Page 43 - 2024 July report

INVESTMENT COMMITTEE MEETING MINUTES (3)
The story in the Private Capital space is the exact opposite to that in the Public Market space. Private capital, which at a 24.3% weight constitutes the second largest component of the JSF portfolio. JSF’s Private Capital portfolio (which totals $65 mill involving about 50 different funds) is managed by Prime on a discretionary basis (since late 2019). Over the last year (2023) JSF’s Private Capital portfolio generated a 0.5% return, which is below the Private Capital Composite Index return of 3.2% and way below its target rate of return of global public equity markets plus 3% or 26.9%. This situation is not totally surprising given the exceptional returns generated by Private Capital in 2020 and 2021 (see Table 2) and the tendency for Private Capital returns to lag on the way up (and down) market cycles. In addition, JSF is heavily overweight in the Venture Capital space where returns have been depressed recently.
Table 2
JSF Investment Returns (net of fees)
May 31, 2024 Weightings
Actual Target*
100.0% 100.0% 53.2% 47.5% 24.5% 30.0% 12.5% 10.0%
9.8% 12.5%
2019
17.7% 25.8% 10.8% 9.5% 3.9%
2020
14.7% 13.6% 24.9% 17.7% 0.3%
2021 2022 2023
2024 Q1
Total JSF Fund
Public Equities
Private Capital
Hedge Funds
21.3% -13.1% 12.0% 5.0% 18.1% -15.8% 21.3% 8.8% 54.0% -11.2% 0.4% 0.1%
4.7% -3.9% 8.1% 3.6% -2.7% -13.7% 3.5% -1.0
Fixed Income & Cash *Subject to board approval
Returns in the Flexible Capital (12.5% weight) and Fixed Income/Cash (9.8% weight) spaces at 9.9% and -1.0% respectively over the last year were in line with expectations.
3. Updated Performance in the 2024 Second Quarter – As of June 11, 2024 the year-to-date JSF portfolio return is 6%. Weakness in April has been more than offset by solid gains in May and June. With US interest rates expected to start declining later in the year and the expectation for corporate earnings growth to accelerate outside the tech sector as the year progresses the odds appear good that JSF will be able to exceed its target rate of return of 7.5% in 2024.
4. Investment Policy Statement (IPS) Revisions/Adage Sizing/New Private Capital Asset Allocation Target – The Committee decided to not make specific reference to the Adage sizing exception to the 20% limit restriction in the IPS. The Committee has already passed a motion (on Nov 16, 2023), following consultation with Prime, allowing the Adage portfolio weighting to exceed 20%. The Committee shall evaluate this policy exception at least annually.
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