tv Government Access Programming SFGTV May 12, 2019 3:00am-4:00am PDT
that would like to address the commission going into closed session? i see none. we will close public comments. we will call item 3a first. >> wait. before we go into closed session. we need to take a vote for attorney-client privilege. >> thank you very much. >> there's a motion. do we have a second? >> second. >> motion by commissioner heldfond. second by chu. can we take this without objection? great. we are invoking attorney-client privilege. we're going to be going into item 3a. we would ask that all persons who are non-legal counsel to exit we're coming out of closed session. there's going to be two parts.
there will be a motion to disclose under 3a and motion to not disclose under 3b. procedural otherly, we need to a vote and then we would disclose whatever we're going to disclose under 3a. is that correct? >> you can take the vote and agree that except for 3a, you're been going to disclose. can i call for a motion to disclose except for 3a, in which case it would be the recommendation passed by the board. >> motion and second by casciato. can we take this without objection? do we have to vote on it first? >> vote on it first. >> we can take it without objection. madam secretary, would you please read the board's recommendation from 3a.
>> board approved to number one set aside the hear officer's may 23rd, 2016 decision denying the application and june 15, 2015 addition denying the petition for rehearing and number two, retirement system staff with the following directions. remand the case to the office 6 of administrative hearing or assignment to a hearing officer as the previously assigned hearing officer has retired and request that the hearing officish yo -- office issue a determination that eddie was incapacitates as a firefighter and lieutenant job duties with his work-related right knee disability and there was no ongoing assignments at the fire department available to petty, that he was capable of performing giving his right knee disability. and number three, present the hearing officer's decision on
remand to the retirement board for approval at the next regularly scheduled meeting after issuance of that decision. >> thank you very much. we're going to go out of order today. we're going to move into item number 10 first, and then welcome back to general public comment. the floor is yours, item 10. >> staff is recommending termination of the afl-cio housing investment trust. as you know, yields in interest rates are very low. so this centerpiece of this recommendation are a couple of things. one is, our required rate of return is 7.4%. we know if we don't hit that over the next 10 and 20 years, our shortfall of our assets relative to our liabilities,
which is $3 billion which will grow between $10 and $20 billion. we conveyed that to the board last month. we have a required rate of return of 7.4. as you'll see on page two, this strategy returned over 2% the last five years and a little under 3.5 the last ten. returns, absolute returns, are one. relative returns versus a benchmark and that's more diversified. the third is liquidity considerations. as we've indicated for the last several years, we're building out of barbelled approach to credit of having a liquid credit strategy that we can call capital in a matter of days when we have liquid capital calls. and then there's a part of the liquid credit portfolio. that's the treasure portfolio. the liquid is much higher returning expectations in the range of 5 or 6%.
so this really doesn't meet our asset allocation requirements. it doesn't meet our return requirements. it doesn't meet our liquidity needs. these are as to why we're recommending this. i want to ask kurt to walk through the item and then nikki as well. >> i don't have too much more to add. just to remind the board that in late 2017, we adopted an as owe allocation which bill is referring to which reduced our target allocation for liquid from 13.5% to just 3%. at the same time, establish a target to private credit. the reasons were exactly as bill described, the long-term returns of private credit are expected to be almost two times that of what we're expecting out of liquid credit. further, with a liquid credit, we have gun to emphasize higher yielding strategies via high
yield bonds, bank loans, which get barbelled with 6% allocation to treasuries. in implementing this over the last 15 or 16 months, we have reduced the liquid credit portion of our portfolio by about 1.8 billion over the last 15 months and have taken capital from all managers. this termination today is -- i would say it was inevitable. as we look at strategies that have the lowest expected returns, we're getting to a point where we have small balances. as you know, we've done -- last year we recommended $750 million of private credit strategies. all of that capital is online over the next 6 to 12 months. we're looking at the strategies that have the lowest return expectations and the least amount of liquidity are the ones we're terminating first. there will be other reductions in terminations in the future.
