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Police pension board hears AI‑driven gains, consultants warn to watch allocations
Summary
Consultants told the City of Placa Police Officers Retirement Plan board that the fund recovered from a March drawdown and is now up roughly 7–9% since quarter end, with much of the gain concentrated in technology and AI‑related stocks; managers said equities are overweight while private real estate remains slightly under target.
Dwayne Madran of Capital City Trust told the City of Placa Police Officers Retirement Plan board on May 26 that all asset classes were within the plan's policy ranges but that equities were currently overweight and private real estate slightly underweight. "This is the lowest it's ever been since I've been managing the account," Madran said of cash levels after he deployed about $200,000 in March, a move he credited with helping the strong April performance.
Madran said year‑to‑date returns through April were about 9.8% and that equities have been the primary driver. He walked directors through charts showing that artificial intelligence and related infrastructure were responsible for a large share of recent S&P 500 earnings‑per‑share growth: "It's predicted to be 39% of the growth will come from AI infrastructure," he said.
BCA's presenter, Mr. Brennan, expanded on market drivers and timing. He said the first quarter reflected a March sell‑off tied to the Iran conflict but that markets rotated back into a risk‑on stance since quarter end. "Since quarter end, your plan is likely up somewhere between seven and eight% quarter to date," Brennan said, adding that a small group of large technology names led the rebound.
Both presenters flagged risk. Madran noted bonds had been underweight but said he had moved them closer to 20% from a mid‑teens level; Brennan described pockets of overvaluation in AI and semiconductor names and said some sectors showed bubble‑like moves even as the broader market advanced. He also outlined inflation and energy‑price risks, noting International Energy Agency plans to release 400 million barrels as a temporary offset to supply disruptions.
Board members asked clarifying questions about valuation, overweight positions and whether to rebalance; consultants recommended no immediate wholesale rebalancing but said they would consider taking profits into private real assets if equities continued their run. The board voted to accept the Capital City Trust and BCA reports as presented.
The board's next regular meeting will provide another opportunity to revisit allocations if market leadership shifts.
