Were looking to partner together with the worlds most outstanding managers were not going to gain the capital soon, well make a 3 year commitments in exchange for lower fees almost all managers will do that. Many, many. Many okay many. And then the third way to reduce the fees through managed accounts the pathway is having a large allocation of money 100 million or more for managers youll begin to think about managed account is within our realm of possibilities. Can you confirm that and thats probably, maybe larger than that. Maybe one hundred 50. Oh, the customization of those fees can you give me a range of how much it would reduce our expense. Yeah. He think if we were to get down to a level that i think is achieveable im going to ask leslie to confirm that about 1. 3 and 13 maybe 1 point that 3 and 15. What does that mean. 1. 3 percent in the Management Fee and 15 percent of profits for the equipment fee and theres so many valuables and the types of managers some managers are less than expensive and 23 and 20 is on the high side how much youre willing to lock up the 13 sounds low but that maybe now that i think it is probably 1. 3 and 15 i think another idea about how the lower fees ill not do this like in the first 7 or 8 years of a program but new streams and teams being lifted out not only that but take equity in this cal percent did in with public equities managers they funded arrow street now, its a 50 million firm is that you provide seat capable north america in exchange for very low fees and sometimes you get a percentage of revenue that may expire after a period of time but thats another pathway but not something we would consider until this thing is seasoned maybe 7 or 10 years down the road if we were ever to do that. Thank you. I want to good morning to the customers and the members its good to see you again i wanted to also speak directly to you through this entire process theres been several moments of it reflection and one thing i wanted to come to realize and heard reiterated in Public Comment was the need for better, more streamline communication between this body and yourselves and that is something i respect and agree there needs to be a more efficient way to communicate to you make sure that everyone has pure and Accurate Information a lot of the feedback ive heard as well as red is somewhat concerning in terms of your advocacy for the positions that youre taking and i dont see that as anyones fault other than our inability to communicate more efficiently so i want to let you know we as a board will be discussing ways to do a better job of communicating and it is my goal it through the communication it will ass also relax the tension that you feel particularly with when we come to an impasse where we disagree with each other i want to get to a phase well disagree but with a level of our respect there and i heard that request for information was made and on some occasions not honored and this again goes back to what i want to see this body move in a direction we develop some kind of a communication direction to communicate with people in a more timely manner i wanted to acknowledge the many concerns that ive heard from folks ive met with from emails ive read and Public Comment that ive heard and there or are couple of things i want to also remind folks of i too i am an active employee my instead of members are active employees particularly with local 21 im very permanently connected to the financial risk and many of the retirees and those soon to be retirees in the room are not in jeopardy of losing their pensions thats an important fact we must always focus on and Good Investments or bad investments you will have a check it is the financial risk rests on the shoulders of folks hike myself and employees it is scary to look at and real financial climate were living in and i myself anal a renter as well any staff so the increasing costs of San Francisco is not something that say that i miss also want to just give voice to many of i in this room have overcome a huge learning curve in educating yourselves on hedge funds as well as alternative Asset Classes i have as well i want to commend the folks in labor that have taken upon themselves to educate themselves and come together collectively it is i think an example of helpful and critical feedback and id like to see us move in that direction im prepared today to vote in favor of hedge funds i am i said that by the majority of the folks in this room its apple unimportant position hedge funds have been used 41 by constitutional investors for over 20 years and one of the things it is attractive of that is that we able to move quickly in and out of this particular investment also known as to other holders we have there are seasoned voices on this body i respect and listen to as i continue to learn but in the he said the reason why im going to be cast my vote i do believe that ive heard enough evidence to convince me we need to protect the pension from an unvegetable down mark our strategies may be anybody difference if i had and flexible and the hedge fund are one as one vehicle to invest our assets in also well, im stop there tuff. Commissioner stansbury. Can everybody in the audience hear me okay. Great to members of the public that are here today thank you for coming weve hired our concerns about a year ago we started this progress and several times made it a point to come out and talk to you there are many faces ive meet with in the past year some are for and some against hedge fund one overriding emotion i since is fear retirees will not receive that monthly pension check i know this looks like first hand but those who havent heard the store story of 340e my parents they rely on a pension for the city of stockton