Page 44 - 2024 January report

INVESTMENT COMMITTEE MINUTES (DRAFT) (4)
Investment Activity – Schedules were circulated showing JSF investment activity over the 4 months ending on October 31, 2023. In total there were 69 transactions, which is less than a normal level of activity. Private Capital transactions totaled 65. The excess of capital calls (i.e. outflows) over distributions (inflows) totaled $326,083 or $81,521 monthly, which is in line with expectations. Transactions outside the Private Capital space were minimal with the planned final redemption of Cat Rock ($1 mill) and top up to Junto ($1 mill) being the only noteworthy events. Other than for cash raising reasons to meet grant and expense requirements, transactions outside the Private Capital space are likely to remain minimal with a $1 mill top up to Farallon Capital Offshore in 2024 being the only specific outlay on the radar screen.
5. Cash Flow Forecast – As noted previously in the Asset Allocation discussion JSF will in the short term redeem $7.3 mill from three public equity funds in order to cover large year end grant funding requirements, the seasonal bulge in operating expenses, the expected net outflow in the Private Capital space, and restore the fixed income/cash balance to approximately $5 million.
6. Adage Sizing – Since JSF’s investment in 2009, Adage has grown from a roughly 6% position to 22.2% as of December 31, 2023. The increase can be credited to not only the strong performance of US equities but also Adage’s strong outperformance since inception. Per the Foundation’s Investment Policy Guidelines (IPS) the allocation to any direct manager or mandate may not exceed 20% of the market value of the Foundation’s assets without Investment Committee approval.
Deciding whether to trim the Adage portfolio weight has been a point of discussion amongst committee members. Please refer to Committee meeting minutes from June 5, 2023, item 9, which summarizes a meeting with Adage management and related observations. At that meeting “There appeared to be a Committee consensus that the current Adage exposure is not a major risk assuming their quasi index investing model and risk mitigation tools remain in place.” This remains the Committee’s view.
Prime produced data showing tracking error over the last 3 and 5 years for various JSF managers. To no one’s surprise Adage has historically maintained a very low tracking error to its benchmark, the S&P 500, given its quasi index investing model. Given this background, the Committee believes the 20% limit rule should not apply to Adage. The Committee passed a motion to this effect. The Committee asked Prime to put together wording to reflect this modification to the 20% rule in the IPS. The statement should indicate that tracking error for Adage should be closely followed for any evidence of material deviation from its successful investing model.
7. Enhanced OCIO Service – Prime Buchholz informed the Committee of an enhancement to their OCIO service model. They are now offering the Foundation the option to shift the burden of executing private fund subscription documents and amendments, to Prime Buchholz, as an authorized signer. This service will not result in any change in ownership of the funds in which Foundation assets are invested – assets will still be owned by the Foundation. This enhanced service is being offered at no additional fee but will require that the Foundation execute an amendment to the existing investment advisory agreement with Prime Buchholz. The Committee approved this enhancement and Prime Buchholz will be following up with the required amendment.
Next Meeting Dates (note changes)
February 14, 2024 – 10am EST – by Zoom June 11, 2024 – 9am EDT – in Boston August 15, 2024 – 10am EDT – by Zoom November 18, 2024 – 10am EST – by Zoom Adjournment – There being no more business the meeting adjourned at 9:50am.
Respectfully submitted, Hugh Brown November 30, 2023
Page 42 January Report