1. JSSA Endowment Portfolio Update
August 3, 2017
Joseph I. Rosenberg, CFA
Investment Committee Chair

2. How is Endowment Now Invested? (estimated 6/30 balances in $1000)

4. Performance v. Objectives 3/31/2017 (6/30/2017 final Q2 performance not available until late August)

5. Market Review/Portfolio Update (Quick)
Market Update:
US stocks (S&P 500) has been hitting record highs
Expensive: P/E Ratio = 24.4 (WSJ, trailing 12 mo; Long Term Avg ~14)
YTD thru 7-21, total return of 11.7%
Int’l stocks have better total return than US YTD thru June:
(13.8% EAFE; 18.4% EM; 9.4%; 9.3% US/S&P 500)
Inflation running about 2.25% (Jan-June ‘17 – ’16)
10 Year Treasury closed at 2.24% on 7-21, in trading range of % all year; future rises should be gradual
Same bond outlook, i.e., expected slow rise in yields, little upside potential, but we manage our fixed income position to limit interest rate risk (e.g., lower than benchmark)
Portfolio Update (Quick):
In FY’18, request made for $2 mil. from endowment to fund operations
Inv’t Com. agreed to begin w/ $750K in July-Sep withdrawals from one hedge fund that is being liquidated. Replacement within “alts” will be made via a mutual fund with hedge-like qualities but w/ daily liquidity

6. Primary Issue to Discuss: Timing of New RFP for Portfolio Advisor
Current Advisor: Graystone Consulting (Morgan Stanley’s Institutional Advisory business);
Jim Meek’s Graystone won competitive evaluation among 11 RFP recipients in 2009;
Overall performance has been mixed, but good in some ways;
Have exceeded 2 of 3 performance objectives (CPI + 6%; T-bill + 5%);
But, for 3rd objective, have trailed composite benchmark by ~ 80 bp since inception. This was mainly due to uneven but subpar active US equity managers. For domestic equities, have switched to passive management
Have provided useful market insights and tactical weightings among asset classes that have improve returns, other things being equal;
Former CFO considered their operational support to JSSA as excellent. Carrie should opine on her own experience
In any case, due diligence suggests that its time to issue a new RFP
Last RFP issued in April 2008; whole process took about a year

7. Suggested Scope of Work Specified in RFP for Portfolio Advisor
Suggest scope of work broken into two distinct parts
Perform initial Investment Advisory functions (this page)
Ongoing functions (next page)
Perform initial Investment Advisory functions:
Assist in review and update of Investment Policy Statement (IPS);
Establish criteria for measuring overall portfolio performance, especially benchmarks, risk v. return, and agency spending needs;
Establish agreed upon initial asset allocation & target ranges to meet above criteria;
Identify & select individual portfolio managers (active & passive)
Establish criteria for evaluating Portfolio Advisor’s performance, as well as that of individual (mainly active) portfolio managers

8. Suggested Scope of Work Specified in RFP for Portfolio Advisor (cont.)
Ongoing functions:
Prepare & present quarterly reports covering portfolio performance & account reviews, integrating all JSSA funds held by Advisor;
Present findings and make recommendations at periodic (usually quarterly) meetings;
Oversee portfolio manager accounts (mainly active ones), including performance monitoring; recommending manager changes; disbursing fees to managers, and billing JSSA;
Clearing of JSSA trades, and being custodian of the Endowment, Liquidity and any other components of total JSSA funds held by Advisor

9. Tasks and Responsibilities for Issuing RFP, Evaluating Proposals, and Selecting Advisor
Write RFP cover letter with high level Scope of Work (can update last one from 2008)
Prepare detailed questionnaire for RFP respondents, in order to achieve relative comparability among responses for evaluation (again, can update last one)
Decide who will be on Proposal Review and Advisor Selection Team? Need commitment of adequate time and level of participation to be involved in entire review & selection process (do not underestimate time required)
Establish realistic time frame for making final selection