MAI Capital reports pension portfolio roughly flat in Q1; assets down about 4% since year-end

MAI Capital Management, the board’s investment advisor, told the Fayetteville City Policeman Pension and Relief Fund Board of Trustees on April 17 that the pension portfolio was essentially flat for the first quarter of 2025 and that market volatility in the prior three weeks had reduced the plan’s market value by roughly 4% since December.

The report matters because the pension pays monthly benefits and trustees review portfolio performance to judge whether current investment policy and withdrawals remain sustainable. MAI — formerly Garrison Asset Management, which the presenter said merged into MAI Capital in December — has managed the funds since February 2014.

MAI’s presenter said the fund returned slightly less than 11% in 2024 driven by strong stock and bond performance and that the plan has generally been near its long-term 60% equity/40% fixed-income allocation. For the first quarter of 2025 MAI reported the plan was “about flat,” with equities down about 1.07% and fixed income up versus the fixed-income index. MAI gave trustees an updated portfolio appraisal showing the plan’s market value at about $55,907,000, down roughly 4% from the end of 2024.

“Performance wise, through the first quarter, we’re about flat,” the MAI presenter said. He added that markets had been “incredibly volatile the last 2 and a half weeks,” with a sharp sell‑off in stocks and rising long‑term rates. The presenter told trustees MAI expects the portfolio to remain defensive relative to broad market swings because it holds many value and dividend‑paying stocks and has used money‑market funds and short‑term CDs to lock in higher short‑term yields.

Trustees asked about future projections and the possible impact of tariffs and other geopolitical events. The MAI presenter said higher tariffs could cause “demand destruction,” slowing the economy and creating price pressures, but added that the portfolio’s holdings are managed to be less volatile than the broader market. He told the board that long‑term equity returns historically average about 10% and that bond returns have been suppressed for years by low rates, which he expects to normalize over a multi‑year horizon.

MAI handed out a one‑page portfolio history and a short “guide to bear markets” to help trustees interpret short‑term declines in the context of long‑term performance. The presenter offered to remain available for questions and to stay for the rest of the meeting.

Ending: Trustees did not take any immediate investment policy votes following the presentation; MAI said it would be available if the board wanted additional follow‑up.