Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Pension Investments topic
No spam. Unsubscribe anytime.
Palatka pension fund holds policy allocation, managers urge patience on international manager
Summary
Investment advisers told the Palatka Firefighters' Pension Board that the fund remains within policy asset-allocation ranges, reported recent negative quarterly returns driven by U.S. equities, and recommended patience with underperforming international active manager American Funds rather than an immediate reallocation.
Investment advisers told the Palatka Firefighters' Pension Board on an April-quarter review that the fund’s asset mix remains within policy limits and that recent quarterly losses were driven chiefly by U.S. equities.
Dwayne Madren of Capital City Trust reported that “all of the asset classes are within the operating range prescribed by the policy” and that the portfolio is under the plan’s 75% equity cap, with roughly 70% effective equity exposure after accounting for private real assets.
The board heard that equities lost value in the quarter — the equity sleeve down roughly 2.8% for the quarter and high-yield bonds and cash offset some losses. Madren noted cash yields of about 4.1% and said he has “a little bit of cash because equities have been expensive,” and that some cash was deployed on March 10.
A second adviser presenting quarterly performance said the market contraction in late winter was largely driven by a short, steep selloff in response to tariff announcements and that the subsequent delay of tariff actions pushed markets back up. The presenter reported that, year to date through late April, U.S. equities remained negative while international and fixed-income allocations outperformed; developed international markets were up about 16.3% year to date through the prior Friday in the presenter’s figures.
The advisers reviewed longer-term performance as well: five-year annualized returns on the equity sleeve were cited at roughly 12% (stocks 13.2%), and the plan’s five-year aggregate earnings were characterized as strong relative to actuarial assumptions.
On manager-level performance, the board was asked to be patient with the American Funds EuroPacific fund, which underperformed for the quarter. The presenter said American Funds has underperformed since 2020 but “if you look at the previous two decades… they were one of the best performing international managers,” and recommended monitoring quarter by quarter rather than immediately moving more assets into index funds.
After questions from trustees, a motion to accept the Capital City Trust report and the PCA report was made and the board voted to accept the advisers’ reports. Board discussion included allocation targets (gold bars on the handout) and a note that the portfolio was slightly underweight U.S. large cap, overweight fixed income and cash — positions that helped in the recent volatile quarter.
Board members pressed advisers about the risks from trade-policy uncertainty and the concentration of large-cap technology names in the S&P 500. The advisers reiterated their current posture: maintain policy allocations, keep cash available to deploy on meaningful equity weakness, and monitor active managers’ performance on a quarterly basis.
The board will continue quarterly monitoring of manager performance and asset allocation and asked staff and advisers to bring any recommendation to reallocate if a manager again materially misses benchmark performance for another quarter.
