FINANCE COMMITTEE AGENDA
March 28, 2023 at 8:30 am
Meeting will be held in the City Hall Conference Room
18 Main Street
Sutter Creek, CA
1. Call to Order – 8:30 AM.
2. Public Matters not on the Agenda
This is an opportunity for the public to comment on items that are not on the Committee’s agenda.
3. General Fund and Capital Fund Reserve Policies
Recommendation: For approval to City Council.
4. PARS Investment
Recommendation: For information and discussion, recommendation to City Council
5. Adjournment
In compliance with the Americans with Disabilities Act, if you are a disabled person and you need a disability-related modification or accommodation to participate in this meeting, please contact City Hall staff at (209) 267-5647 or (209) 267-0639 (fax). 18 Main St., Sutter Creek, CA 95685 • Telephone: (209)267-5647 • Fax: (209)267-0639 • TTY: 711 The City of Sutter Creek is an equal opportunity service provider and employer
STAFF REPORT
TO: THE MEMBERS OF THE FINANCE COMMITTEE
MEETING DATE: MARCH 28, 2023
FROM: JODI STENECK, ACCOUNTING SUPERVISOR
SUBJECT: GENERAL OPERATING AND GENERAL CAPITAL RESERVE
POLICIES
RECOMMENDATION:
Review and approve the General Operating Reserve fund policy and the General Capital Reserve fund policy.
BACKGROUND:
The City of Sutter Creek does not have a reserve fund policy for General Operating or General Capital.
As the City has been budgeting into a General Operating Reserve fund and a General Capital Reserve fund it was discussed that a policy should be created to determine the process, use of funds, repayment, and a reasonable fund balance.
DISCUSSION:
The General Operating Reserve initial goal is 40% of the GF adopted annual budget revenues. Using the 2022-23 adopted budget with GF revenue of $2,187,545 the Operating Reserve fund goal would be $875,018. Per the 22-23 budget, 1% ($21,875) of GF revenue will be transferred to the General Operating reserve which will increase the fund balance to $271,130.
The General Capital Reserve fund currently has $49,557. If we move the $50,118 in the General Savings fund which is not restricted and the funds came from the General fund into the General Capital Reserve fund that would increase the GCR to $99,675.
BUDGET IMPACT:
None
Item 3
City of Sutter Creek
General Operating Reserve Policy
Section 1: Purpose
The purpose of this policy is for the City of Sutter Creek to formally establish General Operating Reserve fund balances based on budgeted revenue. The purpose of the operating reserves is to mitigate the effect of unanticipated situations such as natural disasters and unforeseen events.
Reserves also provide the City with stability in times of economic fluctuations that are nonreoccurring and/or unanticipated. Reserves help provide for a smooth, temporary transition to prevent drastic or devasting changes in service levels caused by changes in the City’s financial situation including unanticipated decreases in revenue or increases in expenditures.
Section 2: Policy
The City of Sutter Creek is establishing reserves with the following designations:
General Operating Reserve:
The General Operating Reserve goal is 40% of the General Fund’s adopted annual budget revenues.
The City Manager will first evaluate the City’s financial condition and make a recommendation to City Council as to the need to make contributions to the General Operating Reserve. This action is done as part of the annual budget adoption; however, these actions can be completed at any time the City Manager deems necessary.
Use of Reserve Funds:
The following is provided to govern the appropriate use and replenishment of the City’s General Operating Reserve fund. The General Operating Reserves should be used first for emergency repairs from natural disasters and operations and maintenance of unforeseen events. These funds should also be used for unbudgeted City Council approved projects. The City Manager must present a report to the City Council to justify the use of the General Operating Reserve and provide the circumstances of the fiscal emergency. All uses of the General Operating Reserve must be approved by resolution of the City Council with a three-fifths vote. Any such uses are to be repaid to the reserve over a period to be determined by the City Council at the time of usage approval, with a target repayment period of no more than two years.
Year-End Excess Revenue
As part of the annual budget adoption process, or at any time the City Manager deems necessary, the City Manager would recommend whether the year-end excess funds could be used as onetime funding to reach the General Operating Reserve goal.
Other Funds
In conjunction with approving the General Operating Fund Reserve Policy, the City Council expresses it intent to evaluate other Special Revenue, Enterprise and Capital funds to establish appropriateness of developing formal fund-specific reserve policies.
City of Sutter Creek
General Capital Reserve Policy
Section 1: Purpose
The purpose of this policy is for the City of Sutter Creek to formally establish minimum levels and reserve targets of the General Capital Reserve fund balance. The purpose of the capital reserves is to ensure a strong foundation for the financing and completion of capital projects, an important component of capital improvement planning is long-term financial planning for future infrastructure improvements and acquisitions. These funds are reserved specifically for capital needs and are not to be used for generally operating purchases.
Section 2: Policy
The City of Sutter Creek is establishing reserves with the following designations:
General Capital Reserve:
The General Capital Reserve fund is a permanent fund for capital improvements that are critical for the continued operation of municipal services. Capital Reserves are directly tied to planned capital needs, with an estimated allowance for emergency repairs and replacement.
The City Manager will first evaluate the City’s financial condition and make a recommendation to City Council as to the need to makes contributions to the General Capital Reserve. This action will be done annually as part of the budget adoption and will include a capital asset report. The report will include estimated repair and replacement costs for a twoone-year period as well as the annual reserve funding amounts required to meet these obligations.
Use of Reserve Funds:
Capital Reserve balances are to be used for the repair and replacement of vehicles, equipment, building repair, and land improvements as approved by the City Council. Reserve funds may also be used to repair or replace items deemed necessary for continued public health and safety.
All uses of the General Capital Reserve must be approved by resolution of the City Council with a fourthree-fifths vote. In the event of an emergency, purchases of equipment, materials, supplies or services determined by the City Manager to be necessary to meet an emergency which threatens the public health, safety or welfare, may be made without prior City Council approval, however the purchases will be provided to the City Council at the earliest practicable meeting time.
All Capital Reserve fund uses are to be repaid to the reserve over a period to be determined by the City Council at the time of usage approval, with a target repayment period of no more than three years.
Year-End Excess Revenue
As part of the annual budget adoption process, or at any time the City Manager deems necessary, the City Manager would recommend whether the excess year-end funds could be used as onetime funding to increase the Capital Reserve Fund.
Other Funds
In conjunction with approving the General Capital Fund Reserve Policy, the City Council expresses it intent to evaluate other Special Revenue and Enterprise funds to establish appropriateness of developing formal fund-specific reserve policies.
Funds Beg. Balance Cash In Cash Out Adj. Balance
01 - General Fund 24,152 241,615 144,247 (1,196) 120,324 39 -General Reserve 695,718 - - - 695,718
86 - General Savings 50,118 - - - 50,118
95 - General Operating Reserve 249,255 - - - 249,255
96 - General Capital Reserves 49,557 - - - 49,557
04 - Crestview Light District 4,250 - 86 - 4,164
07 - Cemetary (11,275) - 165 - (11,440)
17 - Monteverde Store (85) - 192 - (277)
29 - Swimming Pool (45,754) - 486 - (46,240)
59 - Auditorium & Facility Rentals (19,700) 6,820 12,278 (1,636) (26,794) 03 - Streets and Sidewalks (14,646) - 7,757 (39) (22,442) 91 - Road CIP 89,481 4,840 - - 94,321
10 - Sewer M&O 1,025,592 130,089 118,787 38,608 1,075,502 11 - Sewer WCRF Hook up Fees 604,473 - - - 604,473
12 - Sewer Line Replacement 605,263 - - - 605,263
14 - Sewer Cap Reserves 1,083,761 - - - 1,083,761
15 - Sewer Debt Service (10,755) - - - (10,755)
80 - Effluent Disposal (261,066) 25,005 148,895 (91) (385,047) 09 - HMGP Hazard Mitig. Grant Proj 1,214 - - - 1,214
19 - Knights Foundary Restore 2,957 - - - 2,957
20 - FEMA 9,162 - 10,237 - (1,075)
28 - Public Safety/AB109, Grant 5,137 15,000 - - 20,137 50 - COPS Fast Program 2,640 - - - 2,640
57 - First Time Home Buyers Grant - 187,100 - - 187,100 30-36 Traffic Mitigation Total 220,916 - - - 220,916
37 - Parking In Lieu 65,121 - - - 65,121
38 - Fire Service Fund 26,119 - - - 26,119
42 - AB1600 173,957 - - - 173,957
73 - Park Impact Fee 45,206 - - - 45,206
89 - Capital Improvement Projects (293,784) - 1,331 - (295,115) 48 - Covid-19 American Recovery Act 573,773 - - - 573,773 81 - Visitor Center (15,030) 940 2,170 - (16,260)
87 - Refuse 3,346 - - - 3,346
88 - City Council Discretionary 21,440 - - - 21,440
92 - Pension Reserve 136,061 - - - 136,061
93 - Vehicle Cap Reserve 17,142 - - - 17,142
94 - Vacation Cash Out and Accruals (184) - 4,946 - (5,130) 2022-23
Cash Balance Report
for the month of February 2023
Totals 5,113,532 611,409 451,577 35,646 5,309,010
18 Main St., Sutter Creek, CA 95685 • Telephone: (209)267-5647 • Fax: (209)267-1655 • TTY: 711 The City of Sutter Creek is an equal opportunity service provider and employer ______________________________________________________________________________
STAFF REPORT
TO: THE MEMBERS OF THE FINANCE COMMITTEE
MEETING DATE: MARCH XX, 2023
FROM: JODI STENECK, ACCOUNTING SUPERVISOR
SUBJECT: PUBLIC AGENCY RETIREMENT SERVICES INVESTMENT
SELECTION
RECOMMENDATION:
For information and staff direction.
BACKGROUND:
At the January 3, 2023 Sutter Creek City Council meeting the City Council approved the adoption of the Public Agency Retirement Services (PARS) Post-Employment Benefits Trust Program. The resolution that was approved was sent to PARS so they could complete the documents needed for signature by our Plan Administrator. The documents contain an Investment Strategy Selection and Disclosure Form which is used to determine investment options and strategic range.
The City has $136,061 in Fund 92 – Pension Reserve which could be used to fund this investment.
DISCUSSION:
Is the City ready to fund this investment? If so, how much should we transfer for our initial contribution?
Which of the five portfolio do we recommended? Conservative, Moderately Conservative, Moderate, Balanced and Capital Appreciation.
Finally, should the portfolio be Active or Passive? (See page 12).
Mitch Barker with PARS will be attending to answer questions and explain the options available.
BUDGET IMPACT:
None
Investment Guidelines Document
City of Sutter Creek
Employee Benefit Fund Pension Plan
February 2023
DRAFT
City of Sutter Creek Employee Benefit Fund Pension Plan Investment Guidelines Document – HighMark Capital Management, Inc. (v. 2/9/2023 -ARB) 2
Investment Guidelines Document
Scope and Purpose
The purpose of this Investment Guidelines Document is to:
• Facilitate the process of ongoing communication between the Plan Sponsor and its plan fiduciaries;
• Confirm the Plan’s investment goals and objectives and management policies applicable to the investment portfolio identified below and obtained from the Plan Sponsor; • Provide a framework to construct a well-diversified asset mix that can potentially be expected to meet the account’s short- and long-term needs that is consistent with the account’s investment objectives, liquidity considerations and risk tolerance; • Identify any unique considerations that may restrict or limit the investment discretion of its designated investment managers;
• Help maintain a long-term perspective when market volatility is caused by short-term market movements.
