FROM: Lisa Sorani, Manager of HR Employee Services LS -

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INVESTMENT OPTION 4-B r • Option 4 – B: Private Credit (Continued) • Benefits o Limited exposure to interest rates – return generated through Credit not Duration o High expected return (8-10%) o Relatively inexpensive compared to publically traded High Yield debt o Significantly better risk return profiles than publically traded High Yield debt ♦ Superior position in capital structure, stronger credit covenants, ability to do workouts • Drawbacks o Illiquidity – funds often have 4-8 year lock-ups o Pi Private fund structure t o High management fees – base and incentive o Much higher risk investment than traditional core fixed income Pension Consulting Alliance, Inc. ││ EBMUD Fixed Income Discussion │ 52
INVESTMENT OPTION 4-C r • Option 4 – C: Barbell llApproach • This option simply includes an allocation to either option A or B paired with a high-quality short-term mandate • By having both features, the overall credit quality of the bond portfolio does not change as materially – less effect on overall bond portfolio • The goal is to increase the return during the period of low interest rates through the “risk” portion of the barbell yet maintain credit quality through the “safe” side of the barbell • Since both portions of the barbell are short-term in nature the portfolio is less exposed to interest rate increases Pension Consulting Alliance, Inc. ││ EBMUD Fixed Income Discussion │ 53
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M E M O R A N D U M Date: April 29,
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Recent Investment Performance Barro
Page 25:
Additional Considerations Barrow Ha
Page 29 and 30:
For example, as of the most recent
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Q1 - 2013 Preliminary Recent Invest
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Q1 - 2013 Preliminary Periods endin
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Q1 - 2013 Preliminary Fixed Income
Page 38 and 39: AGENDA ITEMS Section Tab Current In
Page 40 and 41: THE CURRENT INTEREST RATE ENVIRONME
Page 50 and 51: SECTION 2 LOOKING FORWARD Source: W
Page 52 and 53: LOOKING FORWARD: INTRODUCTION r •
Page 54 and 55: LOOKING FORWARD: POSSIBLE OUTCOMES
Page 56 and 57: POSSIBLE OUTCOMES: ALTERNATIVE SCEN
Page 78 and 79: LOOKING FORWARD: CONCLUSIONS r •
Page 80 and 81: INVESTMENT OPTIONS r • In light o
Page 82 and 83: INVESTMENT OPTION 2 r • Option 2:
Page 84 and 85: INVESTMENT OPTION 4 r • Option 4:
Page 86 and 87: INVESTMENT OPTION 4-A r • Option
Page 90 and 91: INVESTMENT OPTION 4-C r • Option
Page 92 and 93: CONCLUSIONS r • There are a few a
Page 95 and 96: Considering a Real Return Class Eas
Page 97 and 98: Defining Inflation • Inflation is
Page 99 and 100: Expert Views 5
Page 101 and 102: Expert Views: Inflation Doves • B
Page 103 and 104: Expert Views: Inflation Doves The E
Page 105 and 106: Expert Views: Inflation Hawks • B
Page 107 and 108: Expert Views: Inflation Hawks The E
Page 109 and 110: Expert Views: Summary • Experts a
Page 111 and 112: Institutional Investor Response •
Page 113 and 114: Modeling the Real Return Class •
Page 115 and 116: Modeling the Real Return Class •
Page 117 and 118: Implementing a Real Return Class
Page 119 and 120: Appendix 25 25
Page 121 and 122: Modeling a Real Return Class SUMMAR
Page 123 and 124: A Brief Description of Global Infla
Page 125 and 126: A Brief Description of Absolute Ret
Page 127 and 128: A Brief Description of Absolute Ret
Page 129 and 130: A Brief Description of Commodities
Page 131 and 132: A Brief Description of Oil & Gas RE
Page 133 and 134: A Brief Description of Oil & Gas RE
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FROM: Lisa Sorani, Manager of HR Employee Services LS -

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