>> anything else? okay. >> thanks. i don't have much to add except to say this is a function of our asset allocation that was approved in late 2017. we've been working to implement the revised targets, which is 3% for liquid credit. liquid credit portfolio has been reduced dramatically and we have further reductions to make. so this is just, you know, a step in the process. we're at the point where we feel we need to make decisions among the managers that offer lower yield of which afl- cio is one among elf is. the managers with lower yields that were recommending retaining at this time offer broader diversification across fixed income as well as additional liquidity, which we think is important, you know, from a
portfolio construction standpoint. >> the decisions have been made and are pacing in returns of the reductions have been shoulder to shoulder and hand in hand with any pc. so to add a comment on this particular recommendation. >> absolutely. so support staff's recommendation to do this, we're making this it recommendation not because we think there's anything wrong with the aflcio strategy. we think it's good. we actually -- there's a -- another west coast pension client that has very different asset allocation where we recently recommended they increase their allocation to this strategy. that client does not have this barbelled approach, a much smaller client. this client -- and this plan has this 6% allocation to treasury, which is incredibly liquid and a great core value, and it's an asset class that often does well when all other risk assets are
doing poorly. it has a liquid credit, which at the time we made this when all fixed income was combined, we had strategies between the two. this is one of them. so over time, as we arery we are reallocating, some that don't fit between the two categories, we're recommending, you know -- replacing them with things that make more sense. >> the 6% is to provide for high liquiliquidity. we have a week or 10 days to perform. the liquid credit is to boost returns there pro from what it is right now, a strategy with 3.5 expected return approaching 6%. then the private credit, which is the other large piece we are building out, we have a return expectation there of approaching
8 to 10%. so anyway, that's a summation of the rationale for this recommendation. we're happy to answer the board's questions. >> questions from the board? mr. safai. >> so i understand the argument. i think if we were looking at this just purely on relative return, i think you could make the argument that you have made. i think that there's been a misclassification of this investment. talking to folks at the afl-cio in dc, i understand they didn't want to be classified as liquid credit. you're setting them up or setting this investment up to fail in the eyes of the standard that you've laid out. let's be clear, this is making money for our retirees. all the other investment funds that they are in, they are
classified as -- as you said, you have another client where they're more a fixed income under a fixed income category. i think if we were to reclassify them, we could approach this from a different perspective. i understand last year before i was on this board, 170 million was taken out of this account. now it's down to 50 million. it's relatively small in terms of our overall portfolio, but it is unique in the sense that it is investing money in a fund that creates jobs for union members. the people that are the beneficiaries of this fund are union members. so if there are other investment opportunities that we have that do that, i would like to hear. i only know of this one. so i think it's important for us to approach it from that perspective. not that we just have purely a social investment strategy for everything that we do. but in this particular instance, i know that we have other categories, like you mentioned,
government-backed securities treasures. they're not making the yield this account is making. i think they're making less than that. it's wrong to say this investment is not performing well. maybe, i think the right approach is to say this has been misclassified from the beginning. we have a 23-year relationship with this manager and this investment. i think we need to continue that. i would like to have an opportunity for you all to present us another way to look at this, which would be how we could reclassify this particular investment in our portfolio similar to the way the government-backed securities are or create an account that says, we have a dual purpose for creating union jobs with union members' money and still making money for our retirees. so i don't support this motion today. i think at a minimum, this item needs to be continued for additional amount of time so we can investigate and have you come back and present
alternative strategies to this board. >> commissioner chu. >> i want to thank president stansbury for calling this item out of order. i think i actually do have to leave in a few minutes. so i appreciate being able to call this. i make some comments on it. taking a look at it, there are a few things that come to mind. i think from the staff memo, it's not necessarily focused on the returns or the performance of this fund or strategy. it really is about this question about whether it fits into the portfolio of what they are trying to accomplish. i've had an opportunity to speak to some folks at aflcio but i haven't had an opportunity to speak with staff as to why we categorized it as a liquid credit and whether or not it would have fit into a particulaf our portfolio or not. i think one of the things that would be tough for me today is accept the recommendation without fully vetting some of these item. we speak about a lot of the different elements, and you spoke about diversity,
