2019 Outlook Quarterly Webinar January 23, 2019 TODAYS SPEAKERS - PowerPoint PPT Presentation

WELCOME 2019 Outlook Quarterly Webinar January 23, 2019

TODAY’S SPEAKERS G. Leonard Teitelbaum Chair, RPB Board of Trustees David Baskin President and Founder, Baskin Wealth Management (BWM) Michael Kimmel Executive Director, RPB

AGENDA Opening Remarks 2018 Market Recap and Plan Update 2019 Economic and Market Outlook Q&A

OPENING REMARKS

2018 MARKET RECAP & PLAN UPDATE

2018 Market Recap Market losses with most asset classes returning negative performance Cash outperformed all other asset classes – first time since 1994 Growing recessionary concerns as market activity has increased the probability of an end of the current cycle Strong realized earnings growth spurred by tax reform Continued interest rate increases in 2018 as the Federal Reserve hiked rates once per quarter Return to volatility with December being the most erratic

2018 Recap – Return to Volatility 2018 Global Equity Cumulative Performance (MSCI ACWI) $110 $105 $100 $95 $90 $85 Dec-17 Mar-18 Apr-18 May-18 un-18 Oct-18 Nov-18 Dec-18 an-18 Feb-18 ul-18 Aug-18 ep-18 J J J S Source: Bloomberg.

2018 Recap – Return to Volatility Market begins to price in rate hikes, which scares equity markets plagued by trade concerns 2018 Global Equity Cumulative Performance (MSCI ACWI) $110 $105 $100 $95 $90 $85 Dec-17 Mar-18 Apr-18 May-18 un-18 Oct-18 Nov-18 Dec-18 an-18 Feb-18 ul-18 Aug-18 ep-18 J J J S Source: Bloomberg.

2018 Recap – Return to Volatility Market begins to price in rate hikes, which scares equity markets plagued by trade concerns 2018 Global Equity Cumulative Performance (MSCI ACWI) $110 $105 $100 Trade war volatility offset by strong corporate fundamentals; $95 Fed repeatedly reiterates intentions to hike rates, but market looks for policy shift based on trade dynamics $90 $85 Dec-17 Mar-18 Apr-18 May-18 un-18 Oct-18 Nov-18 Dec-18 an-18 Feb-18 ul-18 Aug-18 ep-18 J J J S Source: Bloomberg.

2018 Recap – Return to Volatility Market begins to price in Market again rate hikes, which scares realizes the Fed equity markets plagued by is serious about trade concerns raising rates 2018 Global Equity Cumulative Performance (MSCI ACWI) $110 $105 $100 Trade war volatility offset by strong corporate fundamentals; $95 Fed repeatedly reiterates intentions to hike rates, but market looks for policy shift based on trade dynamics $90 $85 Dec-17 Mar-18 Apr-18 May-18 un-18 Oct-18 Nov-18 Dec-18 an-18 Feb-18 ul-18 Aug-18 ep-18 J J J S Source: Bloomberg.

2018 Recap – Return to Volatility Market begins to price in Market again rate hikes, which scares realizes the Fed equity markets plagued by is serious about trade concerns raising rates 2018 Global Equity Cumulative Performance (MSCI ACWI) $110 $105 $100 Trade war volatility offset by strong corporate fundamentals; $95 Fed repeatedly reiterates intentions to hike rates, but market looks for policy shift based on trade dynamics $90 $85 Dec-17 Mar-18 Apr-18 May-18 un-18 Oct-18 Nov-18 Dec-18 an-18 Feb-18 ul-18 Aug-18 ep-18 J J J S Growth scare causes interest rates and stocks to decline as investors anticipate start of a recession Source: Bloomberg.

