St. Mary’s County trustees approve active manager shifts for OPEB, consolidate fixed‑income and international holdings

The St. Mary’s County Library Board of Trustees on Dec. 16 approved a set of changes to investments held for its OPEB (other post‑employment benefits) portfolio, moving several passive allocations into active managers and consolidating small, fixed‑income and international holdings.

Trustees voted to select Fuller & Thaler as the small‑cap equity manager for the OPEB allocation, to consolidate several fixed‑income mandates into MetWest, and to fold the Schwab international and emerging‑market ETFs into the MFS International fund. Board President Jim Hanley moved each recommendation after discussion; the motions carried.

The decisions follow a presentation by Dave Saunders of Asset Strategies, who reviewed manager options and performance data pulled from the Callan database. Saunders told trustees the board had previously asked for additional candidates to consider beyond passive allocation, and he summarized differences in holdings, expense ratios and assets under management for each finalist. “The minimum purchase is one item of particular interest,” Saunders said while walking trustees through a small‑cap research packet that compared Palisades, Davenport and Fuller & Thaler. Saunders said the small‑cap allocation under consideration was about $140,000 as of Sept. 30.

Trustees discussed tradeoffs including concentration, turnover and exposure to micro‑cap stocks. Trustee John Walters questioned Palisades’ limited public disclosures and small institutional client base as shown on its Form ADV; Saunders said he believed the ADV figures lagged the manager’s recent institutional growth. Trustee Carolyn Guy said she preferred Fuller & Thaler’s broader number of holdings and longer performance record. After discussion, Hanley moved to accept Fuller & Thaler; the motion was seconded and carried.

On fixed income, Saunders presented three active core‑plus candidates and recommended consolidating the library’s short‑duration, high‑yield and Schwab US Aggregate ETF allocations into a single manager to reduce the number of discrete holdings while retaining exposure to “plus” sectors such as high yield, bank loans and non‑U.S. debt. Saunders summarized credit‑quality profiles and Morningstar ratings for Western Asset, MetWest and Loomis Sayles. Trustees favored MetWest as a more conservative core‑plus option for the library’s funds and voted to consolidate Lord Abbett short‑duration, Vanguard high‑yield and the Schwab US Aggregate ETF into MetWest.

Trustees also approved consolidating the Schwab International and Schwab Emerging Markets ETFs into the MFS International fund. Saunders’ materials showed MFS with a larger number of holdings and relatively lower turnover; several trustees cited MFS’s performance and the fund’s place in the upper‑left quadrant of return‑vs‑risk charts shown during the presentation.

Board members repeatedly emphasized the public‑meeting requirement for OPEB investment actions. Hanley noted that Maryland’s open‑meeting rules require public deliberation when public funds are being invested. No legal or regulatory citations were introduced during the discussion.

Votes at a glance

- Approve Fuller & Thaler as small‑cap manager for the OPEB allocation — Motion carried (mover: Jim Hanley; second: Carolyn Guy). - Consolidate Lord Abbett short duration, Vanguard high‑yield and Schwab US Aggregate ETF into MetWest (core‑plus) — Motion carried (mover: Jim Hanley; second: Sandy Hauenstein). - Consolidate Schwab International and Schwab Emerging Markets ETFs into MFS International — Motion carried (mover: Jim Hanley; second: Carolyn Guy).

What the board said and asked

Trustees pressed Saunders on manager concentration, micro‑cap exposure and Form ADV disclosures. "I think that's a little thin for being included on this sheet," Walters said about Palisades' ADV disclosures. Saunders said the ADV might be out of date and that Palisades had added institutional clients since the filing. Jim Hanley and others asked staff to review each recommendation individually before implementation and to limit duplicative reporting.

Next steps and context

Trustees directed staff and the investment consultant to proceed with the paperwork to implement the approved consolidations and to continue refining reports and benchmarks for the plan. Saunders said he would confirm up‑to‑date ADV and assets‑under‑management figures for Palisades and others and that the firm had already allocated some assets to certain managers. Trustees noted that the decisions would change custody and that some minimum purchase thresholds (Fuller & Thaler cited a $100,000 minimum in Saunders' packet) may apply. Saunders also said the small‑cap amount under consideration was about $140,000 as of Sept. 30.

The board’s investment votes were part of a longer agenda that included budget, personnel and facilities items; trustees said they would continue to monitor performance and report back at future meetings.

Ending

Trustees closed the investment discussion after carrying the motions and moved on to other agenda items including the fixed‑income, international and administrative matters.