Key Plan Sponsor Account Information as of February 2023 Plan Sponsor: City of Sutter Creek
Governance: City Council for the City of Sutter Creek
Plan Name (“Plan”): City of Sutter Creek Employee Benefit Fund Pension Plan Trustee: US Bank
Contact: Susan Hughes, 949-224-7209
[email protected]
Type of Account: Pension Plan
Investment Manager: US Bank, as discretionary trustee, has delegated investment management responsibilities to HighMark Capital Management, Inc. (“Investment Manager”), an SEC-registered investment adviser
Contact: Andrew Brown, CFA, 415-705-7605
[email protected]
City of Sutter Creek Employee Benefit Fund Pension Plan Investment Guidelines Document – HighMark Capital Management, Inc. (v. 2/9/2023 -ARB) 3
Investment Authority: Except as otherwise noted, the Trustee, US Bank, has delegated investment authority to HighMark Capital Management, an SEC-registered investment adviser.
Investment Manager has full investment discretion over the managed assets in the account.
Investment Manager is authorized to purchase, sell, exchange, invest, reinvest and manage the designated assets held in the account, all in accordance with account’s investment objectives, without prior approval or subsequent approval of any other party(ies).
Investment Objectives and Constraints
The goal of the Plan’s investment program is to provide a reasonable level of growth which, will result in sufficient assets to pay the present and future obligations of the Plan. The following objectives are intended to assist in achieving this goal:
• The Plan should seek to earn a return in excess of its policy benchmark over the life of the Plan.
• The Plan’s assets will be managed on a total return basis which takes into consideration both investment income and capital appreciation. While the Plan Sponsor recognizes the importance of preservation of capital, it also adheres to the principle that varying degrees of investment risk are generally rewarded with compensating returns. To achieve these objectives, the Plan Sponsor allocates its assets (asset allocation) with a strategic perspective of the capital markets.
Investment Time Horizon: Intermediate-Term 3 - 5 years
Anticipated Cash Flows: Assets in the Plan will seek to mitigate the impact of future rate increases from CalPERS. It is not anticipated that the Plan will see a high level of disbursements in the first three years of the Plan. However, situations may arise, leading to a disbursement in assets to the CalPERS Trust.
Investment Objective: The primary objective is to maximize total Plan return, subject to the risk and quality constraints set forth herein. The investment objective the Plan Sponsor has selected is the Conservative Objective, which seeks to provide a consistent level of inflationprotected income over the long-term. The major portion of the assets will be fixed income related. Equity securities are utilized to provide inflation protection.
Risk Tolerance: Conservative
The account’s risk tolerance has been rated Conservative, which demonstrates that the account can accept low price fluctuations to pursue its investment objectives.
City of Sutter Creek Employee Benefit Fund Pension Plan Investment Guidelines Document – HighMark Capital Management, Inc. (v. 2/9/2023 -ARB) 4
Strategic Asset Allocation: The asset allocation ranges for this objective are listed below:
Strategic Asset Allocation Ranges
Cash Fixed Income Equity
0%-20% 60%-95% 5%-20%
Policy: 5% Policy: 80% Policy: 15%
Market conditions may cause the account’s asset allocation to vary from the stated range from time to time. The Investment Manager will rebalance the portfolio no less than quarterly and/or when the actual weighting differs substantially from the strategic range, if appropriate and consistent with your objectives.
Security Guidelines:
Equities
With the exception of limitations and constraints described above, Investment Manager may allocate assets of the equity portion of the account among various market capitalizations (large, mid, small) and investment styles (value, growth). Further, Investment Manager may allocate assets among domestic, international developed and emerging market equity securities.
Total Equities 5%-20%
Equity Style Range
Domestic Large Cap Equity 5%-20%
Domestic Mid Cap Equity 0%-5%
Domestic Small Cap Equity 0%-7%
International Equity (incl. Emerging Markets) 0%-7%
Real Estate Investment Trust (REIT) 0%-5%
Fixed Income
In the fixed income portion of the account, Investment Manager may allocate assets among various sectors and industries, as well as varying maturities and credit quality that are consistent with the overall goals and objectives of the portfolio.
Total Fixed Income 60%-95%
Fixed Income Style Range
Long-term bonds (maturities >7 years) 0%-40%
Intermediate-term bonds (maturities 3-7 years) 30%-95%
Short-Term bonds (maturities <3 years) 0%-30%
High Yield bonds 0%-6%
City of Sutter Creek Employee Benefit Fund Pension Plan Investment Guidelines Document – HighMark Capital Management, Inc. (v. 2/9/2023 -ARB) 5
Performance Benchmarks:
The performance of the total Plan shall be measured over a three and five-year periods. These periods are considered sufficient to accommodate the market cycles experienced with investments. The performance shall be compared to the return of the total portfolio blended benchmark shown below.
Total Portfolio Blended Benchmark
7.50% S&P 500 Index
1.50% Russell Mid Cap Index
2.50% Russell 2000 Index
1.00% MSCI Emerging Market Index
2.00% MSCI-EAFE Index
0.50% Wilshire REIT Index
52.25% Bloomberg U.S. Aggregate Bond Index
25.75% ICE BofA 1-3 Year US Corp/Gov’t Index
2.00% ICE BofA High Yield Master II Index
5.00% FTSE 1Mth T-Bill Index
Asset Class/Style Benchmarks
Over a market cycle, the long-term objective for each investment strategy is to add value to a market benchmark. The following are the benchmarks used to monitor each investment strategy:
Large Cap Equity S&P 500 Index
Growth S&P 500 Growth Index
Value S&P 500 Value Index
Mid Cap Equity Russell Mid Cap Index
Growth Russell Mid Cap Growth Index
Value Russell Mid Cap Value Index
Small Cap Equity Russell 2000 Index
Growth Russell 2000 Growth Index
Value Russell 2000 Value Index
REITs Wilshire REIT Index
International Equity MSCI EAFE Index
Investment Grade Bonds Bloomberg U.S. Aggregate Bond Index High Yield ICE BofA High Yield Master II Index
Security Selection
Investment Manager may utilize a full range of investment vehicles when constructing the investment portfolio, including but not limited to individual securities, mutual funds, and exchangetraded funds. In addition, to the extent permissible, Investment Manager is authorized to invest in shares of mutual funds in which the Investment Manager serves as advisor or sub-adviser.
City of Sutter Creek Employee Benefit Fund Pension Plan Investment Guidelines Document – HighMark Capital Management, Inc. (v. 2/9/2023 -ARB) 6
Investment Limitations:
The following investment transactions are prohibited:
• Direct investments in precious metals (precious metals mutual funds and exchange-traded funds are permissible).
• Venture Capital
• Short sales*
• Purchases of Letter Stock, Private Placements, or direct payments • Leveraged Transactions*
• Commodities Transactions Puts, calls, straddles, or other option strategies* • Purchases of real estate, with the exception of REITs • Derivatives, with exception of ETFs*
*Permissible in diversified mutual funds and exchange-traded funds Duties and Responsibilities
Responsibilities of Plan Sponsor
The Plan Administrator for the City of Sutter Creek is responsible for:
▪ Confirming the accuracy of this Investment Guidelines Document, in writing. ▪ Advising Trustee and Investment Manager of any change in the plan/account’s financial situation, funding status, or cash flows, which could possibly necessitate a change to the account’s overall risk tolerance, time horizon or liquidity requirements; and thus would dictate a change to the overall investment objective and goals for the account. ▪ Monitoring and supervising all service vendors and investment options, including investment managers.
▪ Avoiding prohibited transactions and conflicts of interest.
Responsibilities of Trustee
The plan Trustee is responsible for:
▪ Valuing the holdings.
▪ Collecting all income and dividends owed to the Plan. ▪ Settling all transactions (buy-sell orders).
Responsibilities of Investment Manager
The Investment Manager is responsible for:
▪ Assisting the Plan Administrator for the City of Sutter Creek with the development and maintenance of this Investment Policy Guideline document. ▪ Meeting with Plan Administrator for the City of Sutter Creek to review portfolio structure, holdings, and performance.
▪ Designing, recommending and implementing an appropriate asset allocation consistent with the investment objectives, time horizon, risk profile, guidelines and constraints outlined in this statement.
▪ Researching and monitoring investment advisers and investment vehicles. ▪ Purchasing, selling, and reinvesting in securities held in the account. ▪ Monitoring the performance of all selected assets.
▪ Voting proxies, if applicable.
▪ Recommending changes to any of the above.
City of Sutter Creek Employee Benefit Fund Pension Plan Investment Guidelines Document – HighMark Capital Management, Inc. (v. 2/9/2023 -ARB) 7
▪ Periodically reviewing the suitability of the investments, being available to meet with the Plan Administrator at least once each year and being available at such other times within reason at your request.
▪ Preparing and presenting appropriate reports.
▪ Informing the committee if changes occur in personnel that are responsible for portfolio management or research.
Acknowledgement and Acceptance
I/We being the Plan Sponsor with responsibility for the account(s) held on behalf of the Plan Sponsor specified below, designate Investment Manager as having the investment discretion and management responsibility indicated in relation to all assets of the Plan or specified Account. If such designation is set forth in the Plan/trust, I/We hereby confirm such designation as Investment Manager.
I have read the Investment Guidelines Document, and confirm the accuracy of it, including the terms and conditions under which the assets in this account are to be held, managed, and disposed of by Investment Manager. This Investment Guidelines Document supersedes all previous versions of an Investment Guidelines Document or investment objective instructions that may have been executed for this account.
__________________________________________________ Date: ________________ Plan Administrator: City of Sutter Creek
__________________________________________________ Date: ________________ Investment Manager: Andrew Brown, CFA, Portfolio Manager, (415) 705-7605 City of Sutter Creek
PARS 115 Trust – Pension Rate Stabilization Program (PRSP) Investment Selection March 28, 2023
City of Sutter Creek ▎ 2
Contacts
Mitch Barker
Senior Consultant
(949) 310-4876
[email protected]
Will Rogers, RPA
Senior Coordinator, Client Services
(800) 540-6369 x161
[email protected]
Andrew Brown, CFA
Director, Senior Portfolio Manager
(415) 705-7605
[email protected]
City of Sutter Creek ▎ 3
• 115 Trust Team
• Investment Selection Form
• Actuarial Valuation – Pension
• Efficient Frontier
• Active vs. Passive
• Quarterly Performance Sheets
• IGD (Investment Guidelines Document)
• Averaging-in Period
• Review Frequency
Investment Selection Checklist
City of Sutter Creek ▎ 4
Pars 115 Trust Team
Trust Administrator & Consultant
39 Years of Experience
(1984-2023)
2,000+
Plans under
Administration
1,000+
Public Agency
Clients
$6.7B
Assets under
Administration
Investment Manager
• Investment sub-advisor to trustee U.S. Bank
• Investment policy assistance
• Uses open architecture
• Active and passive platform options
• Customized portfolios (with minimum asset level)
104
Years of Experience
(1919-2023)
$17.7B
Assets under
Management &
Advisement
Trustee
• 5th largest commercial bank and one of the
nation’s largest trustees for Section 115 trusts
• Safeguard plan assets
• Oversight protection as plan fiduciary
• Custodian of assets
160
Years of Experience
(1863-2023)
$9.5T
Assets under
Administration
500+
115 Trust Clients
• Serves as record-keeper, consultant,
and central point of contact
• Sub-trust accounting
• Coordinates all agency services
• Monitors plan compliance
(IRS/GASB/State Government Code)
• Processes contributions/disbursements
• Hands-on, dedicated support teams
500 K+
Plan Participants
City of Sutter Creek ▎ 5
Subaccounts
Pension assets can be divided by
dept., bargaining group, or cost
center
Assets in the PARS Section 115
Trust can be used to address
unfunded liabilities.
Financial Stability
Choice of 5 risk tolerance
levels or custom strategy
Flexible Investing
As assets grow, lower fee rates
will be reached on tiered
schedule – saving money
Anytime Access Economies-of-Scale
Trust funds are available
anytime for Pension-related
expenses
No set-up costs, no minimum
annual contribution amounts,
and no fees until assets are added.
