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HomeMy WebLinkAboutAgenda - Pension Advisory Committee - 10/22/2024 _____________________________________________________________________________________ Pension Advisory Committee (PAC) Quarterly Meeting Tuesday, October 22, 2024 2:00 p.m. City Hall Conference Room 301, 180 Market Street Attend Virtually: https://meet.goto.com/SouthBurlingtonVT/pensionadvisorymeeting10-22-2024 You can also dial in using your phone (571) 317-3122 Access Code: 226-852-613 A G E N D A ______________________________________________________________________________ 1) Welcome & Introductions 2) Additions, deletions, or changes to agenda 3) *** Approve prior meeting minutes from July 23, 2024 Meeting 4) ***SEI review of Q3 Net Performance Report. • General overview of the investment plan and status of asset allocation • Cash flow overview over the past five calendar years and since inception 5) South Burlington pension plan overview– Erik Schait, Newport Group 6) Other business 7) Next scheduled meeting- Tuesday January21, 2025 at 2pm 8) Adjourn _____________________________________________________________________________________ Pension Advisory Committee (PAC) Quarterly Meeting Tuesday, July 23, 2024, 2:00 p.m. City Hall Conference Room 301, 180 Market Street MINUTES ______________________________________________________________________________ Attendees: Martha Machar, Steve Locke, Daisy Brayton, Dan Chappell, John Waite, Maddie Sousa, Spencer Baker, Tim Barrit, Mike Scanlan and . Absent: Jason Morin and Brad Dattilio 1) Welcome & Introductions – Meeting called to order at 2:00 p.m. 2) Additions, deletions, or changes to agenda – None, agenda approved. 3) *** Approve prior meeting minutes from April 23, 2024. – No changes, minutes approved. 4) *** SEI Review of Q2 Net Performance Report – Positive across the board. As interest rates reset – positive across the board. Overall strong investment results. Everything is within target. John Waite – What does it look like to de-risk the pension fund? Looking at assets and liabilities, the market value of assets = 43MM, Acturalrial value of asset = $44.2MM and Actuarial Accrued Liability = $50.5MM. The valuation rate = 7.25% Liabilities are estimated growth at 3.4% and benefit payments/assets at 6.6%. It is premature to look at de-risking the plan. We are not completely out of line, we don’t want to seek more risk. Current portfolio has a total return enhancement at 68. Equity is very well diversified. He is very comfortable with our current portfolio. Current portfolio expected short term return distribution is at 7.1%. Market value projections in the next 10 years, current portfolio = $63.9MM. His recommendation would be to stay the course. The committee agreed. De-risking potential – consider funding policy, assume fund maintains current return/risk level in the short term and as fund approaches 100% we will want to talk more about how to de-risk the plan. Public Plan de-risking – once we get to 100% funded, we will want to consider portfolio A and begin the de-risking process. De-risking will be in small steps. 5) Update on Newport Group joining Ascensus – Erik Schait Nothing has changed from Newport to Ascensus. No change in anything else. Martha will get the updated census to Erik in the next few weeks. 6) Other business – no other business. 7) Next scheduled meeting- October 22, 2024, at 2pm. 8) Adjourn – meeting was adjourned at 3:20 p.m. For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI. Dan Cappell, CAIA dcappell@seic.com OCIO partnership reviewThird Quarter 2024 October 22, 2024 City of South Burlington For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.2©2024 SEI Agenda •Executive Summary •Market & Economic Review •Portfolio Review •Appendix For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.3©2024 SEI Please refer to the important disclosures accompanying your portfolio performance in this presentation for information on performance calculations. Executive summary Equities:Equities returned 7.75% in Q3. The equities market was positive across the board, despite some volatility. Large-cap sector broadened out, as rate-sensitive and cyclical industries broadly outperformed, while tech-focused sectors took a breather. U.S. small caps posted an impressive rebound. Fixed Income: Fixed income returned 4.86% in Q3. Bond markets benefitted from the start of central banks’ rate cutting cycles, leading to strong returns across core, inflation-linked and long-duration bonds. High Yield and Emerging Markets debt also displayed positive performance. Alternatives:This marks the seventh consecutive quarter of negative return in the private U.S. real-estate market, however it is worth noting that the overall magnitude of negative return is abating and appears to be flattening when compared to the selloffs of prior quarters. Additionally, we saw some sectors produce positive return during the quarter. Q3 Manager Changes: No changes. As