MINUTES OF THE EMPLOYEE RETIREMENT ACCOUNT COMMITTEE REGULAR QUARTERLY MEETING OF SEPTEMBER 12, 2024 Present: Chair Alexya Alvarenga, Vice Chair Lauren Sullivan (Telephonic), Treasurer Kelly Strickland, Secretary Shayla Griggs. Others: Pension Plans Administrator Debra Martin and Pension Specialist Peter Gottlieb. Absent: None 1. CALL THE MEETING TO ORDER: Presenter: Chair Alvarenga. Chair Alvarenga called the Employee Retirement Account Committee (Committee) meeting to order at 10:01 a.m. 2. PLEDGE OF ALLEGIANCE: Presenter: Chair Alvarenga. Chair Alvarenga led the Committee and meeting attendants in the Pledge of Allegiance. 3. PLEDGE OF CIMILITY: Chair Alvarenga 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. All members were present; Vice Chair Sullivan appeared telephonically. 5. PUBLIC INPUT: None. 6. APPROVAL OF MINUTES: 6.1. Approval Re: Minutes of the Employee Retirement Account Committee Regular Quarterly Meeting of June 6, 2024. Presenter: Chair Alvarenga Secretary Griggs made a motion to accept the minutes of the June 6, 2024, meeting; Treasurer Strickland seconded the motion. The motion passed unanimously (4-0). 7. QUARTERLY INVESTMENT REPORTS: 7.1. Presentation and Discussion Re: VAILC Financial Advisors, ERAC Report for Quarter Ending June 30, 2024. Book 1 Page 120 09-12-2024 10:00 a.m. Book 1 Page 121 09-12-2024 10:00 a.m. Presenter(s): Trent Harris, Financial Advisor; David Allen, Divisional Vice President of Retirement Services VALIC Financial Advisors; Krista Hill Financial Advisor; Corebridge Financial. Trent Harris of VALIC Financial Advisors appeared before the ERAC and introduced himself. Mr. Harris presented the engagement reports. The first page shows how many participants Mr. Harris met in person ort telephonically. The second page shows how many participants engaged with VALIC's customer care group. The third page shows how many participants accessed their account through VALIC's website during the timeframe or their mobile application. He noted a marked increase from those numbers in Q1 2024. The Committee had no questions for Mr. Harris. Secretary Griggs expressed her appreciation to Mr. Harris for his engagement with participants and noted his visibility at City facilities. 7.2. Presentation and Discussion Re: Daher Capital Group, Quarterly Investment Analysis Review Ending June 30, 2024. Presenter: Howard Daher, Principal, Daher Capital Group. Howard Daher of Daher Capital Group appeared before the Board and introduced himself. Mr. Daher provided a market outlook. He discussed some of the bullet points listed on the Market & Plan Summary, noting that large-cap stocks continue to dominate the market due to the prevalence of artificial intelligence (AI) and to what extent it will be incorporated into peoples' daily lives, although, from an investment perspective, it is unclear if AI as an industry will be profitable. While the S&P 500 index (S&P) had appeared as of June 30, 2024, to be poised to retum 30% for the calendar year, as of September 10, 2024, the S&P was up only 15.2% for the calendar year. The tech-heavy Nasdaq index continues to perform well; the Nasdaq 100 fund, offered under the City of Sarasota Florida DC Plan (Plan), now leans more towards technology due to weighting and is up more than 13%. Mid-cap stocks trail large-caps; analysts believe that as interest rates come down, small- and mid-cap stocks will begin to match the pace of large caps. Calendar year forecasts, both as of. June 30, 2024, and year-to-date, remain positive. Similarly, bonds have begun to rebound in Q3 2024, reversing their downward trend in Q1 and Q2 2024 and prior years. As interest rates come down, analysts expect the bond market to stabilize. The BlackRock Total Retumn Immediate Core Bond fund was the only fund on Watch as of Q2 2024, although it had a positive quarter relative to its benchmark. Year-to-date as of September 10, 2024, it has trended up for a total return of 5.4%; it is on watch list only because of its short- and mid-term returns. He recommends leaving the fund on Watch with hopes it continues to improve. Mr. Daher proposed documenting the top 51 funds by assets, which he has typically only presented orally in his presentation. As participant's assets grow beyond the current level of $25.2 million, the Committee may find it helpful to have a visual representation of the allocation. Mr. Daher further suggested the Committee may wish to compare the Plan's asset allocation to that of the 457(b) Deferred Compensation Plan (DCP). Although the 457(b) DCP is not under the purview of the Committee, that comparison may determine if participants take similar risks in their 401(a) and 457(b) accounts, or if they invest more conservatively in one plan and more aggressively in the other; this may inform participant