No Set Up Cost or Minimums
Pension Rate Stabilization Program
Prefund Pension (PRSP) GASB 68
Pension
Reimburse City; or
Pay retirement system
Assets can be used to: General Fund
PARS IRS-Approved Section 115 Trust
Prefund
PENSION OPEB HM MANAGED
ISSDF 203 09.22.2016
Investment Strategy Selection and Disclosure Form
PARS Pension / OPEB Trust Program
■ This document is entered into by client and U.S. Bank National Association (“U.S. Bank”), as trustee. ■ Employer:
■
Plan/Trust Name: Public Agencies Post-Employment Benefits Trust ■ To: HighMark Capital Management, Inc. and U.S. Bank:
U.S. Bank has been or is hereby appointed Investment Manager of the above-referenced Plan/Trust. Please invest the assets of the above-referenced Plan/ Trust for which you have been appointed Investment Manager in the (select one of the strategies listed below for each Plan funded by the Trust):
OPEB Account Pension Account Primary Goal Strategic Range
Liquidity Management (US Treasury) Liquidity Management (US Treasury) Provide current income with liquidity
and stability of principal through
investments in short-term U.S.
Treasury obligations.
Money Market Fund
Liquidity Management (Prime Obligation) Liquidity Management (Prime Obligation) Generate current income with liquidity. Money Market Fund
DIVERSIFIED PORTFOLIOS
Conservative HighMark PLUS Conservative HighMark PLUS Provide a consistent level of inflationprotected income over the long-term.
Equity:
Fixed Income:
Cash:
5-20%
60-95% Conservative Index PLUS Conservative Index PLUS 0-20% Moderately Conservative HighMark PLUS Moderately Conservative HighMark PLUS Provide current income with capital appreciation as a secondary objective.
Equity:
Fixed Income:
Cash:
20-40%
50-80% Moderately Conservative Index PLUS Moderately Conservative Index PLUS 0-20% Moderate HighMark PLUS Moderate HighMark PLUS Provide current income and moderate capital appreciation.
Equity:
Fixed Income:
Cash:
40-60%
40-60% Moderate Index PLUS Moderate Index PLUS 0-20% Balanced HighMark PLUS Balanced HighMark PLUS Provide growth of principal and income.
Equity:
Fixed Income:
Cash:
50-70%
30-50% Balanced Index PLUS Balanced Index PLUS 0-20% Capital Appreciation HighMark PLUS Capital Appreciation HighMark PLUS Primary goal is growth of principal.
Equity:
Fixed Income:
Cash:
65-85%
10-30%
Capital Appreciation Index PLUS Capital Appreciation Index PLUS 0-20% Custom Custom Specify:
Note: HighMark PLUS portfolios are diversified portfolios of actively managed mutual funds. Index PLUS portfolios are diversified portfolios of Index-based mutual funds or exchange-traded funds.
Acknowledged and Approved
Signature of Authorized Signer Title
Print Name of Authorized Signer Date
SAMPLE
City of Sutter Creek ▎ 7
Combined Miscellaneous
& Safety Groups *
Valuation as of
June 30, 2020
Valuation as of
June 30, 2021
Change
Actuarial Liability $13.7 M $14.3 M 4.7% ↑
Assets $9.5 M $11.3 M 18.1% ↑
Unfunded Liability $4.1 M $3.0 M 26.5% ↓
Funded Ratio 69.8% 78.8% 12.8% ↑
Employer Contribution Amount $414 K $472 K 13.9% ↑
(FY 21-22) (FY 22-23)
Employer Contribution Amount – Projected *
---
$456 K 3.3% ↓
(FY 28-29)
Pension Funding Status
As of June 30, 2021, City of Sutter Creek’s CalPERS pension plan is funded as follows:
* Data through 2028-29 from Agency’s latest CalPERS actuarial valuation.
City of Sutter Creek ▎ 8
HighMARK CAPITAL MANAGEMENT
Company Profile
9 *Includes predecessor organizations. HighMark Capital Management, Inc. registered with the SEC as an investment adviser on August 7, 1998. **Assets under management (“AUM”) include assets for which HighMark provides continuous and regular supervisory and management services. Assets under advisement (“AUA”) include assets for which HighMark provides certain investment advisory services (including, but not limited to, investment research and strategies) for client assets of its parent company, MUFG Union Bank, N.A.
***San Francisco denotes HighMark’s main office. Please refer to HighMark’s ADV for additional locations.
LONGEVITY
Managing assets for clients
since 1919*
STABILITY
Investment boutique structure
headquartered in San Francisco
backed by strength within MUFG
Union Bank, N.A.
TALENT
36 investment professionals
19 professionals hold the
Chartered Financial Analyst ®
(CFA) designation
25 years average
industry experience
Client Base Asset Class
ASSETS UNDER MANAGEMENT AND ADVISEMENT**
$17.7 billion as of 12/31/2022
LOCATIONS ▪ Los Angeles
▪ Beverly Hills
▪ Santa Barbara
▪ Portland
▪ Tacoma
▪ Seattle
▪ San Diego
▪ La Jolla
▪ San Francisco*** ▪ Irvine
Equity $7.5 billion
Fixed Income $6.0 billion
Liquidity $2.5 billion
Cash & Cash Equivalents
$1.7 billion
AUM $8.7 billion
AUA $9.0 billion
Establish: Determine your Strategic Asset Allocation Strategy Each Investment Objective reflects the associated PARS Diversified Portfolio as of 9/30/2022. A client’s portfolio construction may vary depending on the client's investment needs, objectives, and restrictions as well as the prevailing market conditions at the time of investment.
Moderately Conservative
Moderate
Expected Standard Deviation (Volatility)
Expected Return
Balanced
Capital Appreciation
Efficient frontier of portfolios with varying ranges of equities and fixed income Conservative
Equity Fixed
Income Cash
Conservative 5-20% 60-95% 0-20%
Moderately Conservative 20-40% 50-80% 0-20%
Moderate 40-60% 40-60% 0-20%
Balanced 50-70% 30-50% 0-20%
Capital Appreciation 65-85% 10-30% 0-20%
10 Construct Your Plan’s Portfolio: PARS Diversified Portfolios – Tactical Allocation 11 Each Investment Objective reflects the associated PARS Diversified Portfolio as of 9/30/2022. A client’s portfolio construction may vary depending on the client's investment needs, objectives, and restrictions as well as the prevailing market conditions at the time of investment.
Conservative
Moderately
Conservative Moderate Balanced Capital Appreciation
Equity 5-20% 20-40% 40-60% 50-70% 65-85%
Current Tactical 14.00% 28.00% 46.67% 56.00% 70.00%
Large Cap Blend 4.16% 8.17% 13.98% 17.04% 21.48%
Large Cap Value 1.82% 3.77% 6.42% 7.70% 9.43%
Large Cap Growth 1.59% 3.30% 5.63% 6.76% 8.25%
Mid Cap Blend 1.38% 2.75% 4.52% 5.50% 6.87%
Real Estate 0.50% 1.05% 1.77% 2.00% 2.00%
Small Cap Value 1.17% 2.14% 3.53% 4.19% 4.86%
Small Cap Growth 1.17% 2.14% 3.53% 4.19% 4.86%
International 1.33% 2.91% 4.39% 5.12% 7.73%
Emerging Markets 0.88% 1.77% 2.91% 3.50% 4.51%
Fixed Income 60-95% 50-80% 40-60% 30-50% 10-30%
Current Tactical 81.50% 67.03% 47.98% 38.00% 22.71%
Short Term Bond 18.00% 13.50% 10.70% 7.50% 3.31%
High Yield 1.10% 1.03% 1.01% 0.88% 0.80%
Intermediate Term Bond 62.40% 52.50% 36.27% 29.63% 18.60% Cash 0-20% 0-20% 0-20% 0-20% 0-20%
Current Tactical 4.49% 4.97% 5.35% 6.00% 7.29%
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00%
Construct Your Plan’s Portfolio: PARS Diversified Portfolios – Active v. Passive 12 Each Investment Objective reflects the associated PARS Diversified Portfolio as of 9/30/2022. A client’s portfolio construction may vary depending on the client's investment needs, objectives, and restrictions as well as the prevailing market conditions at the time of investment. Specific securities identified above do not represent all of the securities purchased, sold or recommended for advisory clients, and you should not assume that investments in the securities identified in this presentation were or will be profitable.
HighMark Plus (Active) Index Plus (Passive)
Equity Ticker Fund Name Ticker Fund Name
Large Cap Blend COFYX Columbia Contrarian Core I3 IVV iShares Core S&P 500 ETF Large Cap Blend VGIAX Vanguard Growth & Income Adm
Large Cap Value DODGX Dodge & Cox Stock IVE iShares S&P 500 Value ETF Large Cap Value IVE iShares S&P 500 Value ETF
Large Cap Growth HNACX Harbor Capital Appreciation Ret IVW iShares S&P 500 Growth ETF Large Cap Growth PRUFX T. Rowe Price Growth Stock I
Mid Cap Blend IWR iShares Russell Mid-Cap ETF IWR iShares Russell Mid-Cap ETF Real Estate VNQ Vanguard Real Estate ETF VNQ Vanguard Real Estate ETF Small Cap Value UBVFX Undiscovered Managers Behavioral Val R6 IWN iShares Russell 2000 Value ETF Small Cap Growth VBK Vanguard Small-Cap Growth ETF IWO iShares Russell 2000 Growth ETF International DFALX DFA Large Cap International Portfolio International DODFX Dodge & Cox International Stock
International MGRDX MFS International Growth R6 IEFA iShares Core MSCI EAFE ETF Emerging Markets HHHFX Hartford Schroders Emerging Mkts Eq F VWO Vanguard FTSE Emerging Markets ETF Fixed Income Ticker Fund Name Ticker Fund Name
Short Term Bond VFSUX Vanguard Short-Term Investment-Grade Adm VFSUX Vanguard Short-Term Investment-Grade Adm High Yield Bond PHIYX PIMCO High Yield Instl VWEAX Vanguard High-Yield Corp Adm Intermediate Term Bond PTTRX PIMCO Total Return Instl AGG iShares Core U.S. Aggregate Bond Intermediate Term Bond PTRQX PGIM Total Return Bond Q
Intermediate Term Bond DBLFX DoubleLine Core Fixed Income I Cash
Characteristics
Fund Manager Dependency Higher dependency on portfolio manager skill Tracks index, thus little-to-no dependency on portfolio manager skill.
Opportunity to Outperform Index Opportunity to outperform index Typically performs below index after fees.
Costs Higher expense ratios due to portfolio manager skill Lower expense ratio due to little dependency on portfolio manager skill or opportunity for outperformance.
City of Sutter Creek ▎ 13
1. Input Phase
– Target discount rate
– Risk tolerance
– Investment philosophy
– Asset allocation
– Timing on use of funds
2. Model Portfolios 3. Dedicated Portfolio Manager
– Makes recommendation
– Fiduciary responsibility
– Drafts investment policy
– Annual on-site reviews
– Cell phone access
Strategy Equity 10-YR Returns*
Capital Appreciation 65-85% 7.50%
Balanced 50-70% 6.32%
Moderate 40-60% 5.46%
Moderately Conservative 20-40% 3.73%
Conservative 5-20% 2.51%
vs. LAIF 0% 0.95%**
Simple Investment Approach
*10-Year returns as of December 31, 2022
**Avg. LAIF apportionment rate (released quarterly)
11over the 10-Year period ending December 31, 2022
City of Sutter Creek ▎ 14
Strategy Allocation* (%)
Capital Appreciation
(65-85% Equity) 5.93%
Balanced
(50-70% Equity) 9.88%
Moderate
(40-60% Equity) 37.15%
Mod. Conservative
(20-40% Equity) 36.76%
Conservative
(5-20% Equity) 4.35%
Other
(Custom) 5.93%
TOTAL 100.00%
PRSP Strategy Allocation – Clients
HIGHMARK CAPITAL MANAGEMENT
Capital Appreciation
5.93%
Balanced
9.88%
Moderate
37.15%
Moderately
Conservative
36.76%
Conservative
4.35%
Other
5.93%
Active Platform: 53% / Passive Platform: 47%
As of December 31, 2022
*Allocations are based on agencies who have funded
HighMark’s dedicated investment team
continuously seeks to add value to our
relationship with your organization.
