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HomeMy WebLinkAboutMinutes Police Pension 09092111 City of Palm Beach Gardens Police Officers' 11 Pension Fund Minutes of the Meeting Held September 9, 2021 The regular meeting of the Board of Trustees of the City of Palm Beach Gardens Police Officers' Pension Fund was called to order at 9:04 AM by Jay Spencer in the Council Chambers at the Palm Beach Gardens City Hall at 10500 North Military Trail, Palm Beach Gardens, Florida. TRUSTEES PRESENT Jay Spencer, Chairman Brad Seidensticker, Secretary Marc Glass, Trustee Greg Mull, Trustee Allan Owens JOHN MCCANN OTHERS PRESENT Scott Baur (Resource Centers) A.C. Lovingood (Resource Centers) Bonni Jensen (KKJ&L) John McCann (AndCo Consulting) Jennifer Gainfort (AndCo Consulting) Investment Monitor John McCann introduced Jennifer Gainfort who will be taking his place after his retirement at the end of the year. Mrs. Gainfort thanked Mr. McCann for the introduction and Mrs. Gainfort gave the Board an overview of her qualifications and tenure at AndCo. The Board welcomed Mrs. Gainfort. Mr. McCann then gave the Board an overview of the three manager presentations for a Large Cap Value Manager. He reviewed that the Board's historical investments in the Large Cap Value sector and noted that a Large Cap Value Manager will function as a satellite manager to generate alpha returns in its sector for the fund. MELLON LARGE CAP GROWTH PRESENTATION — BNY MELLON Ms. Amanda Long and Mr. William Adams appeared before the Board to present information regarding their company and the large cap growth asset strategy. Ms. Long noted that she would be their relationship manager if hired. They have three other clients in Florida and 16 in the US and they are currently transitioning the strategy and team internally. Mr. Adams explained they have a long tenured investment team that has been through many market cycles, a deep research team and they are a value strong fund with an integrated risk management program. He reviewed their investment philosophy and strategy in detail noting they had a risk management approach with daily, weekly, and monthly meetings. Their team stayed the course in January 2020, even when the market favored otherwise. Mr. Adams reviewed their portfolio characteristics and responded to specific questions from the trustees and investment consultant. Mr. McCann explained he had asked each manager a specific list of questions and Mellon reported the following: They are a large cap growth and core (split); 52% value, they have 79 stocks, their standard deviation the past five years was 21% versus 16% for the index and their turnover is 82%. The fee is 25 basis points (bps), the performance fee based on a tiered structure and capped at 100 basis bps or they offered a flat fee of 45 bps. Minutes 09/09/2021 Page 1 Brad Seidensticker questioned holding of Alphabet in the portfolio. Mr. Adams explained that even with high multiples, the company remains intrinsically underrated. ARISTOTLE LARGE CAP GROWTH PRESENTATION — ARISTOTLE Ms. Keri Hepburn and Mr. Will Averill appeared before the Board to present information regarding their company and the large cap growth asset strategy. Ms. Hepburn explained they would be the team on the account if hired. She reviewed information about their company noting they are 100% employee owned. Mr. Averill reviewed the investment team, all are either on track or are currently equity owners of the company. They are a value firm, and the quality review begins with the "who cares" test; if that company went away tomorrow, does the customer care? When Aristotle purchases the company, they tend to own the company for five to seven years. Ms. Hepburn reviewed their returns with the Trustees. Mr. McCann explained he had asked each manager a specific list of questions and Aristotle reported the following: They are a true large cap value manager with 47% value and 47% large cap, the fee for the value equity is 50 bps for a separate account or 39 bps for their collective trust, they have 43 stocks, 13.7% five-year standard deviation and their turnover is 14%. They are an investment trust with daily liquidity and their primary index bench is R1000. They are open to doing a performance -based fee if the Board prefers. Mr. Averill responded to additional questions from the Trustees. SEIZERT LARGE CAP GROWTH PRESENTATION — SEIZERT CAPITAL PARTNERS Mr. David Collin and Mr. Thomas Kenny appeared before the Board to present information regarding their company and the large cap growth asset strategy. Mr. Collin introduced their company noting they only manage domestic equity portfolios. Mr. Kenny reviewed their company philosophy. The manager is also an analyst, which they feel is critical to their process. He reviewed their principles and favorable investment attributes they seek for their stocks. He reviewed their investment process describing how they identify, analyze, and build the portfolio. Mr. Kenny explained they do the research themselves looking for the durability of the company. He