PFRS, Investment Committee — IN-PERSON ONLY!
Detroit Police and Fire Retirement System
Finance
Tuesday, Aug. 27, 2024
10:00 a.m. — 12:00 p.m. EDT
500 Woodward Ave Detroit, MI 48226 (Directions)
Suite 3000 (30th floor)
Please review this Pension Board Resource Guide for explanations of terms and discussions you may encounter on this assignment!
Check the source website for additional information
Reporting
Edited and summarized by the Detroit - MI Documenters Team
Live reporting by
Perry Sylvester
Lorenzo Newsome Jr., the newly appointed pension investment officer for the $2.7 billion Police and Fire Retirement System (PFRS) fund, laid out his goals and vision during his first meeting with the PFRS Investment Committee. Separately, a former staffer was arrested for fraud.
Hey Detroit! On 8/27 at 10 AM I live tweet the Detroit Police & Fire Retirement System Investment Committee meeting for @DetDocumenters & #DETdocumenters media partners @BridgeDet313 @chalkbeatDET @freep @media_outlier @metrotimes @MichiganPublic @PlanetDetroit @wdet @wxyzdetroit
09:06 PM Aug 26, 2024 CDT
The meeting is held at the Ally Building--you know, the one at 500 Woodward with the great view: "The state’s tallest office building at a height of 619 feet" & pretty big at 1,000,000 sq. ft. bedrockdetroit.com/property/ally-…
bedrockdetroit.com/property/ally-…
Now, dear reader, keep in mind this is the PFRS Investment Committee--NOT the PFRS Board--meeting that is being documented. What is the difference? Ah, delighted that you should ask! Info is available at their website ⬇️ rscd.org/about_pfrs_/in…
rscd.org/about_pfrs_/in…
And yeah, I know...you kinda gotta hash through the site to sort everything out. And even then, well...right? So...the PFRS Board of Trustees that @DetDocumenters usually covers for @media_outlier media partners administers the police & fire retirement pension system...
@DetDocumenters @media_outlier ...while the Investment Committee, created by the Plan of Adjustment (POA), "exists for the purpose of making recommendations to the Board of Trustees with respect to certain investment management matters relating to the Retirement System"⬇️ rscd.org/member_resourc…
rscd.org/member_resourc…
@DetDocumenters @media_outlier Via the website: "The Investment Committee shall serve in a fiduciary capacity with respect to the investment management of Retirement System assets, determination of the investment return assumptions, Board compliance..." with, you know...laws & rules
@DetDocumenters @media_outlier I would love to give a preview of the meeting but, alas, the agenda is, like my yoga teacher used to say, "not available to me"...so, what to do? Well, she always rambled on about "just observing, not judging"
@DetDocumenters @media_outlier We can make some guesses, though, that we will be introduced to Lorenzo Newsome Jr, the new PFRS 'Pension Investment Officer'⬇️ dbusiness.com/people/detroit…
dbusiness.com/people/detroit…
@DetDocumenters @media_outlier He come from Nuveen...which I believe PFRS has invested with in the past (and may still be holding in its portfolio) -- none of which is surprising given that Nuveen--a 'TIAA Company'--is big in this space nuveen.com/en-us/
nuveen.com/en-us/
@DetDocumenters @media_outlier What will be very interesting to hear/observe is the matter of a certain former Detroit retirement system's alleged theft from the pension via payment cards, covered here by @freep ⬇️ freep.com/story/money/pe…
freep.com/story/money/pe…
@DetDocumenters @media_outlier @freep Meeting called to order…4 people excused…can’t approve minutes due to numbers
@DetDocumenters @media_outlier @freep Tapper brings up need to renew their fiduciary insurance…everyone agrees that is a pretty good idea and vote to renew
@DetDocumenters @media_outlier @freep Rep from PFRS investment advisory firm going over performance results and economic environment …
@DetDocumenters @media_outlier @freep As per usual, specific slides being shown but referencing a large report given to members…the Magic Packet™️🧙🏻♂️🎩🐰…that we don’t have 😆🤷🏼♂️
@DetDocumenters @media_outlier @freep And two snaps up for @DetDocumenters own AJ Johnson @DetroitJCS who has temerity to ask if a paper copy is available..you know the answer, right?
@DetDocumenters @media_outlier @freep @DetroitJCS Page 96 of report…several active fund managers who were on the “underperforming/watch” list…and “over performing” list had grown.