▪ Integrated client service program established
with PARS over the last 25 years
▪ We have a tradition of interactive client
service to maintain a strong relationship
delivered by local portfolio managers
▪ You benefit from face-to-face meetings and
scheduled conference calls with your client
service team and portfolio management
team
▪ You receive regular communications in a
variety of formats
• Account holdings and transactions
• Quarterly performance evaluation
reports
• Investment outlook and economic
updates
Report: Responsive and Proactive Client Communication
15 Tory Milazzo, CFA
Director
Sr. Portfolio Manager
Central Coast
Andrew Brown, CFA
Director
Sr. Portfolio Manager
Northern California
Hoddy Fritz
Director
Business
Development
Southern California
Keith Stribling, CFA
Vice President
Sr. Portfolio Manager
Orange County
Christiane Tsuda
Vice President
Sr. Portfolio Manager
San Diego
Anne Wimmer, CFA
Director
Sr. Portfolio Manager
Los Angeles
Mike Wiehn, CFA
Director
Business Development
Northern California
HighMark Plus (Active)
Composite Inception Date 07/2004
No of Holdings in Portfolio 20
HighMark Plus Composite (Active)
Gross Net
Current Quarter* 2.60% 2.51%
Blended Benchmark*,** 2.71%
Year To Date* -12.63% -12.95%
Blended Benchmark*,** -10.58%
1 Year -12.63% -12.95%
Blended Benchmark** -10.58%
3 Year -0.89% -1.25%
Blended Benchmark** -0.48%
5 Year 1.30% 0.93%
Blended Benchmark** 1.53%
10 Year 2.51% 2.14%
Blended Benchmark** 2.49%
PARS DIVERSIFIED PORTFOLIOS
CONSERVATIVE
INVESTMENT OBJECTIVE
ANNUAL RETURNS
ASSET ALLOCATION — CONSERVATIVE PORTFOLIO
Comprehensive Investment Solution
HighMark® Capital Management, Inc.’s (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.
Key features include: sophisticated asset allocation
and optimization techniques, four layers of
diversification (asset class, style, manager, and
security), access to rigorously screened, top tier
money managers, flexible investment options, and
experienced investment management.
Rigorous Manager Due Diligence
Our manager review committee utilizes a rigorous
screening process that searches for investment
managers and styles that have not only produced
above-average returns within acceptable risk
parameters, but have the resources and commitment
to continue to deliver these results. We have set high
standards for our investment managers and funds.
This is a highly specialized, time consuming
approach dedicated to one goal: competitive and
consistent performance.
Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation strategies:
HighMark Plus utilizes actively managed mutual
funds while Index Plus utilizes index-based
securities, including exchange-traded funds. Both
investment options leverage HighMark’s active asset
allocation approach.
Risk Management
The portfolio is constructed to control risk through
four layers of diversification – asset classes (cash,
fixed income, equity), investment styles (large cap,
small cap, international, value, growth), managers
and securities. Disciplined mutual fund selection and
monitoring process helps to drive return potential
while reducing portfolio risk.
WHY THE PARS DIVERSIFIED
CONSERVATIVE PORTFOLIO?
Q4 2022
* Returns less than one year are not annualized. **Breakdown for Blended Benchmark: From 10/1/2012 - Present: 7.5% S&P500,
1.5% Russell Mid Cap, 2.5% Russell 2000, 1% MSCI EM (net), 2% MSCI EAFE (net), 52.25% Bloomberg US Agg, 25.75% ICE BofA 1-3 Yr US Corp/Gov’t, 2% ICE BofA US High Yield Master II, 0.5% Wilshire REIT, and 5% FTSE 1 Mth US T-Bill. From 4/1/2007 – 9/30/2012, the blended benchmark was 12% S&P 500; 1% Russell 2000, 2% MSCI EAFE (net), 40% ICE BofA 1-3 Year Corp./Govt, 40% Bloomberg US Agg, 5% FTSE 1 Mth US T-Bill. Prior to April 2007: the blended benchmark was 15% S&P 500, 40% ICE BofA 1-3Yr Corp/Gov, 40% Bloomberg US Agg, and 5% FTSE 1 Mth US T-Bill.
To provide a consistent level of
inflation-protected income over
the long-term. The major portion
of the assets will be fixed income
related. Equity securities are
utilized to provide inflation
protection.
Conservative
Moderately Conservative
Moderate
Balanced
Capital Appreciation
Efficient Frontier
Risk (Standard Deviation)
Reward (Rate of Return)
Strategic Range Policy Tactical
Equity 5 – 20% 15% 14%
Fixed Income 60 – 95% 80% 82%
Cash 0 – 20% 5% 4%
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees, but Net of Embedded Fund Fees)
Index Plus Composite (Passive)
Gross Net
Current Quarter* 2.52% 2.43%
Blended Benchmark*,** 2.71%
Year To Date* -12.06% -12.38%
Blended Benchmark*,** -10.58%
1 Year -12.06% -12.38%
Blended Benchmark** -10.58%
3 Year -0.89% -1.25%
Blended Benchmark** -0.48%
5 Year 1.23% 0.86%
Blended Benchmark** 1.53%
10 Year 2.30% 1.94%
Blended Benchmark** 2.49%
PORTFOLIO FACTS
Index Plus (Passive)
Composite Inception Date 07/2004
No of Holdings in Portfolio 13
(Gross of Investment Management Fees, but Net of Embedded Fund Fees)
HighMark Plus Composite (Active)
2008 -9.04%
2009 15.59%
2010 8.68%
2011 2.19%
2012 8.45%
2013 3.69%
2014 3.88%
2015 0.29%
2016 4.18%
2017 6.73%
2018 -1.35%
2019 11.05%
2020 9.03%
2021 2.20%
2022 -12.63%
Index Plus Composite (Passive)
2008 -6.70%
2009 10.49%
2010 7.67%
2011 3.70%
2012 6.22%
2013 3.40%
2014 4.32%
2015 0.06%
2016 3.75%
2017 5.52%
2018 -1.09%
2019 10.37%
2020 8.56%
2021 1.97%
2022 -12.06%
HIGHMARK CAPITAL MANAGEMENT
350 California Street
Suite 1600
San Francisco, CA 94104
800-582-4734
ABOUT THE ADVISER
HighMark® Capital Management, Inc. (HighMark) has
over 100 years (including predecessor organizations) of institutional money management experience with $8.7
billion in assets under management and $9.0 billion in
assets under advisement*. HighMark has a long term
disciplined approach to money management and
currently manages assets for a wide array of clients.
ABOUT THE PORTFOLIO MANAGEMENT TEAM
Andrew Brown, CFA®
Senior Portfolio Manager
Investment Experience: since 1994
HighMark Tenure: since 1997
Education: MBA, University of Southern California;
BA, University of Southern California
Salvatore “Tory” Milazzo III, CFA®
Senior Portfolio Manager
Investment Experience: since 2004
HighMark Tenure: since 2014
Education: BA, Colgate University
J. Keith Stribling, CFA ®
Senior Portfolio Manager
Investment Experience: since 1985
HighMark Tenure: since 1995
Education: BA, Stetson University
Christiane Tsuda
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2010
Education: BA, International Christian University, Tokyo Anne Wimmer, CFA®
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2007
Education: BA, University of California, Santa Barbara
Asset Allocation Committee
Number of Members: 15
Average Years of Experience: 27
Average Tenure (Years): 15
Manager Review Group
Number of Members: 7
Average Years of Experience: 22
Average Tenure (Years): 10
*Assets under management (“AUM”) include assets for which HighMark provides continuous and regular supervisory and management services. Assets under advisement (“AUA”)
include assets for which HighMark provides certain investment advisory services (including, but not limited to, investment research and strategies) for client assets of its parent company, MUFG Union Bank, N.A.
The performance records shown represent size-weighted composites of tax exempt accounts that meet the following criteria:
Accounts are managed by HighMark with full investment authority according to the PARS Conservative active and passive objectives.
The adviser to the PARS portfolios is US Bank, and HighMark serves as sub-adviser to US Bank to manage these portfolios.
US Bank may charge clients as much as 0.60% annual management fee based on a sliding scale. US Bank pays HighMark 60% of the annual management fee for assets sub-advised by HighMark under its sub-advisory agreement with US Bank.
The 0.36% paid to HighMark, as well as other expenses that may be incurred in the management of the portfolio, will reduce the portfolio’s returns. Assuming an investment for five years, a 5% annual total return, and an annual sub-advisory fee rate of 0.36% deducted from the assets at market at the end of each year, a $10 million initial value would grow to $12.53 million after fees (Net-of-Fees) and $12.76 million before fees (Gross-of-Fees). Gross returns are presented before management and custodial fees but after all trading expenses and reflect the reinvestment of dividends and other income. A client's return will be reduced by the advisory fees and other expenses it may incur as a client. Additional information regarding the firm’s policies and procedures for calculating and reporting performance results is available upon request. Performance results are calculated and presented in U.S. dollars and do not reflect the deduction of investment advisory fees, custody fees, or taxes but do reflect the deduction of trading expenses. Returns are calculated based on trade-date accounting.
Blended benchmarks represent HighMark’s strategic allocations between equity, fixed income, and cash and are rebalanced monthly. Benchmark returns do not reflect the deduction of advisory fees or other expenses of investing but assumes the reinvestment of dividends and other earnings. An investor cannot invest directly in an index. The unmanaged S&P 500 Index is representative of the performance of large companies in the U.S. stock market. The MSCI EAFE Index is a free floatadjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The Russell Midcap Index measures the performance of the midcap segment of the U.S. equity universe. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The ICE BofA U.S. High Yield Master II Index tracks the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market. Wilshire REIT Index measures U.S. publicly traded Real Estate Investment Trusts. The unmanaged Bloomberg U.S. Aggregate Bond Index is generally representative of the U.S. taxable bond market as a whole. The ICE BofA 1-3 Year U.S. Corporate & Government Index tracks the bond performance of the ICE BofA U.S. Corporate & Government Index, with a remaining term to final maturity less than 3 years.
The unmanaged FTSE 1-Month U.S. Treasury Bill Index tracks the yield of the 1-month U.S. Treasury Bill.
HighMark Capital Management, Inc. (HighMark), an SEC-registered investment adviser, is a wholly owned subsidiary of MUFG Union Bank, N.A. (MUFG Union Bank). HighMark manages institutional separate account portfolios for a wide variety of for-profit and nonprofit organizations, public agencies, and public and private retirement plans. HighMark and MUFG Union Banks’s ultimate parent company is a wholly-owned subsidiary of U.S. Bancorp (“USB”). MUFG Union Bank provides certain services to HighMark and is compensated for these services. Past performance does not guarantee future results. Individual account management and construction will vary depending on each client's investment needs and objectives. Investments employing HighMark strategies are NOT insured by the FDIC or by any other Federal Government Agency, are NOT Bank deposits, are NOT guaranteed by the Bank or any Bank affiliate, and MAY lose value, including possible loss of principal.
