The St. Mary's County Retirement Benefits Trust voted June 27 to restructure its U.S. equity allocation to increase mid-cap exposure and adopt a new small-cap value manager. The board approved staff's recommendations as presented on page 27 of the meeting materials, including a swap of the current Schwab S&P 500 large-cap index exposure into an index intended to track the Russell 1000 and the appointment of Vanguard's small-cap value index fund as the new small-cap value manager.

Consultant Patrick Wing summarized the rationale: the trust was modestly overweight large caps and underweight mid caps relative to the policy benchmark. Staff recommended replacing the Schwab S&P 500 holding (a large-cap index) with a Russell 1000 index exposure to move incremental weight from the largest-cap stocks into the 501'1,000 range, thereby increasing mid-cap exposure without taking additional active manager risk. Wing reviewed three small-cap value options'Boston Partners, Kennedy, and Vanguard'and described Vanguard's index construction (CRSP US small-cap value methodology) as providing higher mid-cap tilt, lower fees, and better downside protection in certain down markets.

The implementation plan discussed during the meeting included manager and allocation changes summarized by staff: full liquidation of the Schwab S&P 500 position into the Vanguard Russell 1000 exposure; full liquidation of William Blair (a manager the consultant said had been on watch for underperformance); replacement of the trust's current small-cap value manager with Vanguard small-cap value; and adjustments in other portfolios to rebalance toward fixed income and cash as needed. The consultant presented numeric rebalancing targets and illustrative dollar movements in the packet; staff warned that exact dollar proceeds from liquidations will vary between the presentation and implementation because market prices change between report preparation and trade execution.

During discussion trustees asked about timing and implementation risk. Wing said there is no perfect timing and that rebalancing now would be consistent with selling an overweighted segment after a period of relative outperformance. Trustees asked about William Blair's performance history (in place since March 2021) and staff confirmed the manager had been on watch for performance issues and could be replaced now.

Motion and vote: Vanetta Van Cleve moved to approve the proposed changes as presented on page 27, noting the new small-cap value manager would be the Vanguard small-cap value fund; John Walters seconded. Chairman David Weiskopf called the vote; members signified approval and the motion carried.

Post-vote instructions: staff and the plan administrator (Joy Sapp) will carry out liquidations and transfers consistent with the approved plan, with final settlement amounts and exact cash positions to be reported back to the board once trades settle. Wing and staff also recommended trimming recent non-U.S. equity gains (two $500,000 reductions from WCM and Dodge & Cox in the packet) and reallocating proceeds into fixed-income managers (example target amounts in the packet included transfers to Reams and Loomis) to move the portfolio closer to its formal targets.

The vote concluded a substantive portfolio change intended to increase mid-cap exposure, reduce fees in the small-cap value sleeve, and realign allocations to policy targets.