@DetDocumenters @media_outlier @freep @DetroitJCS I’m skipping all the specifics on which sectors & corresponding portfolio holdings are doing…this is available in the transcript around 10:32
@DetDocumenters @media_outlier @freep @DetroitJCS They are now discussing market assumptions—this is a 10-year, forward looking capital market estimate. This is an update of core estimates…for example, previous estimates expected essentially nothing in returns for core fixed income…
@DetDocumenters @media_outlier @freep @DetroitJCS …now expect higher returns in core fixed income and private credit than ‘defensive’ equities
@DetDocumenters @media_outlier @freep @DetroitJCS A number of oddities…private credit estimates higher than for private equity
@DetDocumenters @media_outlier @freep @DetroitJCS Now moving to private credit portfolio update…Tapper asks if the info is in the same report, as she wants to put up the slides. What Tapper has is older deck that was never sent to the committee 🙄🤷🏼♂️
@DetDocumenters @media_outlier @freep @DetroitJCS No problem, says the advisor doing the presentation…she can speak to slides on hand…discussion covers allocation of holdings in various managers and current returns & distributions to date…will be 10:40 in transcript
@DetDocumenters @media_outlier @freep @DetroitJCS She is now drilling down on Seminole Mortgage Trust…their history as company and as PFRS holding…it is 31% of the portfolio which opens single manager risk…advisor planning to visit Seminole mgt and holdings resized seminolefs.com
seminolefs.com
@DetDocumenters @media_outlier @freep @DetroitJCS Some discussion/comments from members…they are impressed Seminole had no losses & delivered on all they had promised, so want to be sure some position is still maintained
@DetDocumenters @media_outlier @freep @DetroitJCS They are discussing about going into closed session for two real estate transactions and potential litigation…move to go at 10:50
@DetDocumenters @media_outlier @freep @DetroitJCS While we wait…the agenda is now available ⬇️ cms2.revize.com/revize/rscdmi/…
cms2.revize.com/revize/rscdmi/…
@DetDocumenters @media_outlier @freep @DetroitJCS So 20 minutes into closed session and your intrepid @DetDocumenters #DETdocumenters are hanging tough
@DetDocumenters @media_outlier @freep @DetroitJCS When we get back into open session, hopefully some discussion about what was discussed will be forthcoming
@DetDocumenters @media_outlier @freep @DetroitJCS On the agenda we will have Pugh Capital presentation ⬇️ pughcapital.com
pughcapital.com
@DetDocumenters @media_outlier @freep @DetroitJCS Marcella has come to release us from purgatory and back in open session at 11:32…no discussion/recap, jumping into Pugh Capital presentation
@DetDocumenters @media_outlier @freep @DetroitJCS Starting with brief overview…PFRS was their first client outside of Washington
@DetDocumenters @media_outlier @freep @DetroitJCS General fixed income sector review…check 11:35 in transcript for specifics and disaggregated results
@DetDocumenters @media_outlier @freep @DetroitJCS As per presentation from Wilshire reps, they refer to a presentation we do not have (although Tapper does have them on share screen so we see the slides)
@DetDocumenters @media_outlier @freep @DetroitJCS This meeting has what looks to be 18 people attending in person, although this includes the 2 reps from Wilshire and 3 Documenters
@DetDocumenters @media_outlier @freep @DetroitJCS The portfolio manager is providing the relevant cliches/quarterback speak about the economic client
@DetDocumenters @media_outlier @freep @DetroitJCS Look to 11:40 in the transcript…growth will come from upper income quintiles…the form of spending different between quintiles…continued trend of growing inequality etc
@DetDocumenters @media_outlier @freep @DetroitJCS Anticipation of “measured cuts” in interest because overall economy is still in a “growth pattern” 🥱
@DetDocumenters @media_outlier @freep @DetroitJCS 5 minutes in and we finally get to the inverted yield curve and dropping “basis points” like lawn jarts (yeah, those ⬇️)
@DetDocumenters @media_outlier @freep @DetroitJCS Has gone through justification for weighting in corporate debt, earnings continue with expectations
@DetDocumenters @media_outlier @freep @DetroitJCS Mortgages—which are shown in previous slide—are “cheap” and provides justification for allocation within portfolio
@DetDocumenters @media_outlier @freep @DetroitJCS New PIO Lorenzo Newsome asks about holdings in ABS, or ‘asset backed securities’ ⬇️ investopedia.com/terms/a/asset-…
investopedia.com/terms/a/asset-…
@DetDocumenters @media_outlier @freep @DetroitJCS Newsome is now introduced formally to Committee (was introduced previously to full Board)…tells funny story about first request for a meeting he had was from a market/salesperson
@DetDocumenters @media_outlier @freep @DetroitJCS After complimenting the marketing/salesperson for doing their research, gives general overview/estimate of market…expects only one modest interest cut, may want to hold a larger cash position and reduce number of holdings & expenses