350 California Street
Suite 1600
San Francisco, CA 94104
800.582.4734
www.highmarkcapital.com
HOLDINGS
STYLE
Small Cap
2.3%
Interm-Term Bond
62.4% High Yield
1.1%
Short-Term Bond
18.0%
Large Cap Core
4.2%
Large Cap Growth
1.6%
Mid Cap
1.4%
Intl Stocks
2.2%
Cash
4.5%
Large Cap Value
1.8% Real Estate
0.5%
Holdings are subject to change at the
discretion of the investment manager.
HighMark Plus (Active) Index Plus (Passive)
Columbia Contrarian Core I3 iShares Core S&P 500 ETF
Vanguard Growth & Income Adm iShares S&P 500 Value ETF
Dodge & Cox Stock Fund iShares S&P 500 Growth ETF
iShares S&P 500 Value ETF iShares Russell Mid-Cap ETF
Harbor Capital Appreciation - Retirement Vanguard Real Estate ETF T. Rowe Price Growth Stock - I iShares Russell 2000 Value ETF iShares Russell Mid-Cap ETF iShares Russell 2000 Growth ETF Vanguard Real Estate ETF iShares Core MSCI EAFE ETF
Undiscovered Managers Behavioral Value-R6 Vanguard FTSE Emerging Markets ETF Vanguard Small Cap Growth ETF Vanguard Short-Term Invest-Grade Adm DFA Large Cap International Portfolio iShares Core U.S. Aggregate Dodge & Cox International Stock Vanguard High-Yield Corp Adm MFS International Growth - R6 First American Government Obligations Z Hartford Schroders Emerging Markets Eq
Vanguard Short-Term Invest-Grade Adm
PIMCO High Yield Instl
PIMCO Total Return Fund - Inst
PGIM Total Return Bond - R6
DoubleLine Core Fixed Income - I
First American Government Obligations Z
HighMark Plus (Active)
Composite Inception Date 08/2004
No of Holdings in Portfolio 20
PARS DIVERSIFIED PORTFOLIOS
MODERATELY CONSERVATIVE
INVESTMENT OBJECTIVE
ANNUAL RETURNS
ASSET ALLOCATION — MODERATELY CONSERVATIVE PORTFOLIO
Comprehensive Investment Solution
HighMark® Capital Management, Inc.’s (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.
Key features include: sophisticated asset allocation
and optimization techniques, four layers of
diversification (asset class, style, manager, and
security), access to rigorously screened, top tier
money managers, flexible investment options, and
experienced investment management.
Rigorous Manager Due Diligence
Our manager review committee utilizes a rigorous
screening process that searches for investment
managers and styles that have not only produced
above-average returns within acceptable risk
parameters, but have the resources and commitment
to continue to deliver these results. We have set high
standards for our investment managers and funds.
This is a highly specialized, time consuming
approach dedicated to one goal: competitive and
consistent performance.
Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation strategies:
HighMark Plus utilizes actively managed mutual
funds while Index Plus utilizes index-based
securities, including exchange-traded funds. Both
investment options leverage HighMark’s active asset
allocation approach.
Risk Management
The portfolio is constructed to control risk through
four layers of diversification – asset classes (cash,
fixed income, equity), investment styles (large cap,
small cap, international, value, growth), managers
and securities. Disciplined mutual fund selection and
monitoring process helps to drive return potential
while reducing portfolio risk.
WHY THE PARS DIVERSIFIED
MODERATELY CONSERVATIVE PORTFOLIO?
Q4 2022
* Returns less than one year are not annualized. **Breakdown for Blended Benchmark: From 10/1/2012 - Present: 15.5% S&P500, 3% Russell Mid Cap, 4.5% Russell 2000, 2% MSCI EM (net), 4% MSCI EAFE (net), 49.25% Bloomberg US Agg, 14% ICE BofA 1- 3 Yr US Corp/Gov’t, 1.75% ICE BofA US High Yield Master II, 1% Wilshire REIT, and 5% FTSE 1 Mth US T-Bill. From 4/1/2007 - 9/30/2012: the blended benchmark was 25% S&P 500; 1.5% Russell 2000, 3.5% MSCI EAFE (net), 25% ICE BofA 1-3 Year Corp./Govt, 40% Bloomberg US Agg, 5% FTSE 1 Mth US T-Bill. Prior to April 2007, the blended benchmark was 30% S&P 500, 25% ICE BofA 1-3Yr Corp/Gov, 40% Bloomberg US Agg, and 5% FTSE 1 Mth US T-Bill.
To provide current income, with
capital appreciation as a
secondary objective. The major
portion of the assets is committed
to income-producing securities.
Market fluctuations should be
expected.
Strategic Range Policy Tactical
Equity 20 - 40% 30% 28%
Fixed Income 50 - 80% 65% 67%
Cash 0 - 20% 5% 5%
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees, but Net of Embedded Fund Fees)
HighMark Plus Composite (Active)
Gross Net
Current Quarter* 3.55% 3.46%
Blended Benchmark*,** 3.91%
Year To Date* -13.46% -13.77%
Blended Benchmark*,** -12.35%
1 Year -13.46% -13.77%
Blended Benchmark** -12.35%
3 Year 0.26% -0.10%
Blended Benchmark** 0.54%
5 Year 2.23% 1.86%
Blended Benchmark** 2.52%
10 Year 3.73% 3.36%
Blended Benchmark** 3.90%
Index Plus Composite (Passive)
Gross Net
Current Quarter* 3.50% 3.41%
Blended Benchmark*,** 3.91%
Year To Date* -13.00% -13.32%
Blended Benchmark*,** -12.35%
1 Year -13.00% -13.32%
Blended Benchmark** -12.35%
3 Year 0.19% -0.17%
Blended Benchmark** 0.54%
5 Year 2.20% 1.84%
Blended Benchmark** 2.52%
10 Year 3.62% 3.25%
Blended Benchmark** 3.90%
PORTFOLIO FACTS
Index Plus (Passive)
Composite Inception Date 05/2005
No of Holdings in Portfolio 13
Efficient Frontier
Risk (Standard Deviation)
Reward (Rate of Return)
Conservative
Moderately Conservative
Moderate
Capital Appreciation
Balanced
(Gross of Investment Management Fees, but Net of Embedded Fund Fees)
HighMark Plus Composite (Active)
2008 -15.37%
2009 18.71%
2010 10.46%
2011 1.75%
2012 10.88%
2013 7.30%
2014 4.41%
2015 0.32%
2016 4.94%
2017 9.56%
2018 -2.60%
2019 13.73%
2020 10.76%
2021 5.15%
2022 -13.46%
Index Plus Composite (Passive)
2008 -12.40%
2009 11.92%
2010 9.72%
2011 3.24%
2012 8.24%
2013 6.78%
2014 5.40%
2015 -0.18%
2016 5.42%
2017 8.08%
2018 -2.33%
2019 13.53%
2020 9.74%
2021 5.33%
2022 -13.00%
HIGHMARK CAPITAL MANAGEMENT
350 California Street
Suite 1600
San Francisco, CA 94104
800-582-4734
ABOUT THE ADVISER
HighMark® Capital Management, Inc. (HighMark) has
over 100 years (including predecessor organizations) of institutional money management experience with $8.7
billion in assets under management and $9.0 billion in
assets under advisement*. HighMark has a long term
disciplined approach to money management and
currently manages assets for a wide array of clients.
ABOUT THE PORTFOLIO MANAGEMENT TEAM
Andrew Brown, CFA®
Senior Portfolio Manager
Investment Experience: since 1994
HighMark Tenure: since 1997
Education: MBA, University of Southern California;
BA, University of Southern California
Salvatore “Tory” Milazzo III, CFA®
Senior Portfolio Manager
Investment Experience: since 2004
HighMark Tenure: since 2014
Education: BA, Colgate University
J. Keith Stribling, CFA®
Senior Portfolio Manager
Investment Experience: since 1985
HighMark Tenure: since 1995
Education: BA, Stetson University
Christiane Tsuda
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2010
Education: BA, International Christian University, Tokyo Anne Wimmer, CFA®
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2007
Education: BA, University of California, Santa Barbara
Asset Allocation Committee
Number of Members: 15
Average Years of Experience: 27
Average Tenure (Years): 15
Manager Review Group
Number of Members: 7
Average Years of Experience: 22
Average Tenure (Years): 10
*Assets under management (“AUM”) include assets for which HighMark provides continuous and regular supervisory and management services. Assets under advisement (“AUA”)
include assets for which HighMark provides certain investment advisory services (including, but not limited to, investment research and strategies) for client assets of its parent company, MUFG Union Bank, N.A.
The performance records shown represent a size-weighted composite of tax exempt accounts that meet the following criteria: Accounts are managed by HighMark with full investment authority according to the PARS Moderately Conservative active and passive objectives.
The adviser to the PARS portfolios is US Bank, and HighMark serves as sub-adviser to US Bank to manage these portfolios. US Bank may charge clients as much as 0.60% annual management fee based on a sliding scale. US Bank pays HighMark 60% of the annual management fee for assets sub-advised by HighMark under its sub-advisory agreement with US Bank. The 0.36% paid to HighMark, as well as other expenses that may be incurred in the management of the portfolio, will reduce the portfolio’s returns. Assuming an investment for five years, a 5% annual total return, and an annual sub-advisory fee rate of 0.36% deducted from the assets at market at the end of each year, a $10 million initial value would grow to $12.53 million after fees (Net-of-Fees) and $12.76 million before fees (Gross-of-Fees).
Gross returns are presented before management and custodial fees but after all trading expenses and reflect the reinvestment of dividends and other income. A client's return will be reduced by the advisory fees and other expenses it may incur as a client. Additional information regarding the firm’s policies and procedures for calculating and reporting performance results is available upon request. Performance results are calculated and presented in U.S. dollars and do not reflect the deduction of investment advisory fees, custody fees, or taxes but do reflect the deduction of trading expenses. Returns are calculated based on trade-date accounting.
Blended benchmarks represent HighMark’s strategic allocations between equity, fixed income, and cash and are rebalanced monthly. Benchmark returns do not reflect the deduction of advisory fees or other expenses of investing but assumes the reinvestment of dividends and other earnings. An investor cannot invest directly in an index. The unmanaged S&P 500 Index is representative of the performance of large companies in the U.S. stock market. The MSCI EAFE Index is a free float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The ICE BofA U.S. High Yield Master II Index tracks the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market. Wilshire REIT index measures U.S. publicly traded Real Estate Investment Trusts. The unmanaged Bloomberg U.S. Aggregate Bond Index is generally representative of the U.S. taxable bond market as a whole. The ICE BofA 1-3 Year U.S. Corporate & Government Index tracks the bond performance of the ICE BofA U.S. Corporate & Government Index, with a remaining term to final maturity less than 3 years. The unmanaged FTSE 1-Month U.S.
Treasury Bill Index tracks the yield of the 1-month U.S. Treasury Bill.
HighMark Capital Management, Inc. (HighMark), an SEC-registered investment adviser, is a wholly owned subsidiary of MUFG Union Bank, N.A. (MUFG Union Bank). HighMark manages institutional separate account portfolios for a wide variety of for-profit and nonprofit organizations, public agencies, and public and private retirement plans. HighMark and MUFG Union Banks’s ultimate parent company is a wholly-owned subsidiary of U.S. Bancorp (“USB”). MUFG Union Bank provides certain services to HighMark and is compensated for these services. Past performance does not guarantee future results. Individual account management and construction will vary depending on each client's investment needs and objectives. Investments employing HighMark strategies are NOT insured by the FDIC or by any other Federal Government Agency, are NOT Bank deposits, are NOT guaranteed by the Bank or any Bank affiliate, and MAY lose value, including possible loss of principal.