of:9/30/2024 net of fees Market Value 3 Month Return FYTD Return 1 Year Return 3 Year Return 5 Year Return Since Inception Return (10/31/16)City of SouthBurlington $48.5M 5.85%5.85%20.63%4.97%8.41%7.34% 0%10%20%30%40% Commodities Inflation-Linked Emerging Markets Debt High Yield Bonds Long Duration Fixed Income Core Fixed Income Emerging Markets Equity World Equity x US U.S. Small Cap U.S. Large Cap Financial Markets Review One Year 2024 Q3 For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.4©2024 SEI Sources: SEI. These are the views and opinions of SEI which are subject to change. They should not be construed as investment advice. Source: SEI Forward document dated Third Quarter, 2024. Third quarter market observations & summary views Summary Views Macro/Cross-asset •We expect inflation to remain stubbornly high and above central bank targets, particularly in the U.S., so the U.S. easing cycle will likely disappoint dovish market expectations.•Government bond supply should continue to put upward pressure on interest rates.•Volatility is back in equity market.•Commodities should receive a boost from China stimulus. Equity •Diversity in equity markets, particularly in capitalizations and countries, remains an emphasis.•We maintain strategic holdings in Value, Quality, Momentum factors, with an emphasis on Value.•Active management should benefit from reflation, particularly in U.S. large caps.•China finally delivered stimulus. We remain cautious but optimistic. Fixed income •Higher 10-year yields in the U.S. are likely.•We remain defensively positioned in credit, favoring securitized versus corporate debt. Observations •Global Equity Markets were supported by monetary policy and stimulus measures across major economies •A 50bp reduction in the US Fed overnight rate helped to end a two-year-long yield curve inversion Notables for the quarter •Chinese equities +22% in 3Q: China bounces on stimulus measure dubbed the “policy bazooka”. •Equal-weighted U.S. equities up nearly 10%: Starting to see breadth among U.S. equities. •U.S. 10-Year Treasury yield at 3.75%: after starting the year at 4.50%. For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI. Sub Advisor Update For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.6©2024 SEI SEI Core Fixed Income: Western Asset Management The Background: •Western disclosed that Ken Leech Co-CIO has taken an immediate leave of absence in relation to a Wells notice (a notification issued by regulators to inform individuals or companies of completed investigations where infractions have been discovered) he received related to past trade allocations in treasury derivatives in select accounts Ken manages at Western. •SEI swiftly places Western on Watch, restricts new capital and engaged Western. •Western is formally Removed from SEI mutual funds. Mr. Leech's leave added to existing concerns about the development of Western’s investment strategy following the recent exit of John Bellows, former head of its broad markets team. The Benefit: •SEI has considerable global resources focused on manager selection. SEI maintains a back up list of managers for each of it’s mutual funds and portfolio construction optimizations are also conducted throughout the year to ensure an expedited change can occur if required. •SEI contracts individually with specialist managers and client assets remain at the mutual funds’ respective custodians (not commingled). This structure provides control and protection for SEI’s mutual fund shareholders.SEI clients hold shares of a mutual fund and are not invested directly with the subadvisors underneath the mutual wrapper. •SEI’s manager-of-managers structure within the mutual fund allows for SEI to terminate a subadvisor and quickly reallocate assets to one or more existing subadvisors or to a replacement subadvisor. In the traditional consultant model these types of changes can take months, if not longer. For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI. Market and economic review For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.8©2024 SEI Sources: Bloomberg, Russell, Standard & Poor’s. US Large Cap = Russell 1000 Index, US Small Cap = Russell 2000 Index. Value and Growth represented by Russell 1000 Value Index and Russell 1000 Growth Index, respectively. Sectors represented by respective S&P 500 sector indexes. As of 09/30/2024. Past performance is not a guarantee of future results. U.S. equity market review •The stock market hit a couple of air pockets at the starts of August and September before rising significantly as it became clearer that the Federal Reserve would cut rates by a half-percentage point at its mid-September meeting. •Large-cap sector performance broadened out again, as rate-sensitive and cyclical industries broadly outperformed, while tech-focused sectors took a breather after a strong second quarter. The energy sector performed worse with energy commodity prices under pressure during the quarter. •As a result of