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Retirement board told portfolio held up in turbulent quarter; advisers warn more volatility likely
Summary
Graystone advisers told Portsmouthretirement trustees the planportfolio was near policy targets after a volatile first quarter, reporting a net return of about -0.07% vs. a benchmark loss of 0.52%; advisers said tariffs and trade uncertainty make continued volatility likely.
Brian (Graystone presenter) told the Portsmouth Retirement Board that the plan—s investment mix was "effectively spot on our investment policy targets" at the end of the first quarter and that the portfolio returned slightly under flat, "we were down 7 basis points, for the first quarter," net of all fees.
The board heard that the plan—s policy targets remain roughly 70% equities, about 22% fixed income and 8% alternatives. Brian said U.S. equity volatility drove most of the quarter—s moves: "For the full quarter, the S and P was down about 4%," while non-U.S. developed markets were positive and helped mitigate the impact because roughly 35% of the plan—s equity exposure is outside the United States.
Jim (Graystone presenter) and Brian both framed the recent market swings around the administration—s tariff announcements and investors— reaction. Brian noted extreme intra-month moves in April: "The April, the S and P was down 14%. And really since the lows on, April 7, the market rallied over 15%." Jim said that policy uncertainty and the tariff shock had driven consumer and business confidence sharply lower and raised the odds of a recession: "Our recession odds are now at 40%, and stagflation ... is at 30%."
Advisers pointed to active manager selection and portfolio construction as the reason the plan outperformed its benchmark in the quarter. Brian highlighted several managers by name, saying a global-quality mandate (GQG Partners) was defensively positioned in utilities and wireless carriers and outperformed, and that some emerging-market and small-cap managers also added value relative to their benchmarks. He said two hedge-fund managers generated returns “in the 1 and a half to 2% kind of range," which beat hedge funds more broadly in the quarter.
Board members asked whether advisers expected more volatility and whether tactical changes were likely. Jim and Brian said they expect ongoing volatility while trade negotiations remain unresolved and said the investment policy—s strategic targets would not be abandoned: "The 1 thing you will not see is ... significant changes to what the long term strategy is," Brian said, noting the policy allows modest tactical tilts but not wholesale shifts in the long-term allocation.
No formal board action was taken on portfolio policy during the meeting; advisers described liquidity and sources they would use for tactical buys (fixed-income sleeves) but did not propose immediate trades for formal approval.
The presentation included detailed manager- and holdings-level slides; advisers offered to provide additional data on request.
