I think we can do that very easy, yes. And then, as we have in the past, we can forward this with a letter to each of our board of supervisors and the mayors office. Does that sound reasonable, that we could perhaps add one more page, and then, we would expand on that in the following year . I can work on that. Okay. Thank you very much. Thank you. Was there any other Public Comment . No Public Comment requests for this item. Okay. Thank you. Item nine, commissioners, is other public business. And you have the calendar before you. Theres nothing noted in terms of special meeting notes, as we move forward. Were there any items from the prior year that we had not completely covered or ain calendar. I took the past two years calendar and forwarded all the items that we had calendared in the previous years, and any items that we havent done, i put it forth on this calendar, so right now, the answer would be no. Theres nothing undone from the previous years. So we begin with a clean slate. At least trying to. Okay. Thank you. Commissioners, any items you would like to place on the calendar at this point . I think we already placed one, which was the food program. Right. I should say food security, right . Which i think will probably go in the fall after director garcia theres more work to be done on that in the department before that comes forth. Right. Shall we move onto item ten, the jcc report back . Okay. Item ten, and ive lost my agenda. Commissioner sanchez . Commissioner sanchez . A report back on the jcc meeting from february 13th . Yes, commissioner sanchez . The joint Conference Committee for laguna honda met on february 6th. We approved the minutes of the previous meetings. It was primarily closed session, reviewing both the quality reports and the medical credentialing reports, so that ends our meeting for on that. Any additional comments . Okay. Our next item, then. A consideration for adjournment. So a motion for adjournment is in order. So moved. And a second . Second. All in favor, please say aye. This meeting is now adjourned. Thank you. Shall we call the meeting to order. Will everyone rise and join us for the pledge of allegiance . I pledge allegiance to the flag, of the United States of america. And to the republic, for which it stands, one nation, under god, indivisible, with liberty and justice for all. This secretary roll call please. [ roll call ] thank you. First thing well do today is call for general Public Comments. Im sorry. Im sorry. We will be going theyre right here but i didnt look. Theyre right inhouse, yes. Well be going into closed session. Anyone who doesnt need to be in the room would you order. Were coming out of closed session. Is there a motion not to disclose . Theres a motion. We need a second. And a vote. Item passes. Next item please. Item 4, general Public Comments. I have a couple speaker cards. Up first john furland. Let us speak on agenda item 10 on Risk Mitigation. I think the presentations are what i have for you was general Public Comment. You want to speak on item 10 or general item comment. Im using my general Public Comment. Ok. I think the Risk Mitigation presentation are fine as far as they go. But theyre basically a repeat of the june 2016 Investment Committee meeting that commissioner bridges had. I think the key thing is to focus on implementation. I think that, i hope that the two speakers will cousin how Risk Mitigation can actually be implemented. Im going to make three quick proposals. The first is necessary. The first one again, which ive said a lot of times, is the managing director for blah blah blah. Should be a manager district or for chief risk officer. If that capacity, second proposal, at your march 21st Investment Committee meeting on strategic plans theres part of that strategic Risk Mitigation plan. The third one is that you bring in, she does this also, you bring in non consensus views about the risks facing this committee. This board. I just want to mention terrorist caging. Which is discussed in that agenda item. A terror risk is a big risk. The minus 10 correction you had couple weeks ago is not a terror risk. Minus 20 is not a terror risk. Its a big risk. Its minus 25. If you stick to hedging that, you can make the cost very low. Especially if you only partially hedge it. If you only partially hedge it, if you only hedge it for a couple of years. If you just stick to that. The Risk Mitigation plan that i proposed be part of your strategic Investment Plan should include the whole array of Risk Mitigation solutions talked about by pemco. Its a tiny little part. Its an easy part. You can do it extremely easy, especially now that you know where the exposures are. Thank you. Up next is david paige under general Public Comments. Hello, everyone. Theres been a lot going on lately. We got valentines day today and stock market corrections. Gung hey fat choi and also Ash Wednesday is today. February, every february. Black history month, i wanted to say about the Ash Wednesday for those of you that know, you know its a time to take the opportunity to reflect on what precious few moments we have here on this place we call home. Pope frances wrote a book in cyclical on Climate Change and inequality. I finished reading it and thought it was well done. If youve been wondering about the changes in the weather, this is a good way to get the scientific, mostly science, not much religion in here. Scientific explanation of how and why the weather has been changing. So im done with my copy. Im happy to loan it out. See