cyclical sectors outperforming and tech-oriented areas underperforming, the value style meaningfully outperformed growth in the US. -10% -5% 0% 5% 10% 15% Jun '24 Sep '24 Cu m u l a t i v e T o t a l R e t u r n QTD Domestic Equity Market Returns U.S. Large Cap (6.1%)U.S. Small Cap (9.3%) 9.4%3.2%19.4%17.2%11.6%10.7%9.7%9.0%7.8%6.1%1.7%1.6% -2.3% 27.7% 42.2%41.8%35.8%35.8%38.9% 25.2%25.3%28.1%21.7% 42.9%52.7% 0.8% Value Growth Utilities Real Estate Industrials Financials Materials Cons. Staples Cons. Disc. Healthcare Communications Technology Energy To t a l R e t u r n U.S. Large Cap Sectors Third Quarter One Year For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.9©2024 SEI Source: Bloomberg, Russell, MSCI, SEI. U.S. = Russell 3000 Total Return Index, Developed (ex-US) = MSCI World ex-U.S Net Total Return Index, Emerging = MSCI Emerging Markets Net Total Return Index, Europe = MSCI Europe Net Total Return Index, Japan = MSCI Japan Net Total Return Index, Pacific ex-Japan = MSCI Pacific Ex Japan Net Total Return Index, EMEA = MSCI Emerging Markets Europe Middle East & Africa Net Total Return Index, Latin America = MSCI EM Latin America Net Total Return Index, Asia = MSCI EM Asia Net Total Return Index.All returns in USD. As of 09/30/2024. Past performance is not a guarantee of future results. International equity market review •Equity performance broadened out globally as well. Despite a growth scare in early August, both emerging and developed market equities performed well over the third quarter. Emerging markets struggled again in early September before catching up on a surprising slew of economic stimulus and market-support measures in China. •Emerging markets were led by further outperformance in Asia. Performance in EMEA and Latin America were mixed, with headwinds from Turkey and Mexico, respectively. •Performance was positive in almost all developed markets, with only Denmark and the Netherlands posting negative returns. Hong Kong was the best-performing market thanks to China’s policy measures. -10% -5% 0% 5% 10% Jun '24 Sep '24 Cu m u l a t i v e T o t a l R e t u r n QTD International Equity Market Returns Developed (ex-U.S.) (7.8%)Emerging Markets (8.7%) 6.2%7.8%8.7%14.3%6.6%5.7%9.5%7.1%3.7% 35.2%25.0%26.1%28.2%25.2%21.6%29.7%19.2% 2.8% U.S.Developed (ex-U.S.) Emerging Pacific ex-Japan Europe Japan Asia EMEA Latin America Broad Regions Developed Regions Emerging Regions To t a l R e t u r n Regional Performance Third Quarter One Year For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.10©2024 SEI 10 Source: Bloomberg. As of 10/1/2024.Index returns are for illustrative purposes only, and do not represent actual performance of an SEI Fund. Index returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. Major equity index performance -3Q2024. •Broader participation in global equities is our key viewpoint, as performance should expand beyond a handful of names in a few sectors from one country. •The rest of the world outperforming the U.S., emerging markets outperforming developed, small-caps outperforming large, value stocks outperforming growth, and active management outperforming passive are all versions of the reflation theme we see potentially playing out for the remainder of 2024. •We are particularly confident in global value and active management in the U.S. large-cap space. -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 7/1/2024 7/31/2024 8/30/2024 9/29/2024 S&P 500 Index (Gross)Dow Jones Industrial Average NASDAQ Composite MSCI ACWI (Net)MSCI ACWI ex USA (Net)Russell 2000 Index For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.11©2024 SEI Stormy waters for the markets Source: SEI, based on data from MSCI, U.S. Bureau of Labor Statistics, Axioma and FactSet. Data as of 9/30/2024. Returns quoted in USD.Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. -5% 0% 5% 10% 15% 20% Jan Feb Mar Apr May Jun Jul Aug Sep MSCI World Index (total return) 0 100 200 300 400 Jan Feb Mar Apr May Jun Jul Aug Sep Nonfarm payroll SA, 000 190200210220230240250 Dec Jan Feb Mar Apr May Jun Jul Aug Initial unemployment claims, 000 For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.12©2024 SEI Sources: Bloomberg, JP Morgan, SEI. Option-adjusted spreads over US Treasurys US Investment Grade = Bloomberg U.S. Corporate Index, US High Yield = Bloomberg U.S. Corporate High Yield Index, and Emerging Market Debt = JP Morgan EMBI Diversified Sovereign Index. Vertical axis in U.S. Yield Curve chart shortened to enhance visibility of yield curve dynamics. As of 09/30/2024. Past performance is not a guarantee of future results. Fixed income review •Treasury yields fell dramatically in the third quarter, as markets came to expect a significant number of interest rate cuts from the Federal Reserve over the next 12 months. •US inflation and labor market dynamics could have a significant impact on the interest rate outlook in the coming months. The economic policies that come out of the US election in November could also cause markets to recalibrate the interest rate outlook. •After widening slightly in the second quarter, investment-grade and high yield credit spreads tightened meaningfully in the third, once again falling well below long-term averages. •Emerging markets debt spreads finally gained some traction, posting the lowest quarter-ending spreads of the year and falling more meaningfully below their long-term average. 