Retirement Services Division November 29, 2018 Meeting Minutes of the State Employees Retirement Commission Investment Subcommittee

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Date: 11/29/2018 Time: 2:00 p.m.
X Regularly Scheduled __ __ Special
Attendees: Was a quorum present? Yes
Retirement Commission Other Attendees
Charlie Casella Frank Picarelli, SegalMarco
Janet Andrew Joel Fein, Prudential
Michael Carey Jada Swinski, Prudential
Sandra Browne-Brewton Mike McCann
Michael Bailey (by telephone)
Absent Commission Members
Sal Luciano
Comptroller's Office
Thomas Woodruff, Director, HPBSD .
Margaret Haering, Asst. Director, HPBSD
John Herrington, Director, RSD
Amy Cason, Associate ARBO, HPBSD

Matters Discussed:

Mike McCann presented Prudential�s quarterly report, which included statistics on utilization of investment options, variations in asset allocation among plans and status of GoalMaker selection by participants.

Amy Cason presented the latest statistics for the amount of assets currently slated for transfer from the Alternate Retirement Program (ARP) to the SERS plans pursuant to the SAG Award. Tom Woodruff explained the current strategy for holding up liquidation of funds held in the Stable Value Fund until a sufficient level of funds to be liquidated and transferred to the SERS plans is achieved. The current threshold is $50 million. This is being worked out with the Stable Value Fund�s investment managers in order to reduce transaction costs and to limit negative pressure on the fund�s crediting rate. All Stable Value transfers associated with the SAG Award will take place no later than April 12, 2019.

Frank Picarelli of Segal conducted the quarterly review of investments. Several funds remain on the watchlist. These include Wells Fargo, Fidelity VIP Contra Fund and Fidelity VIP Midcap. The Wells Fargo fund is showing a significant improvement and will likely be removed from the watchlist if performance continues to improve.

Frank Picarelli led the discussion on removing one of the two REIT funds from the menu. The Vanguard REIT fund has significantly higher utilization; however, the DFA Fund is currently showing better performance. This may be due to the Vanguard Fund�s recent change of index that it was using. The Committed elected to defer making a decision until other fund changes/upgrades take place.

Frank also presented a selection of Small Cap Value funds for the committee�s consideration for possible addition to the fund line-up to fill in the only missing asset class on the Plans� investment menu. Frank said that the TIAA-CREF Small Cap fund contained considerable exposure to small and mid-cap value equities and suggested that we hold off a decision on this for a while. The Committee will consider replacement of the Fidelity VIP funds, which have consistently lagged their peers over the past 1, 3 and 5 year periods.

Materials Reviewed:
Prudential Quarterly Report
Segal Marco Analysis of Investment Performance
Segal Marco U.S. REIT Fund Comparison
Segal Marco Small Cap Value Search
Analysis, SAG Award transfers/Stable Value Hold

Decisions voted upon:


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