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Investment manager says long-term outlook intact despite 2025 volatility
Summary
PFM advised the committee that the district's moderate (50/50) portfolio has seen short-term losses but remains aligned with a long-term return expectation; the manager recommended focusing on long horizons rather than daily market moves.
Dennis Mullins, senior portfolio manager for PFM Asset Management, told the finance committee that recent market volatility has depressed year-to-date returns but that the portfolio's long-term outlook remains intact.
"We're very long term strategic investors," Mullins said during his presentation, adding that the shortest forecast PFM publishes is five years. He estimated the district's moderate strategy (roughly 50% equities, 50% bonds) could be down around 5% year-to-date based on market moves discussed in the meeting.
Mullins reviewed holdings, calendar-year and multi-year returns and the rationale for maintaining a diversified allocation. He noted that in 2025 the bond portion of diversified portfolios has helped cushion losses in equities and reiterated the firm's long-run equity return expectation of about 7% per year and a combined portfolio return expectation in the 5% range.
