Olivette pension committee accepts second-quarter report, approves $1.2 million shift from Principal to Baird core-plus

The Olivette City Pension Committee on Thursday accepted its second-quarter 2025 performance report from Marquette Associates and approved a set of rebalancing moves that include transferring $1.2 million out of Principal's core-plus product into a Baird core-plus fund.

Marquette Associates advisor Jonathan Bryant presented the quarterly book and told the committee the plan ended the quarter with $23,827,901 in market value and that the plan returned 6.7% for the quarter and 6.4% year-to-date. "You ended the quarter with $23,827,901," Bryant said while walking members through the report and manager-level performance.

The decision follows Marquette's recommendation to replenish the plan's core fixed-income sleeve (from which benefits are paid), reduce exposure to higher-fee Principal products on the plan platform, and reallocate modest amounts across equity and cash holdings. The committee approved a set of smaller rebalancing trades Jonathan presented (selling modest amounts in Vanguard S&P 500 and international funds, adding to the iShares small-cap fund, and contributing to Principal core fixed income to cover near-term benefits) and separately approved moving $1.2 million from Principal's core-plus allocation to a Baird core-plus mutual fund.

Why it matters: the plan's manager fees were estimated at about $90,488 annually, equal to an expense ratio of roughly 38 basis points — above the median Marquette cited (35 basis points). Marquette highlighted Principal's vehicles as materially more expensive (Principal's core-plus was shown at about 72 basis points) while Baird's core-plus option was shown at roughly 30 basis points. Committee members discussed the platform limits Principal places on fund choices and said that moving money off Principal is a priority when the plan can maintain a cushion.

What the committee approved: the rebalancing recommendations that Jonathan Bryant outlined (the staff book includes line-by-line amounts) and a $1.2 million transfer out of Principal core-plus into a Baird core-plus mutual fund. Committee members debated comfort with the dollar amount; Marquette had initially recommended $1.0 million and told the group a maximum comfortable transfer would be $1.2 million. After discussion, a motion to increase the transfer to $1.2 million passed on a voice vote.

Other details from the presentation: Marquette's book shows mixed manager performance across asset classes — U.S. equities and non-U.S. equities each had pockets of strength and weakness, small-cap managers have been a drag, and private equity and real estate performance figures were discussed. Marquette also provided a manager search of core-plus candidates (Baird, Loomis Sayles, PIMCO, Prudential and Principal for comparison) and comparative metrics such as value-added drivers, duration, holdings concentration and calendar-year returns.

On fees and platform access, a committee member put on the record that Principal's platform had limited product availability and that the committee considered that restrictive; the committee has retained outside counsel to explore contractual options for moving more assets off Principal's platform. Committee chair and staff reported they had met with a contract attorney (last name Lassiter) who is analyzing whether and how the plan could exit or reduce exposure to Principal's contract.

Votes at a glance - Motion to approve minutes: approved by voice vote (all in favor). - Motion to approve Marquette's rebalancing recommendations (line-item reallocations in the packet, including $150,000 contribution to Principal core fixed income and other small transfers and a $90,000 reduction in Fidelity cash): approved by voice vote (all in favor). - Motion to transfer funds from Principal core-plus to an external core-plus manager (Baird): motion to move $1,000,000 was made and then amended/raised on the floor to $1,200,000; the committee approved $1,200,000 by voice vote (all in favor).

The committee directed staff and Marquette to continue monitoring the plan's "cushion" (the liquidity buffer) and to revisit additional transfers off the Principal platform if the cushion remains at or above the levels discussed. Staff said selling securities and moving cash can be done quickly if the cushion falls and additional rebalancing is required.

The meeting record shows committee discussion of scheduling and an update that outside counsel is reviewing contract options regarding Principal; no final legal action was reported during this session.