liquidity, and you spoke with returns. i don't think that when we're talking about diversity and returns, of course we would like to maximize our returns, but we also invest in things like absolute return, et cetera, where we know in a bull market, it doesn't mean it's going to yield us the highest return, bub it offers diversity that we're looking for. i think in this situation, what i would really like to understand more of is whether we believe that this type of investment really does fall into the liquid credit world or should or could actually be categorized somewhere else and do we have room in that other part of our portfolio. this is not something that i know very much about, whether or not that exists. i think in terms of liquidity, we just had a report from our investment team from anna and others about how we're in a good position when it comes to liquidity. so i think from what i take away from that particular presentation is that while we're always watch to make sure we do
have the ability to liquidate assets as we kno need to, we'ret at a place where 50 million is going to make a big difference at this moment whether we're going to get that liquidity that we need. so i think given some of these different elements and some of the unanswered questions, i think it would be worthwhile for us to take a look at this a little bit deeper to better understand whether there is another part of our portfolio this makes sense to fit in or if it doesn't, if that's something we need to consider as well. >> a couple things in response. there are two categories, treasuries and liquid credit. that's the barclay's index. that's the same index the aflcio uses. not we. they use to compare their results. to reject a notion they don't we
long in a liquid credit portfolio by our benchmark and their benchmarks are the same. the liquidity that anna has talked about and is going to talk about is by virtue of this pure treasuries portfolio. to reclassify i don't think it s appropriate. >> if i could add an example of the treasuries, he thi they read well with the public investments the 4th quarter of last year when it declined in value a lot. the treasury portion of this portfolio increased by 2 .23% when equities were falling double digits. , 5, 10% or more. aflcio's investment went up, but less than the treasuries because they are spread product. so spread, it's that additional
yield before treasuries. they are very conservative spread products, but they still are something where you own it. over time, you hope to earn a higher return. sometimes they underperform in stressed environments. this is a very recent example of that. >> i hung up on kurt's comments about the appropriateness of the benchmark. you see on page 2, preparing the barclay, this is underperforming over every time period. in addition to that, the barclay's is much more diversified than this strategy. >> any other comments or questions from the board? >> because of our long positive relationship, i don't mind taking more time to answer all their questions. there's a couple issues that are involved here.
one of the representatives spoke to me yesterday. maybe he'll speak today. he's more than welcome as far as i'm concerned. what is driving this is not whether they are a good or poor manager. i think the staff started out by saying this is not abou about tr performance. to immediate our goals as well as being prepared to fund the pinks wpensions we have made, wh of $2 billion to include real estate, which is more than that, therefore, that's what the liquid portfolio is for. the labeling issue, aflcio is within the liquid subsets. one is the core plus segment. that's where they actually are along with three other managers. there is the high yield. there is the other mortgage section as well as the emerging market depth. if he with want to put them in
the mortgage, as you'll see in the next point, i'm sure we've read our notes, the next termination being proposed, a company who has been with us longer whose numbers are 100% higher than the aflcio. staff is also recommending to terminate them. why? because of the liquidity pool to make sure we're ready to fund obligations and commitments. you want to talk about performance? yes. we can move the benchmark, whichever way you want. i did take the time to look up the aflcio hit. i think it's a mutual fund listing, but it's not registered, which is okay. looking how they report their own numbers versus the benchmark they chose, you will see they are beneath their benchmark. it's not performance. they're a good firm. they are smart with the use of their capital. they can fund building projects. that's where the jobs come from. that's great. but in terms of why we are, i believe, what staff wanted to
liquidate this as we bring it down, not only will it be prima and the afclio -- there's 650 million that has to be liquidated by reducing or terminating some of the other managers in the exact same pool that the aflcio trust is in. they may not see that, but we've done this publicly and voted for it. if they have more information to show us over the next 90 days, let's look at it because i don't like terminating anybody. but our asset allocation plan is based on achieving the 7.4% assumed great return. yes, i know exactly how much the 50 million is, how much the 800 million is, when why we're transferring that money in order to reach out for that 7.4. if we pull it back, we have to turn to the city, hey, maybe that 7.4 number we can't achieve. we're going to have to mont movt
to 7.3. that's a small number. that means the city and the participants, active employees l have to contribute, rough guess, 35 million more dollars a year. all these pieces do connect. they all do connect. again, i'm for giving them for time to make their case with the staff and the board. thank you. >> thank you, commissioner driscoll. any other questions, comments, discussion from board members. >> everyone said what i feel -- i'm the new kid on the block, and i wasn't here when we made those decisions on liquidity. i've heard a number of issues regarding classification and whatever. any time we're making a decision, there's a lot of motions and what we're being told. i would like more time for staff to come back to us. >> okay.
