MINUTES OF THE EMPLOYEE RETIREMENT ACCOUNT COMMITTEE REGULAR QUARTERLY MEETING OF FEBRUARY 18, 2021. Present: Chair Jeffrey Vredenburg, Vice Chair Aaron Olson, and Secretary Shayla Griggs. Others: Pension Plans Administrator Debra Martin, and Pension Specialist Peter Gottlieb. Absent: Treasurer Kelly Strickland. 1. CALL THE MEETING TO ORDER: Chair Vredenburg called the meeting to order at 10:00 a.m. 2. PLEDGE OF CIVILITY: Chair Vredenburg 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." 3. ROLL CALL: Presenter: Pension Plans Administrator Martin Pension Plans Administrator Martin called roll. Chair Vredenburg, Vice Chair Olson, and Secretary Griggs were present in City Chambers. Pension Plans Administrator Martin, who appeared telephonically, advised Treasurer Strickland will request an excused absence at the next meeting. Also appearing in person was Pension Specialist Peter Gottlieb. 4. PUBLIC INPUT: None. 5. APPROVAL OF MINUTES: 5.1. Approval Re: Minutes of the Employee Retirement Account Committee Regular Quarterly Meeting of November 12, 2020. Presenter: Chair Vredenburg. Vice Chair Olson made a motion to accept the minutes of the November 12, 2020 meeting; Secretary Griggs seconded the motion. The motion passed unanimously (3-0). 6. QUARTERLY INVESTMENT REPORTS: 6.1. Presentation and Discussion Re: AIG Retirement Services, ERAC Report for Quarter Ending, December 31, 2020. Presenter(s): Gregg Hudak, Financial Advisor, Trent Harris, Financial Advisor, and Lilia Pivetta, Relationship Manager, VALIC Financial Advisors, AIG Retirement Services. Trent Harris appeared before the Committee telephonically and introduced himself. Book 1 Page 62 02-18-2021 10:00 a.m. Book 1 Page 63 02-18-2021 10:00 a.m. Mr. Harris reviewed his activities over the last quarter. He stated he enrolled 14 new employees in addition to performing existing participant reviews, assembled 3 retirement pathfinder financial plans at the request of employees, and is currently working on several others. Mr. Harris stated that meeting with employees using Zoom has enhanced communications. He has also scheduled 2 educational webinars in March and the invitations should have been sent this week to those participants who have e-mail address on record with AIG; Mr. Harris anticipates scheduling additional webinars on a quarterly basis. Mr. Harris explained that his Client Care department, which is based in Houston, TX, is having issues due to the weather which is causing onger-than-normal wait times for participants. At the request of Chair Vredenburg, Mr. Harris stated he would identify participants for whom AIG does not have e-mail addresses and would contact the City for additional information. Ms. Pivetta advised she could assist in the process. Secretary Griggs advised Pension Administration could also assist. The Committee thanked Mr. Hudak, Mr. Harris, and Ms. Pivetta for their presentation and time. 6.2. Presentation and Discussion Re: Quarterly Investment Analysis Review Ending December 31, 2020. Presenter: Howard Daher, Principal, Daher Capital Group. Mr. Daher came before the Committee telephonically and introduced himself. Mr. Daher reviewed the economic and market activity for the last calendar year, noting this has been the first time he recalls seeing both bull and bear markets in such a short timeframe. Despite the significant declines in the first and second quarters, the S&P 500 Index ended the year up approximately 18%; while the S&P has been driven by its top 5 or 6 stocks, the remaining stocks in the Index generally fared well. Mr. Daher noted a positive outlook for the economy over the next year considering COVID-19 vaccine developments, and the same for the stock market for at least the next 6 to 8 months. While the stock market's performance is not fundamental, it continues to push upward. He stated all equity markets were solid, if not modest in some areas; international and emerging markets, which were amongst the first to have been impacted by COVID-19, continue to improve; domestic markets are improving; the United States presidential election has occurred; and the uncertainties faced in 2020 have been overçome. The reduction of uncertainty means there will be more clarity regarding revenues and how companies are rebuilding their business models to operate in the era of COVID-19. The Federal Reserve shows no indication of any actions regarding interest rates in attempts to support the market's positive momentum to continue. Mr. Daher reviewed the Watch List, and explained it now includes information on a single page which had previously been on separate pages. The Watch List now shows the amount invested in each fund, the number of participants, and the total amounts invested in each fund in the current quarter as well as the past; he noted that the prior platform was in use in Q3 2020. Mr. Daher noted that in Q3 2020, both the Ariel Fund Investor fund and DFA Enhanced US Large funds were on watch. DFA has since met criteria in Q4 2020 and Mr. Daher recommends taking them off watch. Mr. Daher stated he is not overly concemed with Ariel, even though it remained on the Watch List in Q4 2020, explaining iti is constructed for higher risk, and it has accordingly performed well in rising markets. He explained the top 6 funds make up approximately 60% of the invested assets in the Plan, noting the Vanguard Wellington Adm fund has historically been the Plan's default fund, meaning it is where assets are invested for those participants who have made no investment election. Mr. Daher explained the Plan has added the BlackRock LifePath Index 2030, 2040, 2050, 2060 and Income mutual funds which are now the Plan's default funds, based on each participant's date of birth and when a participant will reach age 65. Vice Chair Olson asked Mr. Daher if any of the funds held in the Plan take short positions, considering events with GameStop, and to explain how retail investing effects the Plan. Mr. Daher explained that the investments offered in the Plan are all mutual funds which typically take long positions. Although mutual fund managers have discretion to buy and sell stocks in a manner that results in profits for its investors, he has never seen a mutual fund take a short position which would directly affect that specific fund company or manager. Further, mutual fund companies are required to report their holdings and turnovers; as mutual funds offer lower relative risk to individual stocks, the higher risk associated with short sales could discourage investment in that mutual fund. The Committee, Mr. Harris, Mr. Hudak, and Ms. Pivetta discussed identifying those participants who are enrolled in just the Vanguard Wellington Fund, which suggests they have not made any investment election and been defaulted into that fund, as well as how to advertise the availability of the BlackRock target funds as the new default investments which offer more age-appropriate risk profiles, while adhering to AIG's compliance requirements. The Committee thanked Mr. Daher, Mr. Hudak, Mr. Harris, and Ms. Pivetta for their presentations. 7. UNFINISHED BUSINESS: None. 8. NEW BUSINESS: None. 9. OTHER MATTERS: None. 10. ADJOURN. Chair Vredenburg adjourned the Employee Retirement Account Committee (ERAC) Regular Quarterly Meeting at 10:32 a.m. A K Chaizelergdenburg Secretary Shayfa Grigos Book 1 Page 64 02-18-2021 10:00 a.m.