when stockton filed burden of proof theyre retired health care they expected to be there are for the rest of their life it has disappeared thats been decided in court the only question whether or not their continue to receive their monthly pension check and if so how much there are estimates theyll lose half their apprehension imagine in our mid 60s not having a lot of savings you expected your pension and Retiree Health care to be there and all of a sudden you have 30 no health care and loss half the pension can you afford the lifestyle unify worked to put in place so they were face with this and mutilate year battle that went through court thankfully theyve learned their pension will remain intact but as you look across the country stoelg is not the only example detroit and many other examples so i understand what it is like to be a retiree to truly worry about if iceberg to get it pens so one of the things ive looked how we got where we are if you look at the tech bubble in 2000 there were 3 years of negative returns and we changed nothing and continued with the strategy we had in place who o so when the Global Financial crisis hit no 2008 the same thing happened the stock abates e entities lost 41 percent so our planning status went down one hundred plus to a low of 72 percent in 09 is in a period of 8 years from one hundred 8 percent to 72 percent funded we would be remiss if we didnt stop and look at it ourselves and say how did we ended up here and what to change as a sunlight of that extraordinary drop there were a total of 3 ballot measures put out there trying to reform our Pension System as a result we have prop c pro activities like myself a couple of others we took a 40 percent pay cut from prop c so for us logan 20 years down the road ill thrill that 20 years a highly uncertain now for the retirees i have absolutely no doubt our monthly paycheck will come for the rest of our life i apologize if anyone has made you believe otherwise your pension check will come every most for the rest of your life and after your done it will be for our beneficiaries it is backed up by itself city and county of San Francisco so ill say it youll forever get our pension check regardless of whats decided here today as we look at where we were and the two down turns we thought how do we reduce risk so this didnt happen gun the crossroads theres no easy answer the speaker easily awe loutd latitude were stubble we cant get the funds and stocks are incredibly risky we ride them up and down so as we start to look at hedge funds what we learned and this is real Financial Data theyve provided consistent returned i thought at a luncheon and seated next to a hedge fund dbi and he said well, you cant avoid the 2008s without giving up the, 2013 you cant avoid the major down turns by the way, hedge fund are temporary youre not going to ride the turn a all the way up but if you look at our Global Equity that lost 21 percent and hedge funds lost 20 percent if you look at a Pension System in Southern California or Orange County their hedge fund lost one percent we lost 41 and they lost one percent how much would you pay in fees to avoid prop c in the lost of 71 million so 0 thats what were trying to deal with today if you look at the return hedge funds over the last 20 years its approximately that twice of the s. P. C. A. 5 hundred with half of the volatility so over the longer over the last 20 years twice the returns with half the risks and theres many ways to measure the risk how high do we go up and come down its as good as any as weve gone through the process i think a couple of us have gone out and talked to the retirees and the active employees and theres when ive learned an extraordinary cloud of information surrounding hedge fund the common belief were going to be increasing the risk in our portfolio thereby pitting u putting retirees thats the contrary were trying to reduce risk and by every measure in terms of financial returns hedge fund are a way to reduce risk youve heard people talking about Warren Buffett how he is against hedge fund well, i think that is one data point and certainly another side to the story we dont know was is in Warren Buffetts head by few looked at its scc filings warren is the hedge fund in his fcc fooildz hes talked about contracts i disclosures the Interest Rate decisive contractors a product of hedge funds not youll hedge funds theyre not the same not all hedge funds utility derivatives you cant put all hedge funds you cannot pay them all so even some s c i u Pension Systems they have hedge funds if i look at excuse me. If you look at our returns and compare those to the Pension System in terms of our returns weve done extraordinarily thats a our funding ratio but if you compare us to endpochlts were afternoon and endowments have out performed us theyve been early performs of the hedge funds i understand that how Pension Systems have performed in the past hedge fund and emancipation proclamation documents is not always the same some of the concerns that people have with hedge fund their higher than we we pay for index funds but in the world of finance you entity what you pay for in terms of transparency ill never vote to put money to hedge funds that is not transparent this is one consensus were not interested in hedge fund that are not transcript we want to know where ore money is going and be able to track it on a regular basis ive heard the concerns that hedge funds some hedge funds work in a career to our hedge funds they have our same values in San Francisco theres one that is large one founder is focused on hedge funds so my point is not all hedge funds are the same in terms of down side protection some hedge fund use derivative contacts like Warren Buffett and