VLCT Joint Investment Committee Meeting
Friday, March 13, 2019
VLCT Offices, Montpelier, Vermont
Committee Members Present:
PACIF-Jerry Storey (via phone), Aaron Frank (via phone) and Jackie Higgins
VERB- Bill Shepeluk and Todd Odit
VLCT- Peter Elwell
Staff Present: Joe Damiata, Maura Carroll, Jeremiah Breer, Fred Satink and Kelley Avery
Others Present: Dan Smereck via phone (Strategic Assets Advisors, Amanda Abdella via phone and Jason Bilodeau via phone (Mellon)
Bill Shepeluk called the meeting to order at 10:06 a.m., as former Chair John Lawe had resigned from the PACIF Board at the end of 2019. Bill Shepeluk requested that a new chair be nominated. Peter Elwell nominated Bill Shepeluk.
Upon motion (Elwell/Higgins) duly adopted, the committee voted unanimously to elect Bill Shepeluk as committee chair.
Joe Damiata asked that agenda items 5 and 6 be switched for this meeting.
Upon motion (Elwell/Higgins) duly adopted, the committee voted unanimously to approve the agenda as amended.
Upon motion (Odit/Higgins), the board voted unanimously to approve the minutes of the September 13, 2019 committee meeting.
Jason Bilodeau and Amanda Abdella reviewed the fixed income portfolio performance through the end of 2019. Overall, both the PACIF and VERB portfolios outperformed their fourth quarter and 2019 benchmarks. They also briefly reviewed the global and economic outlook for 2020, which is extremely volatile presently due to the coronavirus global pandemic.
Dan Smereck from Strategic Asset Alliance (SAA) reviewed the trusts' investment performance through 2019. PACIF’s consolidated return through December was at 11.58%, while VERB’s was at 12.12%, very close to their benchmarks. Mr. Smereck echoed Mellon’s assessment that U.S. economic growth will likely decline into 2020 due to the pandemic’s impact on global markets.
Mr. Smereck provided an educational overview to the committee regarding Environmental Social and Governance (ESG) investing, which is referred to as “sustainable” pool investing. SAA will review both trusts holdings with regard to ESG principles and share the results with the committee.
Mr. Smereck reviewed the annual Peer Analysis for Risk Pools. Overall, both trusts performed extremely well in comparison to their peers in 2019. Particularly PACIF, which was only outperformed by one of the other 16 pools analyzed. Outperformance was largely attributed to PACIF’s slightly longer duration fixed income holdings. Since this report had not been updated with PACIF’s 2019 year-end surplus figure, Mr. Smereck will send staff an updated version of this report to include this information.
Mr. Smereck presented a SWOT Analysis which assesses the strengths, weaknesses, opportunities and threats for each trust’s portfolios. He indicated both trusts appear to be well positioned, even in the current environment. Mr. Smereck noted he plans to apply ESG investing factors to this analysis in the near future.
The representatives from Mellon and SAA left the call.
Jeremiah Breer discussed going out to bid for investment management services. VLCT has used SAA for more than 10 years. Although staff has been satisfied with SAA’s performance, as a matter of due diligence, staff recommended that the committee approve an RFP process that will first include an approval from each of the boards to move forward.
Upon motion (Elwell/Higgins) duly adopted, the committee voted unanimously to put the investment management services out to bid, contingent on approval from all three VLCT boards.
Upon motion (Higgins/Odit) duly adopted, the board voted unanimously to adjourn the meeting (12:01 p.m.).