attorney Christiansen; Secretary/Treasurer: Griggs seconded the motion. The motion passed unanimously (3-0). Attorney Christiansen explained because the independent medical examinations (IMES) for the 2 pending disability cases have not yet been received, and trustees had questions regarding the records to date, the May 29, 2024, special meeting has been postponed. Attorney Tanya Oliver represents both applicants. He noted that in one case, Workers' Compensation provided an additional report for a visit which occurred after the initial record was compiled; the report was significant and forwarded to the IME physician for review. To Trustee Rossnagle's question, Attorney Christiansen explained that the applicant in question did not have any additional physical examinations. 12. OTHER MATTERS: 12.1. Presentation and Discussion Re: Administrative Budget Analysis for January 1, 2024, through March 31, 2024. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin presented the Administrative Budget Analysis for the period of January 1, 2024, through March 31, 2024. She noted she may need to, at a future meeting, request a budget adjustment for the pass-through costs associated with the 2 pending disability cases. The Board had no questions. 12.2. Presentation and Discussion Re: Check Register for January 1, 2024, through March 31, 2024. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin presented the period of January 1, 2024, through March 31, 2024. The Board had no questions. Attorney Christiansen advised that General Employees Pension Plan (GE Plan) Board of Trustees identified an issue of which the Board may wish to be aware. It was identified that the controlling provisions of the GE Plan require members who are on unpaid leave for more than 30 days to no longer be members of that Plan. Because the GE Plan is closed, a member who is removed for this reason does not have the opportunity to rejoin upon return to paid status; the GE Plan Board of Trustees is amending the controlling provision to allow members who are on extended unpaid leave to be allowed to rejoin upon return to employment. Although the Plan has the same provision, it is open, and therefore the same predicament does not exist for members on extended leave. Nevertheless, the Board may consider amending the Plan should it close. Attorney Christiansen recommends tabling the issue until more updates to Plan provisions are necessary. The Board informally agreed by consensus. Book 1 Page 404 05-24-2024 8:15 a.m. Book 1 Page 405 05-24-2024 8:15 a.m. 13. ADJOURN. Vice Chair Baty adjourned the meeting at 8:59 a.m. SRh Cin oE Chair Johnathan Todd SecretaryTreasurer Shayla Griggs