Investment consultant: funds surpass $20 million; trustees weigh bitcoin, real estate steps

An investment consultant reported Dec. 16 that both the Cocoa Beach fire and police pension funds finished the quarter with market values above $20 million and posted strong fiscal-year gains, and the board discussed portfolio composition, manager changes and a preliminary bitcoin allocation analysis.

Presenter Carrie said the fire fund ended the quarter at about $20.8 million and the police fund at about $20.4 million. She described a positive quarter for equities (U.S. equities up roughly 8% and the S&P 500 posting an above-par quarter) and a fiscal year in which police and fire were up roughly 12.1% and 12.3% respectively, net of fees. Carrie noted the quarter’s gains were concentrated — ‘‘about 70% of that 8% for the S and P came from those magnificent 7 names’’ — and that growth managers with limited exposure to those names (Winslow, for example) underperformed relative to the narrow market rally.

On allocation, Carrie summarized fund mixes near policy targets: roughly 52–53% domestic equity, about 16–17% international equity, 15.5% domestic fixed income, ~4% global fixed income, close to 9–10% real estate, and modest cash for benefit payments. She said the boards committed to a real-estate debt strategy (Mavic) and had requested a redemption from ASB; ASB's remaining exposure will be run off as assets are sold. Carrie also said she and staff worked with Salem to invest recent contribution-driven cash balances to reduce idle cash after Oct. 1 contributions arrived.

Trustees briefly discussed cryptocurrency exposure at the request of absent trustee Dan Pavlazio. Carrie summarized a backtest showing a hypothetical 2% allocation to bitcoin (1% from bonds, 1% from equities) tracked via an ETF would have been slightly beneficial in selected periods but raised practical concerns: "if we had taken 2%, 1 out of bonds, 1 out of equities, and put it in the Bitcoin," she said, "those numbers aren't significantly different" across some multi-period comparisons, but volatility and rebalancing (if an allocation ran from 2% to 5% or to near 0) make implementation challenging. Counsel and trustees noted the local ordinance language appears broad enough to permit board-approved investments but that the investment policy and possibly other procedures would need amendment to authorize direct or ETF crypto exposure.

The presenter also said the board’s fixed-income managers (Dodge & Cox, PIMCO Global) and select equity managers (Vanguard) contributed positively in the quarter. The consultant described a tool called Canoe being used to aggregate statements for alternative investments and said the service is used by many custodians and managers.

Carrie closed by offering to benchmark ASB against peers in coming quarters and answer additional questions; trustees asked staff to bring clarifying data on manager performance and to follow up on policy steps required for alternative allocations.

The board will revisit investment-manager benchmarking and any potential policy changes at upcoming meetings.