2.0% 3.0% 4.0% 5.0% 6.0% 0 5 10 15 20 25 30 Yi e l d Maturity (Years) U.S. Yield Curve 9/30/2024 6/30/2024 9/30/2023 0.9% 3.0% 3.6% 0.9% 3.1% 3.9% 1.0% 3.2% 3.8% 1.2% 4.2%3.8% 0% 1% 2% 3% 4% 5% US Investment Grade US High Yield Emerging Market Debt Op t i o n -Ad j u s t e d S p r e a d Option-Adjusted Spreads 9/30/20246/30/202412/31/2310Y Average For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.13©2024 SEI 13 Source: BEA, FRB, ICE BofA, NBER, and SEI. As of September 30, 2024 (Effective Federal Funds Rate), June 30, 2024 (Real GDP), August 31, 2024 (U.S. Corporate Option-Adjusted Spread). Fed cuts typically accompany falling GDP/rising spreads •Reductions in the federal funds rate, are typically accompanied by a decline in gross domestic product (GDP) and rising credit spreads. •The latest pivot to lower rates, however, comes at a time when third-quarter GDP is tracking at roughly 3%, stock markets are at all-time highs, and credit spreads are near all-time lows. •While we are not overly concerned with a bit of monetary policy stance adjustment at this point in the cycle, inflation remains well above target, so we see a policy mistake brewing. -10 -5 0 5 10 15 19 9 7 19 9 8 19 9 9 20 0 0 20 0 1 20 0 2 20 0 3 20 0 4 20 0 5 20 0 6 20 0 7 20 0 8 20 0 9 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 Pe r c e n t Date U.S. Recession Periods Effective Federal Funds Rate Real GDP U.S. Corporate Option-Adjusted Spread For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.14©2024 SEI Alternatives Performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost, and current performance may be lower or higher than the performance quoted. For performance data current to the most recent month end, please call 1-800-DIAL-SEI. National Council of Real Estate Investment Fiduciaries (NCREIF), National Property Index Plus (NPI+) 6/30/24 Alternatives Alternatives Subsector breakdown of the NPI+Total annual returns as of Q2 2024 Market Performance by Sector NPI Index return In d u s t r i a l In d u s t r i a l In d u s t r i a l Re s i d e n t i a l Re s i d e n t i a l Re s i d e n t i a l Re t a i l Re t a i l Re t a i l Of f i c e Of f i c e Of f i c e Se l f -St o r a g e Se l f -St o r a g e Se l f -St o r a g e Li f e S c i e n c e Li f e S c i e n c e Li f e S c i e n c e Se n i o r H o u s i n g Se n i o r H o u s i n g Se n i o r H o u s i n g Me d i c a l O f f i c e Me d i c a l O f f i c e Me d i c a l O f f i c e St u d e n t H o u s i n g St u d e n t H o u s i n g St u d e n t H o u s i n g Ho t e l Ho t e l Ho t e l -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 1-Year Performance 3-Year Performance 5-Year Performance For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI. Portfolio review For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.16©2024 SEI Important information: asset valuation and portfolio returns Inception date 8/31/2013. Historical Total Index can be provided upon request. The Portfolio Return and fund performance numbers are calculated using Gross Fund Performance, using a true time-weighted performance method (prior to 6/30/2012, the Modified Dietz method of calculation was used). Gross Fund Performance reflects the effective performance of the underlying mutual funds that are selected or recommended by SIMC to implement an institutional client’s investment strategy. Gross Fund Performance does not reflect the impact of fund level management fees,fund administration or shareholder servicing fees, all of which, if applicable, are used to offset the account level investment management fees the client pays to SIMC. Gross Fund Performance does reflect certain operational expenses charged by the funds and the reinvestment of dividends and other earnings. The inclusion of the fund level expenses that the client incurs but that are offset against the client’s account level investment management fees would reduce the Gross Fund Performance of the mutual funds. For additional information about how performance is calculated, please see your monthly performance report. If applicable, alternative, property and private assets performance and valuations may be reported on a monthly or quarterly lag. Alternative, property and private assets performance is calculated gross of investment management fees and net of administrative expenses and underlying fund expenses. However: Structured Credit Fund performance is calculated gross of investment management fees and net of administrative expenses; SEI Offshore Opportunity Fund II Ltd. Class A performance is calculated net