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
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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
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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