explained if both managers do not agree, then they do not purchase the company. Mr. Kenny reviewed their current snapshot explaining they will not hold a sector where they cannot find a good company to own; explaining that is why there are currently four sectors in which they have no holdings. Turnover is typically 25%- 30%. Mr. McCann explained he had asked each manager a specific list of questions and Seizert reported the following: They are 51% value and 77% large cap, they are a concentrated portfolio with only 35 stocks, their risk is 16.7% versus the index of 16.2%, turnover averages 31% which equates to one every three years, the fee is 45 bps for the collective trust or 55 bps for a separate account. Mr. Kenny responded to additional questions from the Trustees and noted that their firm is offering no fees for the first 12-months unless the manager performs well above the benchmark. INVESTMENT CONSULTANT REPORT - ANDCO Large Cap Value Manager Search: The Trustees discussed the presentations. Trustee Brad Seidensticker noted that the liked the team depth in the larger firms as they seem to offer greater stability. Trustee Marc Glass discussed his perceived fit of Aristotle to the objectives of the Pension Fund. Mellon offers less downside protections, Aristotle historically offers more downside protections. Aristotle also had Minutes 09/09/2021 Page 2 the longest holding period, the highest information ratio, and the greatest consistency in performance. The Board considered the amount to potentially invest which resulted in the consideration of the reallocation of assets. • Marc Glass made a motion to hire Aristotle as an active value manager. The Motion received a second from Brad Seidensticker and was approved by the Trustees 5-0. • Greg Mull made a motion to allocate $10 million from the S&P 500 and invest $5 million to the Rhumbline 1200 Value Fund and $5 million to Aristotle Founders Account. The Motion received a second from Allan Owens and was approved by the Trustees 5-0. Mr. McCann reported that as of June 30, 2021 the Plan had total assets of $127,315,246. For the quarter ending June 30, 2021, the Plan earned a net gain of 5.28% compared to the benchmark of 5.16%. The Fiscal -Year -to -Date returns were 22.57% compared to the benchmark of 21.39%, the one-year trialing returns were 28.56% compared to the benchmark of 27.03%, the three-year return was 11.92% versus the benchmark of 12.28%, and the five-year return was 11.80% compared to the 11.96% benchmark. Since inception, the Plan has had a net investment return of 8.20%. Mr. McCann then reviewed how each manager in the Plan is doing, noting that there were strong results across the board. Mr. McCann stated that American Realty will call $230,000 on September 21, 2021, and then informed the Board that IFM Global is expected to call all $5 million in committed capital soon. Mr. McCann recommended that the Board move $2 million from the S&P 500 over to the Highland Capital Short Term Fixed Income Fund. The Board had a lengthy discussion on when to move the funds and decided to wait until the beginning of the next fiscal year. • Marc Glass made a motion to sell $2 million of the S&P 500 and invest those funds into the Highland Capital Short Term Fixed Income Fund on October 1, 2021. The Motion received a second from Brad Seidensticker and was approved by the Trustees 3-0. ATTORNEY REPORT CHAPTER 185 PREMIUM TAX DOLLARS: Attorney Bonni Jensen informed the Board that the Plan received $746 thousand from Chapter 185, noting that the amount increased from the previous year. Mrs. Jensen reviewed the 2019 and 2018 Chapter 185 allocations with the Board, noting that the 2018 amount seems like it was an anomaly. JENSEN MEMO - FEDERAL DEATH BENEFIT AND COVID - REV: Mrs. Jensen informed the Board that her firm has had several active member deaths from COVID-19 and wanted to review the Federal death Benefit and COVID Memo with the Board once again. Mrs. Jensen reviewed the requirements and the presumptions in order to qualify for this benefit. JENSEN MEMO - FEDERAL, STATE, AND LOCAL DEATH BENEFITS: Mrs. Jensen reviewed the Jensen Memo regarding the Federal, State, and Local Death Benefits in detail with the Board. Mrs. Jensen also strongly recommended that members keep their beneficiary designations up-to-date. Minutes 09/09/2021 Page 3 ADMINISTRATOR REPORT RESOURCE CENTERS MEMO - PAYMENT VERIFICATION UPDATE: Scott Baur reviewed the Payment Verification Letter process and results with the Board in detail. Mr. Baur then informed the Board that his firm is looking into alternative services that will assist in identifying members who may be deceased and will make recommendations soon. The Board discussed payment verifications on retired members on ensuring that the Plan has the most recent contact information on each retiree. ACTIVE DROP PARTICIPANTS LIST DATED: 08-30-2021 Albert Lovingood presented the Board with the Active DROP Participants list Dated August 30, 2021 for informational purposes. 