Ohio Police & Fire Pension Fund MINUTES. Board of Trustees Investment Committee/Board 140 East Town Street, Columbus, Ohio August 23, 2017

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1 Call to Order: The meeting was called to order at 9:00am. In Attendance: Committee Members/Trustees: Deighton, Desmond, Heller, Maloney Stifler, Montgomery, C. Moore, Patton, Wainscott and J. Moore Staff: Abankwah, Bader, Eichhorn, Foley, Gallagher, Gatewood, Graham, Hall, Hampton, Harville, Holodnak, Jordan, Luke, McElroy, Miller, Rankin, Robinson, T. Seward, Sparks and Weston. Others Present: Aaron Shapiro and Paul Wilkinson, Conduent; Jeffery Bernard and Ali Yogmour, ORSC; John Danish, Assistant Attorney General; David Lindberg and Felicia Bennett of Wilshire Associates; Matt Coyne and Michelle Davidson from TorreyCove Capital Partners AGENDA ITEM 1: Nomination of Vice Chair Position - In accordance with OP&F s Board Governance Policy, every year the Board of Trustees shall hold nominations and elections for the Vice Chair position. The Vice Chair shall be nominated from the retiree members of the Board. A Board trustee must have served at least one full year as a member of the Board to be eligible for election to an officer position. Mr. J. Moore moved and Mr. Patton seconded a motion to nominate John Wainscott as Vice Chair of the Ohio Police & Fire Pension Fund Board of Trustees. The motion passed with the roll call vote as follows: AGENDA ITEM 2: 5 Year Review of Assumptions - Mr. Aaron Shapiro and Mr. Paul Wilkinson, Conduent reviewed Ohio Police & Fire Pension Fund s census information related to our membership and financial statements for the 5-year period ending December 31, Based on their experience they made recommendations matching assumptions and actuarial methods best suited for OP&F. Any assumptions approved from this study will be used in the calculation of our annual valuation for January 1, Conduent recommended the following changes: Investment return 8.00%. Salary Increase 3.75% Payroll Growth 3.25%

2 After significant discussion the Board of Trustees asked Conduent to use OP&F s current asset to calculate assumptions to further discussion on September 26, INVESTMENT COMMITTEE/BOARD 11:20 am. ITEM A: Monthly Portfolio Valuation Update Mr. Hall provided an update on the OP&F investment portfolio. OP&F s total investment portfolio value ended July 2017 at $15.28 billion with an estimated return of 8.44% year-to-date. ITEM B: 2 nd Qtr Performance Review Wilshire presented the Executive Summary of Investment Performance for periods ended June 30, 2017 and the Private Equity and Private Credit Program Performance Analysis. ITEM C: OP&F Performance Analysis (Actual vs. Expected) Wilshire provided their review of historical 10 year asset class and total portfolio return assumptions versus subsequent actual returns as of December 31, ITEM D: Total Fund Policy Benchmark Implementation Plan IC Wilshire presented their recommendation to update the implementation plan for moving the fund assets from their current allocation to one that reflects the long term asset allocation policy adopted in June The changes reflect the recommended asset allocation transition while adjusting the fund s risk profile to one that more closely matches the adopted policy s risk profile over a threeyear implementation period, systematically reducing tracking error over time. Ms. Maloney Stifler moved and Mr. Patton seconded a motion that the Board adopts the Total Fund Policy Implementation Plan and forward looking changes to the Total Fund Policy Benchmark detailed on page 3 of the Wilshire Associates Implementation Plan and Benchmark Transition document dated August 24, The motion passed with the roll call vote as follows: ITEM G: Private Markets Manager Reviews IC Ms. Weston recommended the following rating actions: Advent International Board voted to maintain a rating of P1 ; Altaris Capital Partners, LLC Board voted to assign an initial rating of P1 ; Apollo Management Board voted to assign an initial rating of P1 ; Blackstone Management Partners Board voted to maintain a rating of P1 ; Cinven Limited Board voted to maintain a rating of P1 ; EQT Partners, Inc. Board voted to maintain a rating of P1 ; Francisco Partners Management, LP Board voted to maintain a rating of P1 ; Glendon Capital Management, LP Board voted to maintain a rating of P1 ; GTCR LLC Board voted to maitian a rating of P1 ; Harvest Partners, LP Board voted to maintain and rating of P1 ; The Jordan Company, LP Board voted to maintain a rating of P1 ; Kohlberg Kravis Roberts & Co, LP Board 2