commissioner bridges? >> thank you for this. i read through the recommendations and actually i was here had we proposed the first realignment. i spoke with staff as well. so i understand the concern of my fellow board members in terms of classification. i've also read the argument from the aflcio. i think it would be prude if prf we're going to make this decision, board members understand exactly what staff is recommending. i'm not sure everyone understands how you're proposing and what's going on. i spent time and i've actually had numerous conversations, but i would go willing to support the fact of delaying so we can maybe make sure that everyone understands the importance of the asset allocation and how it impacts the aflcio as well as our program and what we've already proven in 2017. >> anybody else on the board?
what we've done in a matter like this is when the majority of the board has asked for more time, even when the minority of the board has asked for time, we defer and make sure every board member has enough information to make a decision. sometimes it's 30 days or 60 or 90. we usually set a time. >> 90. >> 90 days, whatever, for it to come back. so is there any member of the board that would like to make a decision when to bring this item back? >> i would like to make a motion to bring this back, continue this item for 90 days. >> okay. >> i'll second. >> so a motion by commissioner safai, commissioner heldfond deferred to casciato on the second. let it be known they both spoke up. any discussion on this item? no. okay. why don't we open it up for public comment. i have a variety of speaker
cards here. give me just a moment to get them organized. we do have a couple different issues going on today. at the top of the stack, i have ted chandler. is there a mr. chandler in the room? >> good afternoon. commissioners, my name is ted chandler. i am the manager director of regional operations for the afclio housing investment trust, and i'm here to ask you you not to terminate the trust. i appreciate your vote in support of continuing this to we can continue to educate the fund as to the nature, our nature as an investment. we do think we have been misclassified and that we are more appropriately classified within that portion of your portfolio, the 6% that's currently dedicated to a passive intermediate treasury index strategy. as has been mentioned, we've
been managing funds for the retirement system for 23 years. we have more than $6 billion of assets, and those assets are invested overwhelmingly in government-backed, multi-family securities. these securities pay a higher yield than united states treasuries while still having the government backing. we're extremely high credit quality, and about 99.9% of our portfolio is rated aaa or aa. 98% is government backed. our current yield of 3.41% on gross bases, 3.05 on a net basis compares to the 2.32% current yield on the intermediate treasury index. >> 30 seconds. >> and we have 99% of our
portfolio is within the highest classifications for liquidities. i do want to point out the reason we are in higher yield is because of the securities we invest in, a full faith and credit construction loan that pays 1.5% more in yield than united states treasury pays today. that's why we'll continue to work with the staff to inform everyone of the benefits of this overwhelmingly government-backed fund that invests in creating housing and construction jobs to benefit members. thank you very much. >> thank you, mr. chandler. up next, i have mr. tony rodriguez. >> good afternoon, commissioners. so my name is tony rodriguez. i work the construction for 25 years. i represent local 43 fire sprinkler union. i was given points, talking points. i just want to read one. it has 376 investors that represent. it's a great mission to generate
competitive returns while giving construction jobs to affordable housing projects. i'm a veteran. i raised my family here in the city. i worked at a good paying union job. i was able to invest in the city, spend our money in the city, and buy a house in the city. supervisor safai said, you get a return on the money. it also helps the working construction workers to be able to live a decent life. you know, i have a pension, a supplemental pension, and health and welfare. i know you have to be responsible to be able to get a return on the money that we pet into that. -- put into that. i ask that you give them the 90 days and look at the benefits that you get from this or that we get from this. that's it. >> thank you. >> thank you mr. rodriguez. up next in the stack -- i'm not
sure if it's on this item or not. mr. nunez. >> counsel 16 business representative. i've been in the construction industry for 34 years. i want to make a point that the mayor is seeking $300 million bond for affordable housing. it's the worst affordable housing crisis in the nation. now is not the time to terminate a long-standing source of affordable housing finance that can help to structure and purchase the bonds and leverage the bond investment for even more affordable housing while generating competitive returns for the sfers beneficiaries. i'm asking the panel to please table this for 90 days and look at all the options. investing with this is when we
need to do to keep this union workers in this city working. thank you. >> thank you, mr. nunez. up next i have art pentoya. >> i'm also a representative of the painters and allied trades over 20 years in the construction field. there's a valid point that's been made. i'm here to support what you've already done which is table this for 90 days but also i'm in support of not terminating or divesting from the pension funds. one of the things that's also done is there's been a history of 180,000-plus jobs that has been developed from this money. 110,000 units of housing, most of it affordable housing. in san francisco alone, 9 projects to date, about 1,660