2021-22 CONFERENCE LIST: Mr. Lovingood presented the Board with the 2021-22 Conference List that The Resource Centers has created. Mr. Lovingood noted that not all conferences are listed and that some of the conferences are more focused on Police and Fire Pension Plans, while other conferences are more focused on General Employee Pension Plans. CHERRY BEKAERT 2021 AUDIT ENGAGEMENT LETTER: Mr. Lovingood presented the Board with the 2021 Audit Engagement Letter. IN -LINE DUTY DISABILITY - HUGHES, ROBERT: Mr. Lovingood provided the Board with an update regarding Mr. Hughes disability application. The Resource Centers is still in the process of gathering medical records and Mr. Lovingood noted that some medical records may not be available due to record retention issues. The City has provided Mr. Hughes Workers' Compensation files. The Board noted that Mr. Hughes has until October 28, 2021, before he will be terminated due to there not being a light -duty permanent position available within the Police Department. Mrs. Jensen explained the disability application process with the Board in detail along with the time required to gather the required medical records for the Independent Medical Review (IME). Mrs. Jensen also stated that finding a physician that specializes in the member's illness or injury that is willing to perform the IME can be difficult to locate at time. Mr. Lovingood explained the average turnaround with physicians when requesting medical records and explained the process when The Resource Centers does not receive a response in a timely manner. Mr. Lovingood noted that Mr. Hughes attorney wants all communications with Mr. Hughes to go through her as she is representing the member, Mrs. Jensen informed the Board that the Plan can engage with the member directly throughout this process. Mrs. Jensen then reviewed the Informal Hearing Process with the Board along with the requirements to determine if the member is permanently and totally disabled, along with if the disability is duty or non -duty related along with, if needed, the process of a formal disability hearing. Mrs. Jensen recommended that the Board authorize The Resource Centers to hire a physician from her firm's pre - approved physician list to perform the IME for Mr. Hughes. Minutes 09/09/2021 Page 4 • Greg Mull made a motion to grant The Resource Centers the authority to hire a physician from the Plan Attorney's approve physician list to perform the Independent Medical Examination for Robert Hughes disability claim. The Motion received a second from Marc Glass and was approved by the Trustees 5-0. ANNUAL BENEFIT STATEMENTS: Mr. Lovingood presented the Board with the 2022 Board Meeting Dates noting that the City Council Chambers has been reserved for these dates. The Board had no objection to the meeting dates. 2022 PROPOSED BOARD MEETING DATES: CYBER SECURITY INSURANCE POLICY: Mr. Lovingood informed the Board that their Cyber Security Insurance Policy will be up for renewal at the end of December and wanted to make the Board aware that Lloyds no longer offers a $250,000 policy anymore and that the new minimum amount is $500,000. Mr. Baur reviewed the average policy renewal rates that The Resource Centers has seen with other Cyber Security Policy renewals with the Board. Mr. Lovingood also noted that the Fiduciary Liability Policy will be up for renewal at the beginning of December. • Marc Glass made a motion to grant Chairman Jay Spencer discretion to authorize renewal of the Plan's Fiduciary Liability Policy. The Motion received a second from Brad Seidensticker and was approved by the Trustees 5-0. MINUTES The June 10, 2021, minutes were presented in the Trustee packets for review and were tabled till the next Board Meeting. Mrs. Jensen noted a few minor changes to the minutes. • Marc Glass made a motion to approve the June 10, 2021 minutes as amended. The Motion received a second from Greg Mull and was approved by the Trustees 5-0. DISBURSEMENTS The Disbursements dated September 9, 2021, were presented in the Trustee packets for review. Mrs. Jensen made the Board aware that the invoice from her firm is incorrect. • Marc Glass made a motion to approve the Disbursements with the exception of the July 31, 2021 KKJ&L Invoice. The Motion received a second from Brad Seidensticker and was approved by the Trustees 5-0. FINANCIAL STATEMENTS The interim financial statements through July 2021 were provided for informational purposes. Minutes 09/09/2021 Page 5 BENEFIT APPROVALS The Benefit Approvals for September 9, 2021 were presented in the Trustee packets for review. • Marc Glass made a motion to approve the Benefit Approvals as presented for September 9, 2021. The Motion received a second from Brad Seidensticker and was approved by the Trustees 5-0. OTHER BUSINESS PUBLIC COMMENTS There were no public comments at this time. ADJOURN There being no further business, the Trustees officially adjourned the meeting at 12:32 PM. The next meeting is scheduled for Thursday, December 9, 2021, at 9:00 AM. Respectfully submitted, Brad Seidensticker, Secretary Minutes 09/09/2021 Page 6