Board adopts 1% cash allocation; Marquette reports portfolio gains since March funding

Trustees at the Board of Trustees meeting approved an amendment to the board’s investment policy to allow a 1% cash allocation and heard a market and portfolio review from Tim Burdick of Marquette Associates.

The chair introduced the amendment on the investment policy (tab 2 of the packet), which records a reallocation from U.S. fixed income to cash. Trustee 4 moved to approve the amendment; Trustee 3 seconded, and the board adopted the change by voice vote. The chair also directed trustees to the tracked changes in the draft showing the reallocation.

In the presentation that followed, Burdick summarized recent market conditions and the board portfolio’s performance. "I have pretty much nothing but good news," he told trustees, noting broad positive returns year-to-date across major indexes and a strong third quarter for bonds after the Federal Reserve’s 50-basis-point cut. He said the portfolio is "about 97 and a half percent allocated at this point," following the board’s implementation schedule.

Burdick gave specific figures: net cash flow into the portfolio since March was reported at $63,100,000; realized and unrealized investment earnings over the recent period were about $3,700,000, which he said equates to a 6.1% return since inception of the newly funded portfolio. Monthly and quarterly returns shown in the packet included 1.4% for September and 4.2% for the third quarter. He also reported manager fees at an annualized 35 basis points and an all-in fee (including Marquette and the custodian) of 57 basis points as of September.

He reviewed allocation details: roughly 68.9% of the portfolio is next-day liquid, about 15% monthly, with remaining allocations less liquid (private debt and other alternatives). He explained one private-debt manager (Golub) is underweight because capital calls are being made at the manager’s discretion and will normalize when additional calls occur; Baird was marked slightly overweight on a percentage basis but can be adjusted by selling liquid holdings.

Burdick introduced a parametric manager as a hedge-fund alternative in the portfolio’s alternatives sleeve. He described the strategy as a systematic mix of T-bills and S&P exposure plus an option-writing overlay intended to collect a premium (pricing options so roughly 85% expire out of the money). He said the product is designed for modest additional return with controlled downside and lower fees (he cited ~29 basis points for the parametric solution) and monthly liquidity.

Trustees asked clarifying questions about how the parametric strategy is classified in the policy (Burdick said it fits in the alternative sleeve), the average tenure of option positions (he said mostly 90 days), and how the program trades off upside for risk control. Burdick cautioned that short-term red/green manager performance indicators can be noisy and that managers should be judged over longer horizons.

The board’s formal actions during the meeting included approval of the prior meeting minutes and adoption of the investment policy amendment to permit the 1% cash allocation. The chair closed the item and the meeting moved on to the grant-process update. The board discussed scheduling a follow-up meeting in January or February to receive the next Marquette report following Q4.