units of housing. there's more projects in the pipeline with this investment. so i think you have a very difficult decision ahead of you, and i hope that you consider all the working people in san francisco, those who are union, who are not union, living here, and get a benefit from these funds. thank you. >> thank you very much. i do have a couple other names in the stack here, but they don't look like they're related to this item. if there's anyone else present that would like to address the commission regarding this particular item, please just come forward one at a time. >> good afternoon, commissioners. i'm cynthia landry, and i chair retirement security for local 1021. we are in support of your continuing this for the next 90
days to flush this out further. but in general, we are opposed to the recommendation to terminate the allocation to the aflcio housing investment trust fund. this fund, as we stated earlier, is i can maaing mor -- is makine u.s. treasury. it also speaks, most importantly, to san francisco values of affordable housing, workforce housing, and union jobs, which provide a pathway to having homes and a good source of income and pensions. the other thing i wanted to say about this is that you have been
invested in this since 1996, and the fund has created 9 projects within san francisco. 1,660 units of housing, 368 which are affordable units, and the construction generated more than 300 union construction jobs, which brings in income to this city. so we ask that you really look at keeping this fund because we think it brings -- it speaks to san francisco values of housing, affordable housing, workforce housing, and union jobs. >> thank you, ms. landry. are there more?
i will close the public comment. there's a motion and there's a second on the floor. excuse me. there's a motion and second. any discussion on this item? >> board members, we would need to know what else the board needs. >> okay. so there were some questions that board members raised. i will make sure that all board members follow up with you in the next two weeks to submit their questions to you so that you understand what it is that you need to work on to get us the information that we've asked for. >> okay. >> okay. so there's a motion and second. doesn't seem to be any discussion. can we call this without objection? item passes. thank you very much for the report. thank you, everyone, for your time. we're going to move back into general public comment, please.
>> my name is john benson. i'm a 44-year member of our pension fund. last saturday, annual shareholder meeting, one of the topics was private equity. comments on private equity was private equity returns are not calculated in the manner that i would regard as honest, and if i was running a pension fund, i would be very careful about what was being offered to me. they also said i would not get excited about investments like private equity. my own view on this is that you should divest from all high risk investments like hedge fund and private equity and just invest in three asset classes, and they are stocks, bonds, and real estate. a combination of stocks, bonds,
and real estate reduce annual retains of 7 to 11% for the past 100 years. you don't have to be an investment genius to get 7.4% returns on investment. the custody i don' custodian sho get 7.4% on investments. i pointed out last meeting, just three investments in stocks, bonds, and real estate. i gave you the -- i gave you the name of the investments. >> 30 seconds. >> the past 15 years, the average return of 15% for the last ten years. there's not one pension fund in the entire world that retains 15% in the last 10 years. so please consider dropping all alternative investments and go back to stocks, bonds, and real estate. thank you. >> thank you very much. are there any other members of
the public that would like to address the board under general public comment? okay. seeing none, we will close general public comment. there were two speaker cards. looks like ms. rivera and mr. branson. do they want to speak? please. why don't we call for mr. branson first. >> president, members of the board, thank you for having me. my name is gary branson, a person of no particular importance. i'm an uber driver, and it has come to my understanding you are contemplating in investing in uber and lyft using this fund. based on what i've seen at the strike outside, investing in a company just as it's employees are striking outside of its headquarters does not strike me as either good investment or good opticsing particularly when there is at least one person out there who is being interviewed by cnbc and cnet who was a
person living out of his car on a permanent basis while driving for uber. that individual was myself. so i suggest that, perhaps, other investments, for example, the aflcio thing, which is going to be putting up more affordable housing for someone such as myself to benefit from, seems like a fabulous idea. thank you for your time. have a nice day. >> thank you, mr. branson. ms. rivera. >> good afternoon. thank you guys for your time. i was also at the strike. my name is a net. i've been working for uber and lyft for two years. it was about nine months in when i realized that the pay i was receiving was decreasing. as of this year, my pay was decreased by 30%. i am on medi-cal. so are my four children.