me afterwards. Thank you very much. Paul grey up next. Hi, my name is paul. Ive been a City Employee for seven years. Id like to comment on the e. S. G. Options in it the deferred program. After engaging a few months back and finding out weve yet to divest in fossil fuels, i thought we did five years ago. I must comment on last months timid vote. Littlely tom lynn said the problem with the rat race is even if you win you are still a rat. The reason i quote this is last month, on your side of the podium, several times, the phrases worse of the worse and dirty to the dirty were used in describing fossil fuel investments. So even if you get rid of the dirty you are still investing in the dirty. Even if its the worst of the worst. Divestment is a morally correct choice. I heard claims your board is the leader in the investment movement. Others are quick to claim to the audience the environmental records. Even one person proclaiming theyre the biggest environmentalists the audience will meet. Please step up, divest now and divest quickly. I heard you expressed concerns about your diversifying because of your fiduciary findings and the city was to divest, you would lose significant amounts of money. There are many people smarter than i am who have studies and arguments to the contrary. No proclaim to know the methodology known for each side. I heard what 99point 9 of the people dont understand what you do heard. What i heard was with your whole board, with your whole staff, with the parade of consultants you cant come up with investments equal to or better than fossil fuel. Everything else you would chose would lose in comparison. Thats what i heard. I have trouble believing this. If it were the case and you believe it, why arent we doubling down on fossil fuels and putting more money into it . That makes no sense to me. Thank you for your time. Ill see you next month when i plan on talking about your level 2 engagement in fossil fuel companies. Thank you mr. Grey. Are there any other members of the public that would like to address the commission . David williams. Retiree chapter. I want to thank the board and perhaps particularly the executive district or in item 28 of the report. Its noted california, well its titled Assembly Bill but its a senate bill. There was some confusion about that. Senate bill 2031 prohibit the Retirement Systems from making cost of living adjustments. I thank you for bringing that to our attention. I can assure you the unions, the labor movement, retirement groups, and ago vow ka see groups will take this up and do everything we can to help kill it. Good afternoon, commissioners and happy valentines day. Claire representing raccsff. I just happen to be going again to city hall the other day and rounded the corner at vaness and grove. That building that used to be a church is undergoing changes on the corner. I was just wondering if perhaps we had managed to buy that nice chunk of real estate and were considering redeveloping it to actually build the Retirement SystemsCity Department administrative building that would house other City Departments including the retirement system and the Health Service system. I just happen to notice theres some activity there and id like to hear some updates on our Real Estate Investment in our search for our own building and property. Thank you. Thank you, very much. Are there any other members of the public that would like to address the commission under general Public Comments. Seeing none. Well close general Public Comment. Lets jump to item number 10 and we will come back to the other items later on. Item number 10. Number 10. That would be great. Thank you president stansbury. You see portfolio risk. We dont get a chance to talk about this very often. Id like you to remember this, we think about this subject and we think about optimizing risk and return. We think about this all the time. We rarely have an opportunity to step back and look at portfolio construction and Risk Mitigation from a more holistic point of view. This is informational but i did want to let you know that we consult, we do make decisions in a vacuum, we consult many thought leaders and any p. C. Is the general consultant and we also sample about a dozen consultants around the country on their ideas about Asset Allocation and risk management. We consult perm, other c. I. O. S, et cetera. I just wanted to let you know that we take things into this account holistically. Were glad to present this and look back and present this to you holistically. Ellen has been preparing for this for an extended period of time and i will ask her to introduce the subject and introduce our guests. Thank you, bill. Good afternoon commissioners. I a poll joys for my voice. Im getting over a cold. But as bill said, well be giving an update to our last dedicated Risk Mitigation presentation to the board, which was at the i. C. Meeting june of 2016. First id like to highlight a few points. As bill said, this is an on going Continuous Research focus for us. Todays presentations are a highlevel overview of that research. We consider all view points as a large institutional invest or. We have access to proprietary research and meetings with premiere leaders from Investment Managers to j. P. Morgan and Goldman Sachs to c. I. O. S, et cetera. We have over 200 managers in our portfolio with varying view points. Their expertise spans all markets. Asset clause, industry, sector, geography. For example, jeremys firm g. M. O. Which is one of the more bearish Investment Managers