2018 Asset Quilt – Diversification Matters Q4 Description 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2018 Core Core US Stable Core MLP MLP EM REITs EM REITs EM EM MLP MLP EM REITs REITs MLP EM Best Performing Bonds Bonds Equities Value Bonds Diversified US Investment Grade Bond Index 45.7% 43.7% 55.8% 31.5% 34.0% 35.9% 39.4% 78.5% 35.9% 13.9% 18.2% 30.4% 2.5% 18.3% 37.3% 10.3% 5.2% 33.6% 1.9% 1.6% Stable US Core High Core Stable REITs REITs REITs MLP EM EAFE EM MLP MLP REITs REITs REITs MLP EAFE Value Equities Bonds Yield Bonds Value Stable Value (90 Day US Treasury Bill) 26.8% 12.8% 3.7% 44.5% 25.6% 13.5% 32.2% 12.7% 76.4% 28.5% 8.7% 17.8% 27.6% 25.0% 2.1% 12.6% 0.6% 17.1% 0.0% 0.6% Core Core Stable High High Core Core US US US High High EAFE EAFE REITs EAFE EAFE EM EAFE EAFE High Yield Bonds (Non-Investment Grade Bonds) Bonds Bonds Value Yield Yield Bonds Bonds Equities Equities Equities Yield Yield 38.6% 20.3% 12.1% 26.3% 11.2% 18.9% 17.3% 22.8% Index 11.6% 8.4% 1.8% -26.2% 58.2% 7.8% 6.0% 0.5% 12.7% 21.1% -2.1% -4.5% Stable High High Core US High US High Stable High REITs MLP MLP MLP MLP EAFE MLP EM REITs REITs Value Yield Yield Bonds Equities Yield Equities Yield Value Yield Real Estate Investment Trust Index 36.8% 16.7% 6.3% 26.1% -36.9% 31.8% 4.8% 11.2% -4.6% -6.7% 6.0% 5.3% -1.4% 7.0% 16.9% 5.0% 16.4% 7.4% 0.0% 7.5% High Stable US US US US US US High US High High US MLP REITs REITs EAFE REITs REITs EM Yield Value Equities Equities Equities Equities Equities Equities Yield Equities Yield Yield Equities Emerging Market Stock Index -3.4% 28.6% 2.5% -0.8% 8.6% 5.1% -7.5% -5.9% 4.5% 31.1% 12.0% 6.1% 15.7% 5.1% -37.3% 15.1% 1.0% 15.8% 2.5% -5.2% US Stable High Stable US Stable Stable Stable High Core Core EM EM High Yield High Yield REITs EAFE MLP MLP EAFE Equities Value Yield Value Equities Value Value Value Yield Bonds Bonds Developed Market International Stock Index -2.6% -6.2% 29.0% 11.1% -38.0% 7.8% 4.8% -12.4% -12.5% -7.5% 2.9% 11.9% 4.9% 28.3% 0.1% 0.1% 0.0% -4.5% 2.7% 3.5% US Core Core High Stable High Core Core Core Core Stable US EAFE EAFE EAFE EAFE EM EM EAFE EAFE Worst Performing Equities Bonds Bonds Yield Value Yield Bonds Bonds Bonds Bonds Value Equities US Large and Small Stock Index -14.2% -15.9% -43.4% -12.1% -2.2% -14.9% 1.0% -13.8% -11.5% 4.1% 4.3% 2.7% 4.8% 1.9% 5.9% 6.5% 4.2% -2.0% 0.9% -14.3% US Stable Stable Core Core Stable Stable Stable Stable EM EAFE REITs EM EM EM EAFE MLP MLP EM MLP Equities Value Value Bonds Bonds Value Value Value Value Master Limited Partnerships (Pipelines) Index -30.8% -21.4% -16.8% -53.3% -18.4% -2.6% -4.9% -32.6% -6.5% -14.6% -17.3% -21.5% 1.1% 1.1% 2.4% 4.3% 0.2% 0.1% 0.1% 0.3%

2018 Year-To-Date Tier 1 Investment Returns January 1, 2018 through December 31, 2018 4.00% 1.93% 1.86% 2.00% 0.01% 0.00% -2.00% -0.78% -4.00% -6.00% -4.90% -5.42% -8.00% -8.27% -10.00% -10.08% -12.00% Capital Appreciation Fund MSCI ACWI IMI Index Appreciation and Income Fund 55% MSCI ACWI IMI/45% Fixed Income Composite** Income Focused Fund Fixed Income Composite*** Capital Preservation Fund FTSE 3 Month T-Bill * Net of investment management fees. ** 50/50 MSCI ACWI (IMI)/Bloomberg Barclays Global Agg through March 31, 2015; 60/40 MSCI ACWI (IMI)/Bloomberg Barclays Global Agg through September 30, 2016; 60/40 MSCI ACWI (IMI)/Bloomberg Barclays U.S. Agg through September 30, 2017; 55/45 MSCI ACWI (IMI)/Bloomberg Barclays U.S. Agg thereafter. *** Barclays Global Aggregate January 1, 2013 through September 30, 2016, Barclays US Aggregate thereafter. .

2018 Tier 1 Allocation Highlights Redeployed defensive cash allocation in December at lower price points in Capital Appreciation and Appreciation & Income Funds Increased value exposure across US and International Stock exposure in Capital Appreciation and Appreciation and Income Funds Shifted MLP (energy related companies) exposure to a more diversified infrastructure exposure in the Income Focused Fund

Tier 1 Fund Design Explained Designed for Lower Volatility Than Overall Market: • Up markets may capture less of the upside • Down markets may capture less of the downside • Over a full market cycle, performance close to the benchmark Key Metrics • Standard Deviation: volatility • Beta: market risk • Sharpe Ratio: risk-adjusted returns • Also track up-market and down-market capture

Standard Deviation – Volatility Lower is less risky Since Inception: January 1, 2013 through December 31, 2018 12.0% 10.7% 9.7% 10.0% 8.0% 6.5% 6.4% 6.0% Standard Deviation 3.9% 4.0% 3.0% 2.0% 0.0% Capital MSCI ACWI Appreciation 55% MSCI Income Fixed Income Appreciation IMI & Income ACWI Focused Fund Composite** Fund Fund IMI/45% Fixed Income Composite* * 50/50 MSCI ACWI (IMI)/Bloomberg Barclays Global Agg through March 31, 2015; 60/40 MSCI ACWI (IMI)/Bloomberg Barclays Global Agg through September 30, 2016; 60/40 MSCI ACWI (IMI)/Bloomberg Barclays U.S. Agg through September 30, 2017; 55/45 MSCI ACWI (IMI)/Bloomberg Barclays U.S. Agg thereafter. ** Barclays Global Aggregate January 1, 2013 through September 30, 2016, Barclays US Aggregate thereafter. .

Beta* – Market Risk Less than 1.0 less sensitive to market changes Since Inception: January 1, 2013 through December 31, 2018 0.96 1.00 0.90 0.80 0.58 0.60 Beta 0.40 0.20 0.00 Capital Appreciation Appreciation & Income Income Focused Beta Beta Beta *Market, or benchmark, Beta is always 1.0