i am in need of food stamps. i don't know how i'm going to fix my car. i am just like the many other drivers here in the bay area that are also driving for uber and lyft. uber has promised that it will decline after the ipo. quite frankly, i don't know how drivers are going to drive. they're going to drive the 16 hours while their eyes are blurry because they can't drive any longer. they're going to risk people's lives on the road. they're going to risk, you know, what integrity they have left. as a company or an organization that works with union workers, i would think this would be a conflict of interest. so i hope that you hear my story and that you understand that until uber and lyft can do a better job of doing their job, which is to provide a service and give back to their community, then you guys not work with them.
thank you. >> thank you very much. are there any other members of the public that would like to address the commission? please come forward. >> brett sanchez, be president of protect our benefits. i don't not if you're going to cover this. i was trying to look through it. it's about the adoption of your budget through the finance committee and the packet talking about the reorganization of this board and the staff, you know, 20 years of virtually not restructuring. , it's hard to believe. clearly, missed opportunities as far as investments. you just need more staff. so we're in definite support of the budget, and if you can squeeze a little bit more to add additional staff, we're in support of that, too. thank you. >> thank you, mr. sanchez. are there any other members of the public present that would like to address the board under general public comment? if so, please step forward. otherwise, i'm going to close
it. >> excuse me. my name is cynthia landry. i am opposed to investments in this portfolio fund. i'm a union member. i have a great quality of life as a result of being a union member. it's very hard for people that are gig workers to sustain themselves in the gig economy. again, i want to speak to san francisco values, and i think this investment would not be appropriate for what san francisco stands for. >> great. thank you very much.
are there any other members of the public that would like to address the commission regarding any items? seeing none, we'll close general public comments. thank you very much. item number five, please. >> action item, approval of the minutes of the april 10, 2019, meeting. >> any comments from the board? >> there was a motion by commissioner heldfond. commissioner bridges. can we have a second. commissioner driscoll seconded the motion. why don't we open it up for public comment. are there members that would like to address the commission regarding the consent calendar? what did i say? >> consent calendar. >> i'm sorry. are there any members of the public that would like to address the commission regarding the minutes? seeing none, can we take this item without objection. it passes thank you very much. item number six, please. >> consent calendar.