managing an emerging market death portfolio for us, as you know. And in addition to client meetings, we attend their annual conference and gain in sight on their perspective as well as their investors. Over all, we continue to recommend diversification through as set allocation and manager selection and its the strongest down side risk, mitigation. More specifically, theres no silver bullet. Compared to Home Insurance have been made in the past. But as we saw during the financial crisis, Home Insurance does not protect against market value decline. Influence companies did not write checks when peoples home values went down. Home insurance for techs against fraud, theft, property damage, et cetera, has comparable coverage in our management agreement. Investment portfolio protection is limited and expensive. You cannot lock in prices when theyre low because these are contracts that expire and have to be continuously renewed at adjust the market rates which spike in times of market stress. Buying could reduce our expected run from 7. 1 to 5. 6 . Therefore, we continue to pursue and implement the most effective strategies to minimize down side risk and prepare for a wide range of adverse market conditions. Later this average we will provide the infrastructure necessary for risk mitigating exposure of Management Strategies in addition to cash securization. Now id like to produce any pimco. They manage an emerging Market Portfolio for us. We have Phillip Nelson here, principle and director of Asset Allocation for any p. C. And Michael Conner executive vice presses at pimco. Thank you for joining us. Good to see yall again. So well revisit some of our presentation from june of 2016. But were going to set a couple stones first. One is, you know, how do we define risk and think about risk . Most importantly how does that translate to when we set a strategic Asset Allocation . And then well have a couple of examples of what are some broad approaches that one can use to manage risk . Well go through a couple examples there. And then, you know, additionally well focus a little more closely on buying puts and what a dedicated putbuying program would look like if its done in a passive fashion. And to steal the punch line of the rest of the portfolio, thats not something were generally supportive of. We think a strategic Asset Allocation is the best solution to manage the Broad Spectrum of risk that exists in the market today. Focusing on just down side risk and many ways ignores the real risk of not meeting longterm liabilities. Theres a return target and a return expectation. Theres funding requirements and theres Economic Risks between both planned sponsor and employees and thinking about that risk in totality is, in our minds, equally as important to longterm goals to pay benefits for as long as possible. So starting with that, just talking a little bit about when we talk about risk, what do we mean by that . Im not going to go page by page. Jumping to page five, risk is a term that is also overly generalized at times. What is risk. Risk with be dis berg of prices relative to the average overtime. It could have month meaning in terms of longterm results. Risks can be permanent loss of capital which is something that we think about in terms of Asset Allocation views, valuation, out of structure longterm portfolio target. And then kind of in our minds, most importantly, risk and not meeting your longterm return goal. What are the draw downs, what are the Economic Impact of over a longterm period not meeting return e expectations. Well have some exhibits in the back that highlight some of this. And then, you know, to address these risk, theres a lot of different ways to go at it. Thats the summary of all this. Theres not one solution theres not one thing being done. Theres not a universal equasion that fixes all of the risks. Its really a holistic multiperspective approach that requires everything from a strategic Asset Allocation looking at ways in areas to be dynamic or tactical with asset class exposures. Having a diversified portfolio. The simplest of Asset Allocation concepts is in the long run, diversification wins out. Thats a boring message at times. One that i think we would be remiss if we didnt hammer that home constantly. We do believe in diversification, over longterm periods. That wins out over longterm periods. Thinking about that, and weve gone through some of these slides. If theres questions about stuff youve seen before, feel free to stop me. Not going to spend as much time on that. But one of the things that we wanted to think about is trying to illuminate when we talk about strategic verse being dynamic and what that means. And when i think about strategic, thats the Asset Allocation target we set and were approved back in october or september timeframe. That is the longterm guide post with which the plans operating today. But then thinking about what are ways to be dynamic within that allocation. So setting bans, setting plus or minus Asset Allocation targets around that. Setting guidelines which, ellen and others will talk about later, talking about the para met tick structure. And within that, identifying Asset Classes that maybe are exhibiting stream levels of under valuation or over valuation. And then tilting the portfolio in those areas. This is not a trading in and out every single day, this is one thats not even trading in every single quarter but subtle shifts over a year, two year periods in terms of how to shift assets. Thinking about Japanese Equiti