350 California Street
Suite 1600
San Francisco, CA 94104
800.582.4734
www.highmarkcapital.com
HOLDINGS
STYLE
Small Cap 4.3%
Interm-Term Bond
52.5%
High Yield 1.0%
Short-Term Bond
13.5%
Large Cap Core
8.2%
Large Cap Growth
3.3%
Mid Cap 2.7%
Intl Stocks 4.7%
Cash 5.0%
Large Cap Value
3.8% Real Estate 1.0%
Holdings are subject to change at the
discretion of the investment manager.
HighMark Plus (Active) Index Plus (Passive)
Columbia Contrarian Core I3 iShares Core S&P 500 ETF
Vanguard Growth & Income Adm iShares S&P 500 Value ETF
Dodge & Cox Stock Fund iShares S&P 500 Growth ETF
iShares S&P 500 Value ETF iShares Russell Mid-Cap ETF
Harbor Capital Appreciation - Retirement Vanguard Real Estate ETF T. Rowe Price Growth Stock - I iShares Russell 2000 Value ETF iShares Russell Mid-Cap ETF iShares Russell 2000 Growth ETF Vanguard Real Estate ETF iShares Core MSCI EAFE ETF
Undiscovered Managers Behavioral Value-R6 Vanguard FTSE Emerging Markets ETF Vanguard Small Cap Growth ETF Vanguard Short-Term Invest-Grade Adm DFA Large Cap International Portfolio iShares Core U.S. Aggregate Dodge & Cox International Stock Vanguard High-Yield Corp Adm MFS International Growth - R6 First American Government Obligations Z Hartford Schroders Emerging Markets Eq
Vanguard Short-Term Invest-Grade Adm
PIMCO High Yield Instl
PIMCO Total Return Fund - Inst
PGIM Total Return Bond - R6
DoubleLine Core Fixed Income - I
First American Government Obligations Z
PARS DIVERSIFIED PORTFOLIOS
MODERATE
INVESTMENT OBJECTIVE
ANNUAL RETURNS
ASSET ALLOCATION — MODERATE PORTFOLIO
Comprehensive Investment Solution
HighMark® Capital Management, Inc.’s (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.
Key features include: sophisticated asset allocation
and optimization techniques, four layers of
diversification (asset class, style, manager, and
security), access to rigorously screened, top tier
money managers, flexible investment options, and
experienced investment management.
Rigorous Manager Due Diligence
Our manager review committee utilizes a rigorous
screening process that searches for investment
managers and styles that have not only produced
above-average returns within acceptable risk
parameters, but have the resources and commitment
to continue to deliver these results. We have set high
standards for our investment managers and funds.
This is a highly specialized, time consuming
approach dedicated to one goal: competitive and
consistent performance.
Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation strategies:
HighMark Plus utilizes actively managed mutual
funds while Index Plus utilizes index-based
securities, including exchange-traded funds. Both
investment options leverage HighMark’s active asset
allocation approach.
Risk Management
The portfolio is constructed to control risk through
four layers of diversification – asset classes (cash,
fixed income, equity), investment styles (large cap,
small cap, international, value, growth), managers
and securities. Disciplined mutual fund selection and
monitoring process helps to drive return potential
while reducing portfolio risk.
WHY THE PARS DIVERSIFIED
MODERATE PORTFOLIO?
Q4 2022
* Returns less than one year are not annualized. **Breakdown for Blended Benchmark: From 10/1/2012 – Present: 26.5% S&P500, 5% Russell Mid Cap, 7.5% Russell 2000, 3.25% MSCI EM (net), 6% MSCI EAFE (net), 33.50% Bloomberg US Agg, 10% ICE BofA 1-3 Yr US Corp/Gov’t, 1.50% ICE BofA US High Yield Master II, 1.75% Wilshire REIT, and 5% FTSE 1 Mth US T-Bill. From 4/1/2007 – 9/30/2012: the blended benchmark was 43% S&P 500; 2% Russell 2000, 5% MSCI EAFE (net), 15% ICE BofA 1-3 Year Corp./Govt, 30% Bloomberg US Agg, 5% FTSE 1 Mth US T-Bill. Prior to April 2007: the blended benchmark was 50% S&P 500, 15% ICE BofA 1- 3Yr Corp/Gov, 30% Bloomberg US Agg, and 5% FTSE 1 Mth US T-Bill.
To provide current income and
moderate capital appreciation.
It is expected that dividend and
interest income will comprise a
significant portion of total return,
although growth through capital
appreciation is equally important.
Strategic Range Policy Tactical
Equity 40 - 60% 50% 47%
Fixed Income 40 - 60% 45% 48%
Cash 0 - 20% 5% 5%
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees, but Net of Embedded Fund Fees)
Index Plus Composite (Passive)
Gross Net
Current Quarter* 4.78% 4.68%
Blended Benchmark*,** 5.30%
Year To Date* -14.21% -14.53%
Blended Benchmark*,** -13.74%
1 Year -14.21% -14.53%
Blended Benchmark** -13.74%
3 Year 1.68% 1.32%
Blended Benchmark** 2.12%
5 Year 3.47% 3.10%
Blended Benchmark** 3.90%
10 Year 5.34% 4.97%
Blended Benchmark** 5.78%
PORTFOLIO FACTS
HighMark Plus (Active)
Composite Inception Date 10/2004
No of Holdings in Portfolio 20
Index Plus (Passive)
Composite Inception Date 05/2006
No of Holdings in Portfolio 13
Efficient Frontier
Risk (Standard Deviation)
Reward (Rate of Return)
Conservative
Moderately Conservative
Moderate
Capital Appreciation
Balanced
(Gross of Investment Management Fees, but Net of Embedded Fund Fees)
HighMark Plus Composite (Active)
2008 -22.88%
2009 21.47%
2010 12.42%
2011 0.55%
2012 12.25%
2013 13.06%
2014 4.84%
2015 0.14%
2016 6.45%
2017 13.19%
2018 -4.03%
2019 17.71%
2020 12.92%
2021 9.31%
2022 -14.63%
Index Plus Composite (Passive)
2008 -18.14%
2009 16.05%
2010 11.77%
2011 2.29%
2012 10.91%
2013 12.79%
2014 5.72%
2015 -0.52%
2016 7.23%
2017 11.59%
2018 -4.03%
2019 17.52%
2020 11.23%
2021 10.18%
2022 -14.21%
HighMark Plus Composite (Active)
Gross Net
Current Quarter* 4.71% 4.62%
Blended Benchmark*,** 5.30%
Year To Date* -14.63% -14.94%
Blended Benchmark*,** -13.74%
1 Year -14.63% -14.94%
Blended Benchmark** -13.74%
3 Year 1.76% 1.40%
Blended Benchmark** 2.12%
5 Year 3.55% 3.18%
Blended Benchmark** 3.90%
10 Year 5.46% 5.09%
Blended Benchmark** 5.78%
HIGHMARK CAPITAL MANAGEMENT
350 California Street
Suite 1600
San Francisco, CA 94104
800-582-4734
ABOUT THE ADVISER
HighMark® Capital Management, Inc. (HighMark) has
over 100 years (including predecessor organizations) of institutional money management experience with $8.7
billion in assets under management and $9.0 billion in
assets under advisement*. HighMark has a long term
disciplined approach to money management and
currently manages assets for a wide array of clients.
ABOUT THE PORTFOLIO MANAGEMENT TEAM
Andrew Brown, CFA®
Senior Portfolio Manager
Investment Experience: since 1994
HighMark Tenure: since 1997
Education: MBA, University of Southern California;
BA, University of Southern California
Salvatore “Tory” Milazzo III, CFA®
Senior Portfolio Manager
Investment Experience: since 2004
HighMark Tenure: since 2014
Education: BA, Colgate University
J. Keith Stribling, CFA®
Senior Portfolio Manager
Investment Experience: since 1985
HighMark Tenure: since 1995
Education: BA, Stetson University
Christiane Tsuda
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2010
Education: BA, International Christian University, Tokyo Anne Wimmer, CFA®
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2007
Education: BA, University of California, Santa Barbara
Asset Allocation Committee
Number of Members: 15
Average Years of Experience: 27
Average Tenure (Years): 15
Manager Review Group
Number of Members: 7
Average Years of Experience: 22
Average Tenure (Years): 10
*Assets under management (“AUM”) include assets for which HighMark provides continuous and regular supervisory and management services. Assets under advisement (“AUA”)
include assets for which HighMark provides certain investment advisory services (including, but not limited to, investment research and strategies) for client assets of its parent company, MUFG Union Bank, N.A.
The performance records shown represent size-weighted composites of tax exempt accounts that meet the following criteria: Accounts are managed by HighMark with full investment authority according to the PARS Moderate active and passive objectives.
The adviser to the PARS portfolios is US Bank, and HighMark serves as sub-adviser to US Bank to manage these portfolios. US Bank may charge clients as much as 0.60% annual management fee based on a sliding scale. US Bank pays HighMark 60% of the annual management fee for assets sub-advised by HighMark under its sub-advisory agreement with US Bank. The 0.36% paid to HighMark, as well as other expenses that may be incurred in the management of the portfolio, will reduce the portfolio’s returns. Assuming an investment for five years, a 5% annual total return, and an annual sub- advisory fee rate of 0.36% deducted from the assets at market at the end of each year, a $10 million initial value would grow to $12.53 million after fees (Net-of-Fees) and $12.76 million before fees (Gross-of-Fees). Gross returns are presented before management and custodial fees but after all trading expenses and reflect the reinvestment of dividends and other income. A client's return will be reduced by the advisory fees and other expenses it may incur as a client. Additional information regarding the firm’s policies and procedures for calculating and reporting performance results is available upon request. Performance results are calculated and presented in U.S. dollars and do not reflect the deduction of investment advisory fees, custody fees, or taxes but do reflect the deduction of trading expenses. Returns are calculated based on trade-date accounting.
Blended benchmarks represent HighMark’s strategic allocations between equity, fixed income, and cash and are rebalanced monthly. Benchmark returns do not reflect the deduction of advisory fees or other expenses of investing but assumes the reinvestment of dividends and other earnings. An investor cannot invest directly in an index. The unmanaged S&P 500 Index is representative of the performance of large companies in the U.S. stock market. The MSCI EAFE Index is a free float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The ICE BofA U.S. High Yield Master II Index tracks the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market. Wilshire REIT index measures U.S. publicly traded Real Estate Investment Trusts. The unmanaged Bloomberg U.S. Aggregate Bond Index is generally representative of the U.S. taxable bond market as a whole. The ICE BofA 1-3 Year U.S. Corporate & Government Index tracks the bond performance of the ICE BofA U.S. Corporate & Government Index, with a remaining term to final maturity less than 3 years. The unmanaged FTSE 1-Month U.S. Treasury Bill Index tracks the yield of the 1- month U.S. Treasury Bill.
HighMark Capital Management, Inc. (HighMark), an SEC-registered investment adviser, is a wholly owned subsidiary of MUFG Union Bank, N.A. (MUFG Union Bank). HighMark manages institutional separate account portfolios for a wide variety of for-profit and nonprofit organizations, public agencies, and public and private retirement plans. HighMark and MUFG Union Banks’s ultimate parent company is a wholly-owned subsidiary of U.S. Bancorp (“USB”). MUFG Union Bank provides certain services to HighMark and is compensated for these services. Past performance does not guarantee future results. Individual account management and construction will vary depending on each client's investment needs and objectives. Investments employing HighMark strategies are NOT insured by the FDIC or by any other Federal Government Agency, are NOT Bank deposits, are NOT guaranteed by the Bank or any Bank affiliate, and MAY lose value, including possible loss of principal.
350 California Street
Suite 1600
San Francisco, CA 94104
800.582.4734
www.highmarkcapital.com
HOLDINGS
STYLE
Small Cap
7.0%
Interm-Term Bond
36.3%
High Yield
1.0% Short-Term Bond
10.7%
Large Cap Core
14.0%
Large Cap Growth
5.6%
Mid Cap
4.5%
Intl Stocks
7.3%
Cash
5.4%
Large Cap Value
6.4%
Real Estate
1.8%
Holdings are subject to change at the
discretion of the investment manager.
