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Investment manager reports quarterly gains for borough pension plans, discusses small crypto allocation option
Summary
An outside investment presenter told Franklin Park council members the borough—mployee pension plans are up about 3% year-to-date in May and just over 4% as of a recent day; he said international equities, a weaker dollar and exposure to gold miners helped performance and described a cautious, limited approach to adding crypto as a pension hedge.
An investment presenter identified in the meeting only as Jason told Franklin Park Borough Council members that the borough—mployee pension plans had returned a little over 3% as of May and ‘‘as of yesterday, we were up, a little bit over 4% for each net of all fees.’'
The presenter said the portfolio outperformance this year owed to higher non-U.S. equity allocations, a weaker U.S. dollar and gains in gold and gold-mining stocks, while fixed-income allocations were conservative. He noted specific plan movements: ‘‘The police plan is up another $66,000 this month. The general employees is up another 22 [thousand],’’ and added that international equity exposure was ‘‘up around 15%, year to date.’'
Why it matters: the pension plans pay retirement benefits for borough employees; periodic performance updates help council members weigh risk, funding status and any potential policy changes for asset allocation. Members asked about how alternative assets might fit in and whether the plans should consider small allocations to cryptocurrencies.
Details of the presentation: Jason described a multi-asset approach that includes international equities, real assets (infrastructure, farmland, timberland), a manager holding high-quality global stocks and a modest exposure to gold bullion and miners. He said international equities benefited from dividend yields and some central-bank rate easing overseas, and that a declining U.S. dollar amplified international returns. He also outlined why the dollar nd U.S. Treasury dynamics can affect portfolio construction, referencing the U.S. national debt figure mentioned during the discussion: $37,000,000,000,000.
On cryptocurrencies, Jason characterized the debate within the investment committee as mixed and said some large institutions have taken small positions. He described a potential pension allocation of roughly ‘‘2 to 3%’’ as a hedge, and used the borough—xamples to illustrate scale: ‘‘With the police plans approaching $10,000,000, a 3% position in that portfolio is roughly 300,000. If we lost that, if Bitcoin magically went to 0, I could tell you that the 300 basis points, it would hurt performance for a year or 2, but it would really kind of chug along.’'
Council questions and next steps: council members asked about alternative assets committees and how crypto would correlate with other growth exposures; Jason said bitcoin has tracked like a levered growth trade in some recent periods but that its historical record is still limited. No formal change to investment policy or allocation was adopted during the meeting; Jason opened the floor for questions and the council reserved any formal action for follow-up meetings.
Ending: council members received the update and asked staff and counsel to bring back any formal policy proposals if the council wishes to consider changes to the plans llocation or to add explicit guardrails for alternative assets.