communication and education. He noted that the largest 5 allocations in the Plan represent 66% of participant assets. Mr. Daher advised that, in other plans he consults, target date funds and static asset allocation funds remain very popular; while the Plan offers target date funds, they hold approximately 2% of Plan assets. He noted that total Plan assets has grown approximately $3 million over the last 12 months due to contributions and roll-overs, as well as market gains. Looking at Plan assets by class, approximately 40% of assets are in domestic large-cap; small- and mid- cap, international, and target date funds do not get the same type of investor attention. Mr. Daher noted that when the market rises, investors are typically eager to explore new asset classes, and when the market trends down, investors return to traditional classes. Mr. Harris advised that, periodically, a small number of participants inquire regarding precious metal and cryptocurrency funds. To Mr. Daher's question, the Committee expressed confidence that the current investment menu offers sufficient diversity and risk and asked Mr. Harris to advise when he sees significant participant interest in different investment classes, and asked Mr. Daher to advise when there may be deficiencies in the investment menu from his perspective. Mr. Harris advised that, as iti is a retirement vehicle, the Committee should be cautious of offering too many options as that could result in unused funds and confusion amongst inexperienced investors; those participants who sought more risk than what is offered by the Plan may wish to invest through personal investment accounts instead of through their employer-sponsored retirement accounts. Mr. Daher reiterated his observation that participants appear to be consistently more interested in domestic large-cap equities, and less in other asset classes and target date funds, even though they're all reasonable investment classes for risk mitigation. He echoed Mr. Harris' suggestion and advised that if the Committee were to add riskier or volatile investment classes, the Plan should similarly provide extensive education to participants. Mr. Daher briefly reviewed the Evaluation Criteria page of the Investment Analysis Review and explained how the percentile ranking is a more accurate description of performance than by absolute or relative return as a percentage over time. He explained that although the mid-term retums are lackluster, the short- and long-term retumns are positive and encouraging, but more importantly, the funds in the investment menu have very reasonable percentile rankings, which is a weighted composite score which factors annualized returns, relative returns to peers and the benchmark over various periods, manager tenure, manager fees, and risk factors. He noted thati in the short-term, there are no anticipated market disruptions, however 2025 may prove to be more eventful. He briefly reviewed the Watch List and Historical Lookback. The Committee thanked Mr. Daher for his presentation. 8. UNFINISHED BUSINESS: None. 9. NEW BUSINESS: 9.1. Presentation and Discussion Re: Proposed Ordinance Regarding Investment Policy Statement. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin advised that the proposed ordinance has already been presented to the City Commission fori its first reading, and it is on the Commission's September 16, 2024, agenda for the second reading. The ordinance was drafted to change the frequency with which the Committee reviews its Investment Policy Statement (IPS) from annually to an as-needed basis, to remove the requirement for the IPS to define the investment portfolio's asset allocation policy, which does not apply to a 401(a) or self- directed plan, and to change the age by when participants must take mandatory withdrawals to be pursuant to the current Internal Revenue Code. Lastly, Pension Plans Administrator noted that the original IPS issued when the ERAC was founded had never been signed; Mr. Daher will provide a final draft of the IPS for the current Committee Members to sign at its next meeting. 10. OTHER MATTERS: 10.1. Presentation and Discussion: Proposed 2025 Meeting Schedule. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin presented the Proposed 2025 Meeting Scheduie. The Committee agreed to the dates presented. Book 1 Page 122 09-12-2024 10:00 a.m. Book 1 Page 123 09-12-2024 10:00 a.m. Secretary Griggs and Treasurer Strickland advised they may not be able to attend the November 14, 2024, meeting due to scheduling conflicts. Pension Plans Administrator Martin advised she would look into a different date. 11. ADJOURN. Chair Alvarenga adjourned the Employee Retirement Account Committee (ERAC) Regular Quarterly Meeting at 10:32 a.m. 1owhk M Chair Alexya lyarenga Secretary Shayla Griggs