of investment management and administrative expenses; and Energy Debt Fund performance is calculated net of management fees, performance fees, as applicable, and operating expenses. Net Portfolio Returns since 6/30/12 reflect the deduction of SIMC’s investment management fee and the impact that fee had on the client’s portfolio performance. Prior to 6/30/12, Net Portfolio Returns deduct a proxy annual fee for all periods to demonstrate the impact that SIMC’s investment management fee had on the portfolio performance. However, this is a hypothetical calculation, as it does not reflect the actual fees paid by the client during the period. Please see your client invoice for actual fees paid. For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.17©2024 SEI City of South Burlington Defined Benefit Plan Portfolio summary —September 30, 2024 For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.18©2024 SEI City of South Burlington Pension Plan Cash flow summary –September 30, 2024 Last 5 fiscal years of Plan cash flows ($) 2024 2023 2022 2021 2020 Since Inception Total Contributions 1,454,140.43 1,422,939.83 1,676,500.40 1,764,516.26 1,744,340.56 15,403,145.62 Net benefit payments -2,669,529.06 -2,248,480.47 -2,077,646.09 -1,929,008.79 -1,816,071.92 -20,048,342.10 Investment Activity 4,480,333.09 4,070,378.24 -4,650,640.94 9,881,829.36 1,201,492.03 25,092,592.04 9/30/2024 Portfolio value: $48,451,137 Trust Summary Fiscal YTD ($) Contributions 58,949.74 Net benefit payments -718,824.00 Investment activity*2,771,401.44 *Per SEI Trust statement, includes income, plus realized and unrealized gains/losses. For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.19©2024 SEI Return time periods less than 12 months are cumulative, over 12 months are annualized. City of South Burlington Defined Benefit Plan Annualized investment returns —September 30, 2024 For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.20©2024 SEI Return time periods less than 12 months are cumulative, over 12 months are annualized. City of South Burlington Defined Benefit Plan Annualized investment returns —September 30, 2024 For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.21©2024 SEI City of South Burlington Defined Benefit PlanInvestment compliance verification —September 30, 2024 As of: 9/30/2024 Market Value Actual Allocation Target Allocation US Equity Factor $7,365,650 15.2%15.0% Large Cap Index Fund $6,364,612 13.1%13.0% Small Cap II Fund $1,451,565 3.0%3.0% World Equity Ex-US Fund $10,373,083 21.4%21.0% Emerging Markets Equity Fund $1,481,589 3.1%3.0% Equity $27,036,499 55.8%55.0% Core Fixed Income Fund $5,767,466 11.9%12.0% Limited Duration Fund $5,672,431 11.7%12.0% High Yield Bond Fund $1,939,006 4.0%4.0% Emerging Markets Debt Fund $1,951,825 4.0%4.0% Fixed Income $15,330,728 31.6%32.0% Dynamic Asset Allocation $2,442,453 5.0%5.0% Other $2,442,453 5.0%5.0% Core Property CIT $3,641,657 7.5%8.0% Real Estate $3,641,657 7.5%8.0% Gov't Institutional Fund $4 0.0%0.0% Cash $4 0.0%0.0% Total $48,451,341 100.0%100.0% For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI. Appendix For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.23©2024 SEI Manager changes Funds Manager Addition and Rationale Manager Termination and Rationale Small Cap II Fund ArrowMark Partners (May 2024) ArrowMark was removed from the Fund for portfolio construction reasons. This change will more closely align the Fund with SEI’s alpha sources. ArrowMark’s allocation will be redistributed among existing managers in the Fund. Emerging Markets Equity Fund KBI Global Investors (May 2024) The decision to remove KBI’s Emerging Markets Equity strategy was motivated by alpha source and portfolio construction considerations. This change enhances the Fund’s ability to manage value and quality alpha source exposures while improving the balance between risk and return through the use of high-conviction concentrated strategies. KBI’s allocation will be redistributed among the Fund’s existing managers. For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.24©2024 SEI Important information: SIMC This presentation is provided by SEI Investments Management Corporation (SIMC), a registered investment adviser and wholly owned subsidiary of SEI Investments Company. The material included herein is based on the views of SIMC. Statements that are not factual in nature, including opinions, projections and estimates, assume certain economic conditions and industry developments and constitute only current opinions that are subject to change without notice. Nothing herein is intended to be a forecast of future events, or a guarantee of future results. This presentation should not be relied upon by the reader as research or investment advice (unless SIMC has otherwise separately entered into a written agreement for the provision of investment advice). There are risks involved with investing including loss of principal. There is no assurance that the objectives of any strategy or fund