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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. 2 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 3 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