some are shot stocks theres a way to buy downsize protection a lot of ways. There were 12 unions that signed a letter that set back e seventd sensitive a letter to the board supporting our decision to look at this as a fact based analysis i know the term expert is not always popular those represent the majority of workers on this board there are 3 active employees that have a pension on this board and there are 2 people who are ref pepgsz as retirees and in total 5 members of the board whole Financial Wellbeing is reliant on this pension and there are 0 people that devoted their time in volunteering they want to insure that apprehension system will be around for a long time so as weve deliberate weve been carve careful so any message to retirees your check will continue to come every month as we continue down this road well be careful and deliberate thats why i port the 5 percent polarization for the hedge fund and well reevaluate where we are in a year and decide if this is a Program Worth having and continually reevaluate with staff everything that is happening were looking at the best interests of the plan so with the long statement im done. Thank you. Yes. I cant talk long because my board here on behalf of the project sponsor can you hear me okay. Ill try to talk loud thank you so much fewer patience its been long thus far i wanted to say in terms of hedge funds i know that their risky and yes as mr. Cokeer pointed out 85 percent of the portfolio at the assets at some point being at the level of risk you cant get away from everything that has a level of risk its a matter of how much risk one of the speakers i think one of the speakers talked about the enar documents versus the funds are we late in the game possibly because hedge funds primarily made month of their money earlier than that the question to mr. Cokeer trailing that do you feel comfortable that we can still attract some good managers to its hard to go through a good and bad manager their absorbing feeds and in a saying that guidelines can i still at this at this point that has good and bad were trailing in the whole sector can do you think the probabilities are as getting not a great return. Same protecting the assets of this board. Thats a good question commissioners maybe to first provide Information Private entities is a 3 trillion industry a so hedge funds are also about a 3 trillion industry but theyre mostly very liquid assets so i dont have too many concerns that we not going to be able to attract very good managers we live in San Francisco so will be able to hold for meetings with more hedge funds managers than just about Everything Else in the country their flowing to meet with the other endowments in the area stanford and uc as well as the apple and, etc. Theyre here on a regular basis doing fundamental analyze and meeting are clients so i see that our assets is going to be very good okay there are a number of managers that are now i mean we will need to look at this closely and see if quote their two large but you dont want i dont have too many concerns to attract a good roster manager. Yeah. I believe that well be able to with a good staff and good consulting and fund to Fund Assistance be able to construct a good portfolio and it is a good size as well its not the size of looking at to put to work is very dont believe doable. Were in a sweet spot if youre platoon is 200 million and your allocating 10 percent of hedge fund crisis 15 managers that will take a one Million Dollars assignment not many but 300 billion and looking to invest in 20 managers and looking to move the needle one and a half billion dollars theres more 25 managers will take that large amount of money. Maybe less. Were in a sweet spot commissioner brought up hedge funds the majority meet the scc regulations thats half of the 10 or 15 years ago ill be hardpressed to find ones that dont meet the regulation but its not required so much as hedge fund to have that. I when i read through the materials and i got to pages 12 and 13 it focused on saying why you want to go to a direct fund to fund and the pros and cons of both i understand the rational but as you go through the writing im more prone an approach moving forward as we try to test the water and recruit and sub guidelines could be more fund to fund thats why the question was asked when i read through this this is not the the direct youre talking about going direct as part of the allocation so the argument was compelling in the stampedes for me thats why the question was asked over and over about direct fund to fund you dont want to go fund to fund. I prefer not to one of the reasons they have lower rurpdz and second higher fees about 75 higher and the third good managers restrict the amount on the funds they prefer indirect relationships when you center a direct relationship youre the client is more likely committed and understand the commitment first hand. Lastly we would have access manager directly ourselves. Those are the reasons why. Those are our gear it towards direct. No. Were going to there will the rfp to gain the sweet of fund to fund and both direct. Will you be asking responses. Will you be asking for responses to both or pick one or the other . I envision one rfp but inviting both profiles of candidates to submit is that helpful. So we can expect to see both with a recommendation. Whichever you choose. Yes. Im sorry commissioner. No, no thats fine the driving point for me this is not what i see this is based on the material here so just a reiterate you stated your approach to get guidelines at the same time having a staff to enhance where you are today you have great staff but adding to that and issuing an rfp. The first to issue an rfp okay that will take sometime we would