>> we'll take it as submitted. we will open up for public comment. are there any members of the public that would like to address the commission regarding the consent calendar? seeing none, we'll close the comment. is there a motion on the floor? i'll move the item. commissioner casciato will move the item. may we have a second? a second from commissioner bridges. thank you very much. any discussion on this item? can we take it out objection? item passes. thank you very much. >> item 7, discussion item, risk review for sfers total plan, risk adjusted returns and exposure analysis. >> that was a rhetorical question. >> we could do item nine since the liquid credit team is still here. >> is that okay? would you refer to go to nine since you have everyone here? doesn't matter to me. does it matter to you? okay. great. i'm sorry. item neighbor. >> action item, recommendations
to terminate the allocation to prima capital advisers commercial real estate debt strategy within the liquid credit portfolio. >> commissioners, this is a recommendation to terminate prima for a very similar reason as earlier. dedicating a part of our portfolio to very liquid assets within credit and unti in the pe credit space and more liquid in what we call liquid space to achieve higher returns. also, prima is not a particularly liquid strategy. it can take months to redeem. i'm going to ask kurt to further introduce the item. >> this is a coul a consequences reducing what we have and the liquid credit portfolio. prima has been a long-term
partner of sfers. they have done well. however, the returns that we expect no longer fit with our objectives. so we -- the discussion here is exactly the same as the prior discussion. so i don't know that we have much more to say other than what's written in the memo. i'll ask dan whether he has any comments. >> once again, it's a similar situation. it's a very focused and specialized manager that filled the role when the fixed income category was a larger part of this portfolio. now that liquid credit is only 3%, we're making tough choices for the managers that can wear multiple hats within this 3% context. >> the reason why the allocation is the way it is is because of
where yields are. they're very low. as you'll see here on page 3 of the memo here, the yield on this is 4.9. it is relatively liquid, not like private credit. liquid credit come positive i c% yield. it's a function of meeting our return objectives and the return for this strategy. >> questions from the board? >> basically, the two arguments are the same that you presented between the aflcio and this one. however, i think you can see there's h he elasticity in termf the information that comes back from the could not at thifrom ts
different in these two. i think it's a point that should be pointed out that we don't hear that in this. so i would move that we accept that. >> there's a motion by commissioner heldfond and seconded by casciato. any discussion? >> since there's no performance numbers in the recommendation, however, looking at the last report dated january 1st, 2019, is this true? the last ten years, 9% return? >> that's approximately. >> that's approximately correct. >> yes. >> comparing it with other managers in the liquid credit area, not to be harsh, but compared to aflcio hit trust
fund, did 3.42. >> correct. >> we should still terminate prima? >> yes. >> thank you. >> i don't disagree with you by the way. >> okay. any other questions from the board? discussion on this item? seeing none, why don't we open it up for public comment. are there any members of the public that would like to address the commission regarding this particular item? seeing none, we'll close public comment. can we take this item without objection? seeing none, this item passes. shall we go back to the top of the order? madam secretary, item 7, please. >> discussion item, risk review for sfers total plan. risk adjusted returns and exposure analysis. >> very good. board members, i'll make a couple brief comments while anna
and susan and david make their way. we've done many things here over the last couple years relative to private allocation and risk management, private credit, national resources, esg, et cetera. there's quite a volume of new initiatives. this is the third and final presentation that we have for risk management. the last two have been done in the prior two board meetings. those two were first regarding as owe allocation and rationale for our allocation and what we expect in terms of our return profile. we expect to outperform in down markets. we expect to outperform in ordinary markets. we expect to outperform in good markets. we do expect to underperform in
great bull markets, although our absolute level of return would be very, very good. the design of the asset allocation to do two things, retrieve high returns and minimize the impact by negative markets. the second risk management presentation that we had last month was a very complete review of our liquidity profile and how we're thinking of them in terms of the pacing. we have 7.5 billion dollars of current unfunded commitments to the private markets. so we've walked through biasset class and in the aggregate, what that liquidity profile would look like and how it changes over time and that it's our goal that in about 8 or 10 years, is that the distributions, the net distributions, net of capital
calls from the private markets will be more than sufficient to pay plan benefits, which would be a great outcome. today we have the third and final presentation. then we will do this annually. today is about portfolio analytics and also about the exposures by asset class and funds. this is ground breaking material. all three have been new. we also have with us susan and david who are partners in the cofounders of our risk management platform. i'm going to ask anna to walk through the items and susan and david are available for questions. >> thank you. commissioners, bill reviewed that we already covered two large pillars of the risk management framework. we reviewed the strategic at owe
allocation or policy portfolios, ran through numbers and scenarios for the strategic allocations, reviewed the liquidity management. today we are going to talk about the risk exposures for the total fund in each asset class. with that, i'll ask our partners to join us because this work of labor for the last 8 months since i joined, and certain much longer for her. i would like to start to acknowledge every single person in the investment staff who is very diligent about risk management. risk management is not a band of a single person. every person who is underwriting and you see that in our
discussion, is very aware of the risk return tradeout. what we will talk about today is, as we put together little by little this investment recommendation, how does it all look as a total portfolio? so we will review three parts. the first presentation we're covering, performance analytics, we'll do the performance contribution and risk adjusted returns for the fund. our partners from an apc present kindly and regularly, looking at expanded analytics. then we will look at the exposures through geographic regions, countries, and sectors. so when i started, i needed to pull together the data and who do we work with? what does the plan look like?
