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HomeMy WebLinkAbout1.22.25 Deferred Comp Meeting MinutesDEFERRED COMPENSATION PLAN COMMITTEE ST. LUCIE COUNTY, FLORIDA REGULAR MEETING Date: January 22, 2025 Convened: 9:00 AM Adjourned: 9:35 AM Committee Members Present: George Landry, County Administrator; Dan McIntyre, County Attorney; Kimberly Warren, St. Lucie County Clerk & Comptroller, Finance Director; Michelle Franklin, St. Lucie County Property Appraiser; Wendy Miller, St. Lucie County Tax Collector Designee (via phone) Others Present: Jennifer Gainfort, Mariner; Vera Smith, Deputy Clerk, Recording Secretary CALL TO ORDER George Landry, County Administrator, called the meeting to order at 9:00 AM. I. APPROVAL OF MINUTES FROM THE NOVEMBER 29. 2023 QUARTERLY MEETING Dan McIntyre, County Attorney, motioned to approve the December 3, 2024, meeting minutes. Kimberly Warren, St. Lucie County Clerk & Comptroller, Finance Director, seconded the motion, which was carried unanimously. II. QUARTERLY INVESTMENT PERFORMANCE REVIEW (JUNE 30, 2024)— JENNIFER GAINFORT (MARINER) Jennifer Gainfort (Mariner Institutional) handed the committee a printed report of the Investment Performance Review period ending December 31, 2024. She provided a brief market overview of the fourth-quarter investment report and highlighted that the returns were mixed in the closeout of the last quarter. The US economy is performing better than expected due to lower interest rates and election uncertainty. From an equity standpoint, for the quarter, S&P 500 Large Caps had a strong year, with a 2.4% increase and 25% for the full year, marking the first back-to-back years of over 20% growth since 1997/1998. In market caps, mid -caps, and small -caps underperformed relatively to large -caps for the quarter. The market peaked in December and then saw a sell-off due to the Fed's announcement of fewer rate cuts and concerns regarding inflation rising above the 2% target. The 1000 Growth Index had a 7% increase, while large -cap value stocks were negative by 2%. The Magnificent Seven continued to drive returns, though with some dispersion, with Nvidia 70%, Apple 30%, and Microsoft 13.3%. Overseas markets were negative for the quarter, and the aggregate fixed -income index was down 3%. The Fed's rate cuts at the short end of the curve led to higher interest rates at the longer end, putting pressure on bonds. Ms. Gainfort advised that at the end of the quarter, the plan's asset value had closed at just over $25 million, with 56% of assets passively invested and 43% actively managed. The Winslow Large Cap Growth Fund replaced the Allspring Large Cap Growth Fund, effective mid -December, with participants automatically moved unless directed otherwise. She reviewed the scorecard for passive and active funds, the performance of various funds, and the reasons for replacements. The Winslow Large Cap Growth Fund improved peer group ranking and performance, despite underperforming the 1000 Growth Index. The Vanguard Windsor fund is a large -cap value fund and is performing green across the board. The ClearBridge Mid Cap Fund remains in the red and on the watch list due to underperformance and concerns about the quality of holdings. The Mass Mutual Small Cap fund is passing across the board and holding strong. The American Funds EuroPacific has seen some flags with underperformance. She discussed that a potential replacement was recommended for ClearBridge Mid Cap and American Funds EuroPacific. The recommendation was made to consider adding an international growth/value fund to balance the portfolio. The Dodge & Cox Income strategy continues to perform well over three and five years, experiencing some underperformance during the quarter but remaining strong in the long term. She mentioned that the committee approved the transition of Dodge & Cox from the "I" Share Class to the "X" Share Class, a lower - fee option that reduced fees from 41 basis points to 33 basis points. The process was transitioned through Lincoln, scheduled to take effect March 24, 2025, and letters will be sent to participants regarding the share class transition. Ms. Gainfort advised that the passive strategies for target date funds passed all criteria with no significant issues or concerns, except for manager tenure, which will be flagged until they reach five years. Ms. Gainfort provided a review and replacement recommendation for the following strategies for the period ending December 31, 2024: U.S. Mid Cap Core Manager Analysis She provided an overview of three replacements (EARNEST Mid Cap Core, Carillon Scout Mid Cap I, Touchstone Mid Cap Institutional) for the bond strategy, highlighting the index performance regarding the long-term/volatile returns. Ms. Gainfort recommended EARNEST Mid Cap Core as the replacement Mid Cap fund. Dan McIntyre, the County Attorney, motioned to approve the recommendation to replace ClearBridge Mid Cap I with EARNEST Mid Cap Core (Harbor Mid Cap Retirement Fund). Michelle Franklin, St. Lucie County Property Appraiser, seconded the motion, which was carried unanimously. International Developed Growth Manager Analysis She provided an overview of two new investment styles (Causeway International Value Instl, DFA International Value 1) for the portfolio to enhance international growth and provide balance like domestic investments. She highlighted the strong performance, diverse nature, and low cost. Ms. Gainfort recommended DFA International Value I as an additional fund to the existing plan rather than replacing any current funds. Dan McIntyre, the County Attorney, motioned to approve the recommendation to add DFA International Value I as an additional fund to the portfolio. Kimberly Warren, St. Lucie County Clerk & Comptroller, Finance Director, seconded the motion, which was carried unanimously. International Developed Value Manager Analysis She provided an overview of three replacement (Goldman Sachs GQG Ptnrs Intl Opps R6, Harding Loevner International Eq Instl, MFS International Growth R6) funds for the international value regarding performance, growth and strategy. She highlighted that the GQG fund is newer with a strong track record in a favorable market value. Ms. Gainfort recommended Goldman Sachs GQG Ptnrs Intl Opps R6 as the replacement fund. Dan McIntyre, the County Attorney, motioned to approve the recommendation to replace American Funds EuroPacific Growth R6 with Goldman Sachs GQG Partners Intl Opps R6. Kimberly Warren, St. Lucie County Clerk & Comptroller, Finance Director, seconded the motion, which was carried unanimously. III. DISCUSSION The committee discussed the transition from the Columbia Trust to the Lincoln Stable Value fund, effective April 1, 2025, and the potential addition of Morningstar's managed account service. Mr. McIntyre mentioned an email received from the County HR Director regarding the Morning Star contract with Lincoln and 45 basis points for discussion. Upon discussion, it was mentioned the managed account service, with a fee of 45 basis points, would provide personalized investment advice and automatic fund allocation, which would be optional, and participants must opt -in, but participants would need to be aware of the additional cost. Dan McIntyre, the County Attorney, motioned to the committee to recommend to the Board the agreement to enter into a voluntary agreement with Morningstar for participants interested in the service for 45 basis points. Kimberly Warren, St. Lucie County Clerk & Comptroller, Finance Director, seconded the motion, which was carried unanimously. IV. ADJORN There being no further business to discuss, the meeting was adjourned at 9:37 AM.