HomeMy WebLinkAboutMinutes Fire Pension 061810PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND
MINUTES OF MEETING HELD
June 18, 2010
A meeting of the Board of Trustees was called to order at 9:05 A.M. at Council
Chambers, Palm Beach Gardens, Florida. Those persons present were:
TRUSTEES
Tom Murphy
Rick Rhodes
Ed Morej on
Donna Wisneski
Roy 011iff
ADDITION TO THE AGENDA
OTHERS
Margie Adcock, Administrator
Pedro Herrera, Attorney
Joe Bogdahn, Investment Monitor
Mr. Morej on stated that he would like to add the proposed Ordinance to the Agenda
under Other Business. A motion was made, seconded and carried 5 -0 to add the proposed
Ordinance to the Agenda under Other Business. Mr. Herrera noted that the proposed
Ordinance was being added to the Agenda now because his office just received
comments from the City on the document.
INVESTMENT MONITOR REPORT
Joe Bogdahn appeared before the Board. He provided an investment strategy review of
the domestic equity portion of the portfolio. He noted that Dana is the domestic equity
manager. There was discussion on anything the Board could do to increase the returns by
changing or adding managers. Mr. Bogdahn provided information for the Board on other
blends of managers. There was a lengthy discussion on the benchmark for Dana. It was
noted that they have a growth and value equity portfolio that they can move back and
forth between. For the growth product the benchmark is the Russell 1000 Growth, while
the benchmark for the core value product is the S &P 500. There was a lengthy discussion
on what the benchmark is currently and the proposed benchmark. Mr. Rhodes stated that
the reports from Dana needed to be consistent and reported to the Investment Policy
Statement, as it appeared that some prior reports were inconsistent. Mr. Bogdahn stated
that the total domestic equity portfolio will be measured against the Russell 3000 and the
individual growth and value components will be measured against the Russell 1000
Growth and S &P, respectively. Mr. Bogdahn reviewed the proposed revised Investment
Policy Statement. There was further discussion. A motion was made, seconded and
carried 5 -0 to approve the proposed revised Investment Policy Statement as amended
based on the Attorney's final approval. Mr. Bogdahn stated that he would make the
changes discussed and provide the revised Statement to the Attorney for final review.
Once it is reviewed and approved by the Attorney, it will be provided to the Board.
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Mr. Bogdahn stated that the Board was meeting today to discuss whether the Board
should stay with Dana as the sole domestic equity manager; complement them with
another manager; or replace them with another manager. He reviewed the information he
provided using the following combinations:
100% Dana Large Cap
50% Dana Large Cap Value /50% Dana Large Cap Growth
100% Manning & Napier
50% Dana Large Cap Value /50 %ASC
50% Dana Large Cap /ICC Multicap
50% DGHM Value /50% Brown Large Cap Growth
50% DGHM Value /50% DSM Large Cap Growth
50% Eagle /50% DSM Large Cap Growth
50% Moody Value /50 %Brown Large Cap Growth
50% Westend/ 50% Cornerstone
Mr. Bogdahn reviewed the risk/return analysis for the eight years ending March 31, 2010.
He reviewed the upside and downside capture ratios for the four and eight year periods
ending March 31, 2010. He stated that he thinks the Dana Large Cap Value and ICC
Multicap blend would be a strong one. Mr. Morejon stated that he would like to see a
comparison of Dana to the managers that the Board previously interviewed. Mr.
Bogdahn stated that he would provide that information at the next meeting. Mr. Bogdahn
stated that the Fund's objective is to, over time, beat the S &P 500 by 2 %. He stated that
Dana has come pretty close to doing that in eight years. Dana has done what they have
said they were going to do. He noted that perhaps now the Board wants them to do
something different. Mr. Bogdahn stated that he would recommend going to the Dana
Core Value product and adding the ICC Multicap. He stated that would provide two
different processes. He would eliminate the Dana Growth and add ICC, which would
give a more opportunistic component. There was a lengthy discussion. Mr. Bogdahn
stated that he would provide the comparison information for the next meeting
Mr. Bogdahn then provided a summary of the quotes and information he received
regarding the Board's request for information on custodial services. There was
discussion on the current services provided by Regions. Mr. Bogdahn reviewed the
responses he received from Salem Trust, BNY, Fifth Third Bank and SunTrust. It was
noted that Regions was the least expensive than any other custodian on the list. Ms.
Adcock noted that she has not had any issues with Regions and advised that they were
always very responsive. The Board decided to retain the current agreement and services
with Regions.
Mr. Bogdahn noted that the Fund was currently under - allocated in the real estate
component. There was a lengthy discussion on whether the Board would want to add
more of an allocation to real estate. He provided the Board with the cap rate spread to the
10 -year treasury. Mr. Bogdahn stated that he thought now is the time to be adding to get
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back to the target in real estate. The risk is that real estate is an illiquid investment and is
a long -term investment. It was noted that American Realty does a good job. He feels
Intercontinental would be a good complement. He recommended hiring Intercontinental
and giving them $1.5 million and bringing back American Realty to a $1.5 million
investment to get the Fund back to a 10% allocation in real estate. There was discussion
on whether American has written off all of their holdings and the concern about giving
them more money to bring them back to $1.5 million. Mr. Bogdahn stated that American
owned solid properties and the return of American is based on the market cycle of when
the Fund invested. Mr. Bogdahn stated that it was his recommendation to target an
allocation of 10% in real estate with 50% to American Realty and 50% to
Intercontinental. He stated that at this point he likes the idea of adding to real estate. A
motion was made, seconded and carried 5 -0 to authorize the Attorney to negotiate an
agreement with Intercontinental for the next meeting.
ATTORNEY REPORT
Mr. Herrera discussed the status of the revised Ordinance. He stated that his office and
the City have reviewed it and it is being proposed for consideration. He stated that it
includes the changes that will bring the Ordinance into compliance with Chapter 2009 -97
and establish a guaranteed rate of 3% for DROP accounts. Mr. Herrera reviewed the
changes with the Board. It was noted that there was a problem with the printing of the
Ordinance with respect to Section 38- 57(2), which showed that this Section had been
stricken when in fact that is not the case. Mr. Herrera continued to review the proposed
Ordinance. There was a lengthy discussion. A motion was made, seconded and passed 5-
0 to move forward with the proposed changes to the Ordinance as discussed, making sure
that Section 38 -57(2) has and will not be stricken. A motion was made, seconded and
passed 5 -0 to provide that after the Attorney reviews and finalizes the proposed
Ordinance, the Ordinance be distributed to all of the Trustees with final approval to be
held by the Chair before provided to the City Council.
OTHER BUSINESS
There being no further business, the meeting adjourned.
Respectfully submitted,
Tom Murphy, Secretary