3 voted to assign an initial rating of P1 ; Leonard Green & Partners, LP Board voted to maintain a rating of P1 ; Marlin Management, Inc. Board voted to assign an initial rating of P1 ; MBK Management, Inc. Board voted to assign an initial rating of P1 ; NGP Energy Capital Management, LLC Board voted to maintain a rating of P1 ; Rhône Group LLC Board voted to maintain a rating of P1 ; RRJ Management LTD Board voted to maintain a rating of P1 ; Stone Point Capital Board voted to assign an initial rating of P1 ; Summit partners, LP Board voted to maintain a rating of P1 ; TA Associates Management, LP Board voted to maintain a rating of P1 ; Tenex Capital Management, LP Board voted to maintain a rating of P1 ; Veritas Capital Fund Management LLC Board voted to assign an initial rating of P1 ; Vista Equity Partners Management, LP Board voted to maintain a rating of P1 ; Warbug Pincus LLC Board voted to maintain a rating of P1 ; Athenian Venture Partners Board voted to assign a rating of P3 ; Blue Chip Venture Company Ltd Board voted to maintain a rating of P3 ; Blue Point Capital Partners, LLC Board voted to maintain a rating of P1 ; Kirtland Capital Corporation Board voted to maintain a rating of P3 ; Linsalata Capital Management, LLC Board voted to assign a rating of P3 ; Morgenthaler Management Corporation Board voted to maintain a rating of P3 ; Primus Capital Partners, Inc. Board voted to maintain a rating of P1 ; Riverside Partners, LLC Board voted to maintain a rating of P1 ; Abbott Capital Management, LLC Board voted to maintain a rating of P1 ; Adams Street Partners, LLC Board voted to maintain a rating of P1 ; Coller Investment Management Limited Board voted to maintain a rating of P1 ; Fort Washington Investment Advisors, Inc. Board voted to maintain a rating of P2 ; HarbourVest Partners, LLC Board voted to maintain a rating of P1 ; Horsley Bridge Partners, LLC Board voted to maintain a rating of P1 ; Landmark Equity Advisors, LLC Board voted to assign a rating of P2 ; Lexington Partners Board voted to maintain a rating of P1 ; Northgate Capital, LP Board voted to assign a rating of P1 ; Park Street Capital Advisers, LLC Board voted to maintain a rating of P1 ; TriGuard Management, LLC Board voted to maintain a rating of P1 ; Wilshire Associated Inc. Board voted to maintain a rating of P1. Ms. Maloney Stifler moved and Mr. Patton seconded a motion that the Board accepts the rating recommendations of Investment Staff for OP&F s private markets investment managers as outlined in Investment Staff s memorandum to the Board dated. The motion passed with the roll call vote as follows: ITEM H: Private Markets Recommendation (Primus VIII) IC Investment Staff and TorreyCove presented their recommendation for a Capital Commitment of up to $25 million to Primus Capital Funds VIII, LP. 3

4 Mr. Patton moved and Mr. Heller seconded a motion that the Board accepts the recommendation of Investment Staff and Investment Adviser for a Capital Commitment of up to $25,000,000 to Primus Capital Fund VIII, L.P., upon the terms outlined in Investment Staff s memorandum dated and attached supplemental materials and such other terms favorable or protective to OP&F, as determined by the Executive Director. The motion passed with the roll call vote as follows: ITEM I: Private Markets Recommendation (GTCR XII) IC Investment Staff and TorreyCove presented their recommendation for a Capital Commitment of up to $40 million to GTCR XII, LP. Mr. Heller moved and Ms. Maloney Stifler seconded a motion that the Board accepts the recommendation of Investment Staff and Investment Adviser for a Capital Commitment of up to $40,000,000 to GTCR XII, L.P., upon the terms outlined in Investment Staff s memorandum dated and attached supplemental materials and such other terms favorable or protective to OP&F, as determined by the Executive Director. The motion passed with the roll call vote as follows: ITEM J: Open Discussion None GENERAL COUNSEL: Draft Proposed Legislative Items Ms. Foley outlined the proposed legislative items that are categorized under the following three sections: I. Disability Benefits: A B C II. Death Fund and DROP benefits: A B C D III. Miscellaneous: A B and C and D. Uncodified Section 3 E

5 ADJOURNMENT: The Board/Committee adjourned at 12:50 pm Ohio Police & Fire Pension Fund John J. Gallagher Jr. Executive Director Materials Provided/Attached: 1. Nomination of Vice Chair Position Memorandum, dated 2. Quinquennial Actuarial Experience Review , Conduent 3. Monthly Portfolio Valuation Update as of 7/31/2017 Handout. 4. Presentation from Wilshire Associates regarding the Executive Summary of Investment Performance dated 6/30/ Presentation from Wilshire Associates regarding the Private Equity & Private Credit Program Analysis dated 8/24/ Presentation from Wilshire Associates regarding the Historical Assumptions vs. Actual Results dated 7. Memo from Wilshire regarding the Total Fund Policy Benchmark Revisions & Implementation Plan dated 8. Presentation from Wilshire Associates regarding the Implementation Plan & Benchmark Transition dated 8/24/ Memo from Staff regarding the Private Markets Investment Manager Rating Reviews dated 10. Presentation from Staff regarding the Private Markets Investment Manager Rating Reviews dated 11. Memo from Staff regarding the Private Markets Primus Capital Fund VIII, LP recommendation dated 12. Memo from TorreyCove regarding Primus Capital Fund VIII, LP dated 8/9/ Presentation from TorreyCove regarding Primus Capital Fund VIII, LP dated 8/9/ Memo from Staff regarding the Private Markets GTCR Fund XII, LP recommendation dated 15. Memo from TorreyCove regarding GTCR Fund XII, LP dated 8/8/ Presentation from TorreyCove regarding GTCR Fund XII, LP dated 8/8/ Draft Legislative Items 5