HighMark Plus (Active) Index Plus (Passive)
Columbia Contrarian Core I3 iShares Core S&P 500 ETF
Vanguard Growth & Income Adm iShares S&P 500 Value ETF
Dodge & Cox Stock Fund iShares S&P 500 Growth ETF
iShares S&P 500 Value ETF iShares Russell Mid-Cap ETF
Harbor Capital Appreciation - Retirement Vanguard Real Estate ETF T. Rowe Price Growth Stock - I iShares Russell 2000 Value ETF iShares Russell Mid-Cap ETF iShares Russell 2000 Growth ETF Vanguard Real Estate ETF iShares Core MSCI EAFE ETF
Undiscovered Managers Behavioral Value-R6 Vanguard FTSE Emerging Markets ETF Vanguard Small Cap Growth ETF Vanguard Short-Term Invest-Grade Adm DFA Large Cap International Portfolio iShares Core U.S. Aggregate Dodge & Cox International Stock Vanguard High-Yield Corp Adm MFS International Growth - R6 First American Government Obligations Z Hartford Schroders Emerging Markets Eq
Vanguard Short-Term Invest-Grade Adm
PIMCO High Yield Instl
PIMCO Total Return Fund - Inst
PGIM Total Return Bond - R6
DoubleLine Core Fixed Income - I
First American Government Obligations Z
HighMark Plus (Active)
Composite Inception Date 10/2006
No of Holdings in Portfolio 20
PARS DIVERSIFIED PORTFOLIOS
BALANCED
INVESTMENT OBJECTIVE
ANNUAL RETURNS
ASSET ALLOCATION — BALANCED PORTFOLIO
Comprehensive Investment Solution
HighMark® Capital Management, Inc.’s (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.
Key features include: sophisticated asset allocation
and optimization techniques, four layers of
diversification (asset class, style, manager, and
security), access to rigorously screened, top tier
money managers, flexible investment options, and
experienced investment management.
Rigorous Manager Due Diligence
Our manager review committee utilizes a rigorous
screening process that searches for investment
managers and styles that have not only produced
above-average returns within acceptable risk
parameters, but have the resources and commitment
to continue to deliver these results. We have set high
standards for our investment managers and funds.
This is a highly specialized, time consuming
approach dedicated to one goal: competitive and
consistent performance.
Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation strategies:
HighMark Plus utilizes actively managed mutual
funds while Index Plus utilizes index-based
securities, including exchange-traded funds. Both
investment options leverage HighMark’s active asset
allocation approach.
Risk Management
The portfolio is constructed to control risk through
four layers of diversification – asset classes (cash,
fixed income, equity), investment styles (large cap,
small cap, international, value, growth), managers
and securities. Disciplined mutual fund selection and
monitoring process helps to drive return potential
while reducing portfolio risk.
WHY THE PARS DIVERSIFIED
BALANCED PORTFOLIO?
Q4 2022
* Returns less than one year are not annualized. **Breakdown for Blended Benchmark: From 10/1/2012 – Present: 32% S&P500, 6% Russell Mid Cap, 9% Russell 2000, 4% MSCI EM (net), 7% MSCI EAFE (net), 27% Bloomberg US Agg, 6.75% ICE BofA 1-3 Yr US Corp/Gov’t, 1.25% ICE BofA US High Yield Master II, 2% Wilshire REIT, and 5% FTSE 1 Mth US T-Bill. From 4/1/2007 – 9/30/2012:
the blended benchmark was 51% S&P 500; 3% Russell 2000, 6% MSCI EAFE (net), 5% ICE BofA 1-3 Year Corp./Govt, 30% Bloomberg US Agg, 5% FTSE 1 Mth US T-Bill. Prior to April 2007: the blended benchmark was 60% S&P 500, 5% ICE BofA 1-3Yr Corp/Gov, 30% Bloomberg US Agg, and 5% FTSE 1 Mth US T-Bill.
To provide growth of principal and
income. While dividend and
interest income are an important
component of the objective’s
total return, it is expected that
capital appreciation will comprise
a larger portion of the total return.
Strategic Range Policy Tactical
Equity 50 – 70% 60% 56%
Fixed Income 30 – 50% 35% 38%
Cash 0 – 20% 5% 6%
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees, but Net of Embedded Fund Fees)
HighMark Plus Composite (Active)
Gross Net
Current Quarter* 5.27% 5.18%
Blended Benchmark*,** 6.00%
Year To Date* -15.28% -15.59%
Blended Benchmark*,** -14.58%
1 Year -15.28% -15.59%
Blended Benchmark** -14.58%
3 Year 2.43% 2.07%
Blended Benchmark** 2.83%
5 Year 4.15% 3.77%
Blended Benchmark** 4.53%
10 Year 6.32% 5.94%
Blended Benchmark** 6.69%
Index Plus Composite (Passive)
Gross Net
Current Quarter* 5.38% 5.29%
Blended Benchmark*,** 6.00%
Year To Date* -14.97% -15.28%
Blended Benchmark*,** -14.58%
1 Year -14.97% -15.28%
Blended Benchmark** -14.58%
3 Year 2.38% 2.02%
Blended Benchmark** 2.83%
5 Year 4.03% 3.66%
Blended Benchmark** 4.53%
10 Year 6.17% 5.79%
Blended Benchmark** 6.69%
PORTFOLIO FACTS
Index Plus (Passive)
Composite Inception Date 10/2007
No of Holdings in Portfolio 13
Efficient Frontier
Risk (Standard Deviation)
Reward (Rate of Return)
Conservative
Moderately Conservative
Moderate
Capital Appreciation
Balanced
(Gross of Investment Management Fees, but Net of Embedded Fund Fees)
HighMark Plus Composite (Active)
2008 -25.72%
2009 21.36%
2010 14.11%
2011 -0.46%
2012 13.25%
2013 16.61%
2014 4.70%
2015 0.04%
2016 6.81%
2017 15.46%
2018 -4.88%
2019 19.85%
2020 13.85%
2021 11.44%
2022 -15.28%
Index Plus Composite (Passive)
2008 -23.22%
2009 17.62%
2010 12.76%
2011 1.60%
2012 11.93%
2013 15.63%
2014 6.08%
2015 -0.81%
2016 8.26%
2017 13.39%
2018 -5.05%
2019 19.59%
2020 12.07%
2021 12.63%
2022 -14.97%
HIGHMARK CAPITAL MANAGEMENT
350 California Street
Suite 1600
San Francisco, CA 94104
800-582-4734
ABOUT THE ADVISER
HighMark® Capital Management, Inc. (HighMark) has
over 100 years (including predecessor organizations) of institutional money management experience with $8.7
billion in assets under management and $9.0 billion in
assets under advisement*. HighMark has a long term
disciplined approach to money management and
currently manages assets for a wide array of clients.
ABOUT THE PORTFOLIO MANAGEMENT TEAM
Andrew Brown, CFA®
Senior Portfolio Manager
Investment Experience: since 1994
HighMark Tenure: since 1997
Education: MBA, University of Southern California;
BA, University of Southern California
Salvatore “Tory” Milazzo III, CFA®
Senior Portfolio Manager
Investment Experience: since 2004
HighMark Tenure: since 2014
Education: BA, Colgate University
J. Keith Stribling, CFA®
Senior Portfolio Manager
Investment Experience: since 1985
HighMark Tenure: since 1995
Education: BA, Stetson University
Christiane Tsuda
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2010
Education: BA, International Christian University, Tokyo Anne Wimmer, CFA®
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2007
Education: BA, University of California, Santa Barbara
Asset Allocation Committee
Number of Members: 15
Average Years of Experience: 27
Average Tenure (Years): 15
Manager Review Group
Number of Members: 7
Average Years of Experience: 22
Average Tenure (Years): 10
*Assets under management (“AUM”) include assets for which HighMark provides continuous and regular supervisory and management services. Assets under advisement (“AUA”)
include assets for which HighMark provides certain investment advisory services (including, but not limited to, investment research and strategies) for client assets of its parent company, MUFG Union Bank, N.A.
The performance records shown represent size-weighted composites of tax exempt accounts that meet the following criteria:
Accounts are managed by HighMark with full investment authority according to the PARS Balanced active and passive objectives.
The composite name has been changed from PARS Balanced/Moderately Aggressive to PARS Balanced on 5/1/2013. The adviser to the PARS portfolios is US Bank, and HighMark serves as sub-adviser to US Bank to manage these portfolios. US Bank may charge clients as much as 0.60% annual management fee based on a sliding scale. US Bank pays HighMark 60% of the annual management fee for assets sub-advised by HighMark under its sub-advisory agreement with US Bank. The
0.36% paid to HighMark, as well as other expenses that may be incurred in the management of the portfolio, will reduce the portfolio’s returns. Assuming an investment for five years, a 5% annual total return, and an annual sub-advisory fee rate of
0.36% deducted from the assets at market at the end of each year, a $10 million initial value would grow to $12.53 million after fees (Net-of-Fees) and $12.76 million before fees (Gross-of-Fees). Gross returns are presented before management and custodial fees but after all trading expenses and reflect the reinvestment of dividends and other income. A client's return will be reduced by the advisory fees and other expenses it may incur as a client. Additional information regarding the firm’s policies and procedures for calculating and reporting performance results is available upon request. Performance results are calculated and presented in U.S. dollars and do not reflect the deduction of investment advisory fees, custody fees, or taxes but do reflect the deduction of trading expenses. Returns are calculated based on trade-date accounting.
Blended benchmarks represent HighMark’s strategic allocations between equity, fixed income, and cash and are rebalanced monthly. Benchmark returns do not reflect the deduction of advisory fees or other expenses of investing but assumes the reinvestment of dividends and other earnings. An investor cannot invest directly in an index. The unmanaged S&P 500 Index is representative of the performance of large companies in the U.S. stock market. The MSCI EAFE Index is a free float- adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The Russell Midcap Index measures the performance of the mid- cap segment of the U.S. equity universe. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The ICE BofA U.S. High Yield Master II Index tracks the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market. Wilshire REIT index measures U.S. publicly traded Real Estate Investment Trusts. The unmanaged Bloomberg U.S. Aggregate Bond Index is generally representative of the U.S. taxable bond market as a whole. The ICE BofA 1-3 Year U.S. Corporate & Government Index tracks the bond performance of the ICE BofA U.S. Corporate & Government Index, with a remaining term to final maturity less than 3 years.
The unmanaged FTSE 1-Month U.S. Treasury Bill Index tracks the yield of the 1-month U.S. Treasury Bill.
HighMark Capital Management, Inc. (HighMark), an SEC-registered investment adviser, is a wholly owned subsidiary of MUFG Union Bank, N.A. (MUFG Union Bank). HighMark manages institutional separate account portfolios for a wide variety of for-profit and nonprofit organizations, public agencies, and public and private retirement plans. HighMark and MUFG Union Banks’s ultimate parent company is a wholly-owned subsidiary of U.S. Bancorp (“USB”). MUFG Union Bank provides certain services to HighMark and is compensated for these services. Past performance does not guarantee future results. Individual account management and construction will vary depending on each client's investment needs and objectives. Investments employing HighMark strategies are NOT insured by the FDIC or by any other Federal Government Agency, are NOT Bank deposits, are NOT guaranteed by the Bank or any Bank affiliate, and MAY lose value, including possible loss of principal.