@DetDocumenters @media_outlier @freep @DetroitJCS Newsome started speaking about 11:55…would be worth reviewing transcript. Points to doing detail-work to optimize operations—management of liquidity, understanding of risk, ensuring correct level of fees being paid
@DetDocumenters @media_outlier @freep @DetroitJCS Acknowledges work his predecessor Woodrow Tyler did for properly managing liquidity to take advantage of possible tactical opportunities in market and provides overall flexibility
@DetDocumenters @media_outlier @freep @DetroitJCS Also speaking of importance of thorough review of holdings and managers to ensure it aligns with investment policy…wants portfolio managers info uploaded to Bloomberg and available directly to committee in form of internal dashboard so they can better self-manage
@DetDocumenters @media_outlier @freep @DetroitJCS Not sure but assume by “uploaded to Bloomberg” refers to use of following ⬇️ bloomberg.com/company/press/…
bloomberg.com/company/press/…
@DetDocumenters @media_outlier @freep @DetroitJCS Trustee Pegg speaks about past & future of Investment Committee, noting it is in its 10th year following creation by POA and wants it to continue… not sure if “continue” refers to its performance/trend or existence 🤔
@DetDocumenters @media_outlier @freep @DetroitJCS Newsome responds and again points to importance of having all portfolio managers/holdings uploaded and available to IC and Board for faster access to info and historical data
@DetDocumenters @media_outlier @freep @DetroitJCS Committee now playing some old hits…receipt of payment from City, how it would be better to receive quarterly, ongoing request to actuaries Gabriel Roeder, difference between legacy and hybrid plans, etc
@DetDocumenters @media_outlier @freep @DetroitJCS You can check starting around 12:10 in transcript for above if you want to revisit the rabbit holes 🧐
@DetDocumenters @media_outlier @freep @DetroitJCS Okay…check 12:20 in transcript for names of some real estate and preferred equity holdings…this all was discussed during last IC meeting of GRSD (I believe)…discussing moving capital from sales to a brokerage account to sweep out the cash, process of wind down
@DetDocumenters @media_outlier @freep @DetroitJCS This presentation is given by outgoing CIO and (I believe) all about legacy investments they are selling/redeeming…as always, speaking from a report we don’t have 🤷🏼♂️🫤
@DetDocumenters @media_outlier @freep @DetroitJCS As he says, “you”—meaning “they”—can read about it all in the document. Now “you” as in, well, YOU, dear reader, can’t
@DetDocumenters @media_outlier @freep @DetroitJCS 12:26 he is talking about the challenges of sorting out the cash account…funds coming & going via wide range of transactions, raw data sent from Bank of America but is difficult process to disaggregate
@DetDocumenters @media_outlier @freep @DetroitJCS Question from Pegg about where process is at for hiring an investment analyst…Newsome states the greater need is for a hire in investment operations, and that person could be developed in analyst
@DetDocumenters @media_outlier @freep @DetroitJCS Assistant to GC King gives his report…but you all have that in your packet, right?
@DetDocumenters @media_outlier @freep @DetroitJCS Finally get to the active PFRS fraud investigation that was reported on by @freep Tapper gives overview of what happened & action plan…she has reached out for audit firm and she will have forensic audit firm in place and report done…they are performing internal review
@DetDocumenters @media_outlier @freep @DetroitJCS Also Tapper mentioned working with a firm … not sure if same as forensic auditor …with resources to analyze data sets outside normal audit review
@DetDocumenters @media_outlier @freep @DetroitJCS So, first off, I want to declare 'disaggregate(d)' to be the official word of this thread. I mean, like, what the hell? I sound like I s*** PPT or something. Not quite sure where that came from...shows you probably shouldn't listen to policy-type podcasts at 1 1/2X speed
@DetDocumenters @media_outlier @freep @DetroitJCS Second, it is clear that the MSP investigation of the former PFRS employee reported on last month is being taken very seriously and we look forward to the results of the forensic audit...and assume they will be shared publicly as the investigation comes to close.
@DetDocumenters @media_outlier @freep @DetroitJCS If anything in this coverage is inaccurate please email documenters@media_outlier.org with "Correction Request" in the subject line
@DetDocumenters @media_outlier @freep @DetroitJCS As always, you can find more coverage at documenters.org
documenters.org
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Agency Information
Detroit Police and Fire Retirement System
The Police & Fire Retirement System of the City of Detroit helps Detroit families meet the economic challenges of retirement, disability or death.
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