will be achieved or will be successful. No investment strategy, including diversification, can protect against market risk or loss. Current and future portfolio holdings are subject to risk. Past performance does not guarantee future results. For those SEI funds which employ a “manager of managers” structure, SIMC is responsible for overseeing the sub-advisers and recommending their hiring, termination, and replacement. References to specific securities, if any, are provided solely to illustrate SIMC’s investment advisory services and do not constitute an offer or recommendation to buy, sell or hold such securities. Any presentation of gross mutual fund performance of underlying mutual fund investments or gross account level performance is only intended for one-on-one presentations with clients and may not be duplicated in any form by any means or redistributed without SIMC’s prior written consent. Annual performance is calculated based on monthly return streams, geometrically linked as of the end of the specified month end. Performance results do not reflect the effect of certain account level advisory fees. The inclusion of such fees would reduce account level performance, particularly when compounded over a period of years. The following hypothetical illustration shows the compound effect fees have on investment return: For an account charged 1% with a stated annual return of 10%, the net total return before taxes would be reduced from 10% to 9%. A ten year investment of $100,000 at 10% would grow to $259,374, and at 9%,to $236,736 before taxes. For a complete description of all fees and expenses, please refer to SIMC’s Form ADV Part 2A, the investment management agreement between SIMC and each client,and quarterly client invoices. Certain economic and market information contained herein has been obtained from published sources prepared by other parties, which in certain cases have not been updated through the date hereof. While such sources are believed to be reliable, neither SEI nor its affiliates assumes any responsibility for the accuracy or completeness of such information and such information has not been independently verified by SEI. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs, or expenses, which would reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Any presentation of gross mutual fund performance of underlying mutual fund investments or gross account level performance is only intended for one-on-one presentations with clients and may not be duplicated in any form by any means or redistributed without SIMC’s prior written consent. For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.25©2024 SEI Important information: collective trust funds As identified in the presentation, certain funds are collective trust funds, not mutual funds. A collective trust fund is an investment fund that is maintained by a bank or trust company for the collective investment of qualified retirement plans and governmental plans, and that is exempt from SEC registration as an investment company under Section 3(c)(11) of the Investment Company Act of 1940. Collective trust funds eliminate many of the administrative costs associated with institutional and retail mutual funds. For more information on the collective trust funds, including fees and expenses, please read the disclosure document for the trust. There is no guarantee that the investment objective will be fulfilled. If the fund is a target date fund, the principal balance of the portfolio may be depleted prior to a portfolio’s target end-date and, therefore, distributions may end earlier than expected. This risk increases if the distribution amount chosen is a significant portion of the starting principal. The target date represents the respective date when an investor intends to retire. Principal of any target date fund is not guaranteed at any time, including the target date. The projected time periods do not take into account the payment of fees to the advisor out of the portfolio or any other additional distribution from the account. For those SEI collective trust funds that may be held in the account, the SEI collective trust fund is part of a Collective Investment Trust (the "Trust") operated by SEI Trust Company (“STC”). STC manages the Trust based on the advice of one or more third party managers, which may include SIMC. Additionally, STC serves as the trustee of the collective trust funds and maintains ultimate fiduciary authority over the management of, and the investments made, in the funds. STC is also a wholly owned subsidiary of SEI Investments Company. For existing institutional investor client use only. Not for public distribution. The information contained herein is confidential and proprietary to SEI and is not to be reproduced or made available in any form to any persons without the express prior writtenconsent of SEI or as permitted by the investment management agreement between the institutional investor and SEI.26©2024 SEI Thank you.