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HomeMy WebLinkAboutMinutes Fire Pension 051809PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND MINUTES OF MEETING HELD May 18, 2009 A meeting of the Board of Trustees was called to order at 9:03 A.M. at Council Chambers, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES Tom Murphy Rick Rhodes Richard Hitchins Roy 011iff MINUTES OTHERS Margie Adcock, Administrator Ken Harrison Sugarman, Attorney Joe Bogdahn, Investment Monitor Mike Dana, Investment Manager The Board reviewed the minutes of the meeting held March 16, 2009. A motion was made, seconded and carried 3 -0 to accept the minutes of the meeting held March 16, 2009. Rick Rhodes entered the meeting. INVESTMENT MANAGER REPORT: DANA INVESTMENT ADVISORS Mike Dana appeared before the Board. He discussed the market environment. He stated that they are starting to see glimmers of hope. They are starting to see financials get some stabilization. He thinks the market is near or has hit the bottom already. They are starting to see home sales increase. They are starting to see volatility as the indices get better. Mr. Dana reviewed the performance of the portfolio as of March 31, 2009. The total portfolio was down 7.61% for the quarter while the Russell 3000 was down 10.80 %. For the fiscal year to date, the portfolio was down 29.28% while the Russell 3000 was down 31.12 %. Since inception of June 10, 2008, the portfolio was down .87% while the Russell 3000 was down 1.39 %. The portfolio for the month of April was up 9.5 %. Mr. Dana reviewed the asset allocation as of March 31, 2009, which was 58% in large cap growth; 32% in large cap value; 8% in small cap and 2% in cash. Mr. Dana stated that they are sector neutral managers and noted that their performance is pretty close to that. He reviewed the holdings in the portfolio as of March 31, 2009. He stated that things are getting better although there are still some problems out there. He noted that consumers are starting to spend but he thinks spending is going to be controlled. Mr. Dana discussed their enhanced income option plan. Mr. Bogdahn noted that this was briefly discussed at the last meeting. Mr. Dana stated that there is no correlation to stocks or bonds. It is an option strategy that is relatively short term, being only a couple of months. He stated that last year it returned 8.5% net of fees. Mr. Harrison stated that this would need an Ordinance change. Mr. Bogdahn stated that this would be a 5% position or about $1 million. He stated that he recommended putting the Fund in this investment. He stated that he also wanted to discuss another option regarding TARP which would also need an Ordinance change. The Board discussed having Mr. Bogdahn and Mr. Harrison to review the entire Ordinance and see all the changes that need to be made. Mr. Bogdahn stated that he would recommend doing a general broadening of the 2 Ordinance so the Board would not keep having to go back to City Council. He stated that he would forward the proposed language regarding the investments to Mr. Harrison for review and Mr. Harrison could review and add any other proposed changes to the Ordinance that he feels might be necessary. Mr. Harrison discussed the Senate Bill waiting to be signed by the Governor, which would increase international exposure to 25% and allow for the terms of the Trustees to be increased from two years to four years. INVESTMENT MONITOR REPORT Joe Bogdahn appeared before the Board. He reviewed the market environment for the period ending March 31, 2009. He discussed inflation. He does not think the inflation factor will be as big as it seems now. He thinks it will be two years before the market sees any inflation issues. He thinks the worst news has come through and the next couple of years will be pretty strong. Mr. Bogdahn reviewed the investment performance for the quarter ending March 31, 2009. The Fund was down 4.09% net of fees for the quarter while the benchmark was down 7.83 %. The equity portfolio managed by Dana was down 7.62% for the quarter while the benchmark was down 10.80 %. The international portfolio managed by Voyageur was down 5.12% for the quarter while the EAFE was down 13.85 %. The real estate portfolio managed by American Realty was down 13.10% for the quarter while the NCREIF was down 7.33 %. Agincourt was up .66% for the quarter while the benchmark was up .12 %. DHJ fixed income was up 1.27% for the quarter while the benchmark was up .91 %. Mr. Bogdahn discussed rebalancing the portfolio noting that some assets needed to be redeployed. He stated that he would like to be able to send instructions regarding rebalancing to either the Custodian or the Administrator for action. There was a lengthy discussion. A motion was made, seconded and carried 4 -0 to authorize the Investment Monitor to provide asset allocation instructions to the Administrator, who will direct the Custodian to follow such asset allocation instructions. Mr. Bogdahn stated that he thinks this portfolio is allocated well for the long -term. There was a discussion on the assumed rate of return. He stated that he was not recommending changing the assumed rate of return at this point. Mr. Harrison stated that the trend around the State has been to reduce the assumed rate to something less than 8 %. Mr. Bogdahn discussed TALF. He stated that they have done a lot of research and there seems to be a government program that makes sense. He noted that Congress is only offering this for 2009. He noted that PIMCO has a new program and they just had their first closing on May 1. There is a $1 million minimum and it is a three -year investment. He stated that MBIA also is offering a similar investment with a $500,000 minimum. He noted that the Ordinance would need to be changed to allow for this type of investment. There was a lengthy discussion. The Board noted that there was no need to have the Attorney look into this because if the proposed changes to the Ordinance discussed earlier are not done by the end of 2009, TALF would no longer be an option. Mike Dana departed the meeting. There was discussion on the DROP account for the Chief Mr. Bogdahn stated that he would have the Custodian establish a separate DROP account and would allocate the DROP money to go into that account. There will be an additional account set up for the 3 DROP and the Actuary will be able to determine the accounts. There was discussion on the ability of a self - directed DROP. Mr. Harrison stated that the demand for a self - directed DROP is not what is was when markets were booming. He stated that there is usually a one -time option to go into some sort of fixed account. There was a lengthy discussion. ATTORNEY REPORT Mr. Harrison provided an opinion letter dated May 14, 2009 regarding the 2% reduction in the Share Account Allocation for DROP Participants. The question was whether the 2% reduction applied to DROP Participants, which the opinion letter concluded that it did not. Mr. Harrison discussed the drafting of the proposed Ordinance changes. He stated that the Board would need to approve the proposed Ordinance and then obtain an impact statement from the Actuary. He stated that he would do all of the Ordinance changes at one time and then go to the City Council one time with all of the requested changes. He stated that he would work with Mr. Bogdahn on the proposed Ordinance to include all changes needed. Mr. Harrison discussed the letter from Jerry Catoe dated April 21, 2009. He stated that the Plan is the Plan and since Mr. Catoe participated in the Plan he owes the overpayment. The Board has a fiduciary duty to recoup the overpayment. The issue has been addressed going forward where only 50% of the Share Account will be disbursed upon separation from employment. It was noted that Robert Boniewski did not provide any response. The Board asked the Administrator to send a follow up letter to Mr. Boniewski to confirm receipt. The Board asked the Administrator to send a response to Mr. Catoe as well noting that the Board had received and reviewed his letter and that the Board decision stands and deductions will begin on June 1. Joe Bogdahn departed the meeting. ADMINISTRATIVE REPORT Ms. Adcock presented the Board with the benefit calculation and election for Peter Bergel. A motion was made, seconded and carried 4 -0 to approve the benefit election. Ms. Adcock presented the list of disbursements to be made. A motion was made, seconded and carried 4 -0 to approve the disbursements listed. OTHER BUSINESS There being no further business, the meeting adjourned. Respectfully submitted, Tom Murphy, Secretary