350 California Street
Suite 1600
San Francisco, CA 94104
800.582.4734
www.highmarkcapital.com
HOLDINGS
STYLE
Small Cap
8.4%
Interm-Term Bond
29.6%
High Yield
0.9%
Short-Term Bond
7.5%
Large Cap Core
17.0%
Large Cap Growth
6.8%
Mid Cap
5.5%
Intl Stocks
8.6%
Cash
6.0%
Large Cap Value
7.7%
Real Estate
2.0%
Holdings are subject to change at the
discretion of the investment manager.
HighMark Plus (Active) Index Plus (Passive)
Columbia Contrarian Core I3 iShares Core S&P 500 ETF
Vanguard Growth & Income Adm iShares S&P 500 Value ETF
Dodge & Cox Stock Fund iShares S&P 500 Growth ETF
iShares S&P 500 Value ETF iShares Russell Mid-Cap ETF
Harbor Capital Appreciation - Retirement Vanguard Real Estate ETF T. Rowe Price Growth Stock - I iShares Russell 2000 Value ETF iShares Russell Mid-Cap ETF iShares Russell 2000 Growth ETF Vanguard Real Estate ETF iShares Core MSCI EAFE ETF
Undiscovered Managers Behavioral Value-R6 Vanguard FTSE Emerging Markets ETF Vanguard Small Cap Growth ETF Vanguard Short-Term Invest-Grade Adm DFA Large Cap International Portfolio iShares Core U.S. Aggregate Dodge & Cox International Stock Vanguard High-Yield Corp Adm MFS International Growth - R6 First American Government Obligations Z Hartford Schroders Emerging Markets Eq
Vanguard Short-Term Invest-Grade Adm
PIMCO High Yield Instl
PIMCO Total Return Fund - Inst
PGIM Total Return Bond - R6
DoubleLine Core Fixed Income - I
First American Government Obligations Z
PARS DIVERSIFIED PORTFOLIOS
CAPITAL APPRECIATION
INVESTMENT OBJECTIVE
ANNUAL RETURNS
ASSET ALLOCATION — CAPITAL APPRECIATION PORTFOLIO
Comprehensive Investment Solution
HighMark® Capital Management, Inc.’s (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.
Key features include: sophisticated asset allocation
and optimization techniques, four layers of
diversification (asset class, style, manager, and
security), access to rigorously screened, top tier
money managers, flexible investment options, and
experienced investment management.
Rigorous Manager Due Diligence
Our manager review committee utilizes a rigorous
screening process that searches for investment
managers and styles that have not only produced
above-average returns within acceptable risk
parameters, but have the resources and commitment
to continue to deliver these results. We have set high
standards for our investment managers and funds.
This is a highly specialized, time consuming
approach dedicated to one goal: competitive and
consistent performance.
Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation strategies:
HighMark Plus utilizes actively managed mutual
funds while Index Plus utilizes index-based
securities, including exchange-traded funds. Both
investment options leverage HighMark’s active asset
allocation approach.
Risk Management
The portfolio is constructed to control risk through
four layers of diversification – asset classes (cash,
fixed income, equity), investment styles (large cap,
small cap, international, value, growth), managers
and securities. Disciplined mutual fund selection and
monitoring process helps to drive return potential
while reducing portfolio risk.
WHY THE PARS DIVERSIFIED
CAPITAL APPRECIATION PORTFOLIO?
Q4 2022
* Returns less than one year are not annualized. **Breakdown for Blended Benchmark: 39.5% S&P500, 7.5% Russell Mid Cap,
10.5% Russell 2000, 5.25% MSCI EM (net), 10.25% MSCI EAFE (net), 16% Bloomberg US Agg, 3% ICE BofA 1-3 Yr US Corp/Gov’t, 1% ICE BofA US High Yield Master II, 2% Wilshire REIT, and 5% FTSE 1 Mth US T-Bill.
To provide growth of principal.
The major portion of the assets
are invested in equity securities
and market fluctuations are
expected.
Strategic Range Policy Tactical
Equity 65 - 85% 75% 70%
Fixed Income 10 - 30% 20% 23%
Cash 0 - 20% 5% 7%
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees, but Net of Embedded Fund Fees)
Consolidated Composite
Gross Net
Current Quarter* 6.28% 6.19%
Blended Benchmark*,** 7.21%
Year To Date* -16.08% -16.38%
Blended Benchmark*,** -15.65%
1 Year -16.08% -16.38%
Blended Benchmark** -15.65%
3 Year 3.37% 3.00%
Blended Benchmark** 3.77%
5 Year 4.99% 4.61%
Blended Benchmark** 5.33%
10 Year 7.50% 7.12%
Blended Benchmark** 7.91%
PORTFOLIO FACTS
Consolidated Composite
Composite Inception Date 01/2009
No of Holdings in Portfolio 20
Efficient Frontier
Risk (Standard Deviation)
Reward (Rate of Return)
Conservative
Moderately Conservative
Moderate
Capital Appreciation Balanced
(Gross of Investment Management Fees, but Net of Embedded Fund Fees)
Consolidated Composite
2008 N/A
2009 23.77%
2010 12.95%
2011 -1.35%
2012 13.87%
2013 20.33%
2014 6.05%
2015 -0.26%
2016 8.79%
2017 16.72%
2018 -5.82%
2019 22.62%
2020 14.50%
2021 14.96%
2022 -16.08%
HIGHMARK CAPITAL MANAGEMENT
350 California Street
Suite 1600
San Francisco, CA 94104
800-582-4734
ABOUT THE ADVISER
HighMark® Capital Management, Inc. (HighMark) has
over 100 years (including predecessor organizations) of institutional money management experience with $8.7
billion in assets under management and $9.0 billion in
assets under advisement*. HighMark has a long term
disciplined approach to money management and
currently manages assets for a wide array of clients.
ABOUT THE PORTFOLIO MANAGEMENT TEAM
Andrew Brown, CFA®
Senior Portfolio Manager
Investment Experience: since 1994
HighMark Tenure: since 1997
Education: MBA, University of Southern California;
BA, University of Southern California
Salvatore “Tory” Milazzo III, CFA®
Senior Portfolio Manager
Investment Experience: since 2004
HighMark Tenure: since 2014
Education: BA, Colgate University
J. Keith Stribling, CFA®
Senior Portfolio Manager
Investment Experience: since 1985
HighMark Tenure: since 1995
Education: BA, Stetson University
Christiane Tsuda
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2010
Education: BA, International Christian University, Tokyo Anne Wimmer, CFA®
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2007
Education: BA, University of California, Santa Barbara
Asset Allocation Committee
Number of Members: 15
Average Years of Experience: 27
Average Tenure (Years): 15
Manager Review Group
Number of Members: 7
Average Years of Experience: 22
Average Tenure (Years): 10
*Assets under management (“AUM”) include assets for which HighMark provides continuous and regular supervisory and management services. Assets under advisement (“AUA”)
include assets for which HighMark provides certain investment advisory services (including, but not limited to, investment research and strategies) for client assets of its parent company, MUFG Union Bank, N.A.
The performance records shown represent a size-weighted composite of tax exempt accounts that meet the following criteria: Accounts are managed by HighMark with full investment authority according to the PARS Capital Appreciation active and passive objectives.
The adviser to the PARS portfolios is US Bank, and HighMark serves as sub-adviser to US Bank to manage these portfolios. US Bank may charge clients as much as 0.60% annual management fee based on a sliding scale. US Bank pays HighMark 60% of the annual management fee for assets sub-advised by HighMark under its sub-advisory agreement with US Bank. The 0.36% paid to HighMark, as well as other expenses that may be incurred in the management of the portfolio, will reduce the portfolio’s returns. Assuming an investment for five years, a 5% annual total return, and an annual sub- advisory fee rate of 0.36% deducted from the assets at market at the end of each year, a $10 million initial value would grow to $12.53 million after fees (Net-of-Fees) and $12.76 million before fees (Gross-of-Fees). Gross returns are presented before management and custodial fees but after all trading expenses and reflect the reinvestment of dividends and other income. A client's return will be reduced by the advisory fees and other expenses it may incur as a client. Additional information regarding the firm’s policies and procedures for calculating and reporting performance results is available upon request. Performance results are calculated and presented in U.S. dollars and do not reflect the deduction of investment advisory fees, custody fees, or taxes but do reflect the deduction of trading expenses. Returns are calculated based on trade-date accounting.
Blended benchmarks represent HighMark’s strategic allocations between equity, fixed income, and cash and are rebalanced monthly. Benchmark returns do not reflect the deduction of advisory fees or other expenses of investing but assumes the reinvestment of dividends and other earnings. An investor cannot invest directly in an index. The unmanaged S&P 500 Index is representative of the performance of large companies in the U.S. stock market. The MSCI EAFE Index is a free float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The ICE BofA U.S. High Yield Master II Index tracks the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market. Wilshire REIT index measures U.S. publicly traded Real Estate Investment Trusts. The unmanaged Bloomberg U.S. Aggregate Bond Index is generally representative of the U.S. taxable bond market as a whole. The ICE BofA 1-3 Year U.S. Corporate & Government Index tracks the bond performance of the ICE BofA U.S. Corporate & Government Index, with a remaining term to final maturity less than 3 years. The unmanaged FTSE 1-Month U.S. Treasury Bill Index tracks the yield of the 1-month U.S. Treasury Bill.
HighMark Capital Management, Inc. (HighMark), an SEC-registered investment adviser, is a wholly owned subsidiary of MUFG Union Bank, N.A. (MUFG Union Bank). HighMark manages institutional separate account portfolios for a wide variety of for-profit and nonprofit organizations, public agencies, and public and private retirement plans. HighMark and MUFG Union Banks’s ultimate parent company is a wholly-owned subsidiary of U.S. Bancorp (“USB”). MUFG Union Bank provides certain services to HighMark and is compensated for these services. Past performance does not guarantee future results.
Individual account management and construction will vary depending on each client's investment needs and objectives.
Investments employing HighMark strategies are NOT insured by the FDIC or by any other Federal Government Agency, are NOT Bank deposits, are NOT guaranteed by the Bank or any Bank affiliate, and MAY lose value, including possible loss of principal.
350 California Street
Suite 1600
San Francisco, CA 94104
800.582.4734
www.highmarkcapital.com
HOLDINGS
STYLE
Small Cap
9.7%
Interm-Term Bond
18.6%
High Yield
0.8%
Short-Term Bond
3.3%
Large Cap Core
21.5%
Large Cap Growth
8.3%
Mid Cap
6.9%
Intl Stocks
12.2%
Cash
7.3%
Large Cap Value
9.4%
Real Estate
2.0%
Holdings are subject to change at the
discretion of the investment manager.
HighMark Plus (Active) Index Plus (Passive)
Columbia Contrarian Core I3 iShares Core S&P 500 ETF
Vanguard Growth & Income Adm iShares S&P 500 Value ETF
Dodge & Cox Stock Fund iShares S&P 500 Growth ETF
iShares S&P 500 Value ETF iShares Russell Mid-Cap ETF
Harbor Capital Appreciation – Retirement Vanguard Real Estate ETF T. Rowe Price Growth Stock - I iShares Russell 2000 Value ETF iShares Russell Mid-Cap ETF iShares Russell 2000 Growth ETF Vanguard Real Estate ETF iShares Core MSCI EAFE ETF
Undiscovered Managers Behavioral Value-R6 Vanguard FTSE Emerging Markets ETF Vanguard Small Cap Growth ETF Vanguard Short-Term Invest-Grade Adm DFA Large Cap International Portfolio iShares Core U.S. Aggregate Dodge & Cox International Stock Vanguard High-Yield Corp Adm MFS International Growth - R6 First American Government Obligations Z Hartford Schroders Emerging Markets Eq
Vanguard Short-Term Invest-Grade Adm
PIMCO High Yield Instl
PIMCO Total Return Fund - Inst
PGIM Total Return Bond - R6
DoubleLine Core Fixed Income - I
First American Government Obligations Z