i know there's a lot on this page, but look at the middle of it. in the middle of the page is our asset allocations, strategic asset allocation or the policy portfolio. you could see the equity allocation targeted 31% of the plan. fixed income is treasuries and liquid credit is 9% of the plan, et cetera. this is what we're solving for which is as we mentioned, this it one of the largest decisions that drives the expected returns. how are we implementing and partnering with? what analytics are we using to support our decisions in terms of evaluating the risk return tradeoff and bringing the proposals to you every month? so, for example, on the left, you will see that in our private
investments, private credit relapse -- private equity, we collaborate extensively with consultants. you hear every month cambridge associates. we do a lot of analysis and collaborate with torrey cove and our custodian provides further analytics through burgess. that's just one piece of analytics. for example, with our absolute return portfolio, we collaborate with blackstone asset managers. we also work with alborne to look at their due dill against and further engage with hfri to understand what goes into the alternative space. so these are just two examples. the other example that i would like to bring up is on the
right. we recently instituted as part of our overall risk management framework deep dive reviews for each asset allocation. for public equities, we produced over 300-page report using five different analytics. style analytics. we collaborated with napc, we put together reports, e-investments. we pulled it together to get the full perspective. the reason we need that many collaborations, because each asset class is unique. what style analytics provides for public equity portfolio, the fact to exposures is very different from what we see when we work with torrey cove and
even further difference with kaisa. what we engaged over a year ago is to look at the overall aggregate portfolio analysis. now that we have seen the pieces in the allocation, this is the part. how does this look like? kaisa has been amazing in this journey to pool the data, to weave all these different threads into the oval quilt. i would like to turn it over to susan to introduce kaisa and talk about the example of how we put it together, the processes, the data review, and also thank the amazing responsive partners in this undertaking, and can i would like to acknowledge susan and david, our cofounders and ceo and president.
kana is our representative. he's been answering my calls and e-mails over multiple weekends. megan is sitting there, i call her data queen. she knows every data point for multiple portfolios. i thank them for their partnership. >> thank you. nice to meet all of you. i was here a year and a half ago. my name is susan. i'm the president and cofounder joined by dave who is also a cofounder and ceo. for those of you unfamiliar, the platform is designed to aggregate exposures across multi-asset class portfolios, inclusive of hedge funds, private he can wet funds, direct investments, coinvestments, and typically complex portfolios. our entire client base is institutional allocators, like public pension plans, endowments
and foundations. our relationship with sfers january in january of 2017. that's really when the on boarding commenced. they were in the process of moving from northern truck. so our team successfully migrated all of the historical data back to the 1980s and uploaded that in the platform. the true on boarding and ramp up began with anna's addition in 2018 where her team has been working diligently to make sure that the data quality and integrity is sound in the platform. we've been working with other sfers service providers, including torrey cove on the private equity side and blackstone on the hedge fund side and melon to aggregate all of this information so that we're now at the point where sfers can successfully report their total portfolio exposures
across different asset classes, countries, sectors, currencies. they're able to report total portfolio performance and contribution, and where we're going is in the future, we would like for sfers to be able to rely on us to do better modeling, to set pacing across privates, and to understand how the portfolio would change if they were to hypothetically add or remove managers, like this conversation has entailed today. so it's very nice to meet you and we're here generally to support the presentation that anna and team will be making. thank you. >> thank you, susan. >> i would like to move on. we have a lot to cover. we'll start on page 5. the reports, unless i indicate, are direct screen shots from the platform. this is the evolution over the last 20 years of assets under management, and youil