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HomeMy WebLinkAboutMinutes Police Pension 062323 Special MeetingPalm Beach Gardens Police Officers' Pension Fund Minutes of the Meeting Held: June 23, 2023 1. Chair Jay Spencer called the Special Board Meeting of the Board of Trustees of the City of Palm Beach Gardens Police Officers' Pension Fund to order at 9:05 AM in the Council Chambers and called roll. Those persons present included: 2. TRUSTEES PRESENT Jay Spencer, Chairman Brad Seidensticker, Secretary Sean O'Brien Greg Mull, Trustee Marc Glass, Trustee 3. REPORTS TWIN Capital OTHERS PRESENT Scott Baur & A.C. Lovingood (Resource Centers) Jennifer Gainfort, Consultant (AndCo Consulting) Bonni Jensen (Klausner Kaufman Jensen Levinson) Geoffrey Gerber (TWIN Capital) Geoffrey Gerber thanked the Board for allowing him to come and present the TWIN Capital Enhanced Index Strategies to the Board. Mr. Gerber started his presentation by reviewing the TWIN Capital Profile, reporting that the firm is 100% employee owned with over 30 years of experience. As of March 31, 2032, TWIN Capital has over $140,000,000.00 in Assets Under Management and the firm is ranked as the 9t" largest U.S. Enhanced Index Equity Manager in Pensions and Investments. Mr. Gerber informed the Board that his firm manages $155,000,000.00 in assets for Seven AnclCo Public and Taft -Hartley Pension Plan clients including the City of Gainesville and Allegheny County Police Officers' Pension Fund. Secretary Bard Seidensticker inquired if the accounts are managed separately, which Mr. Gerber confirmed that they are, and that the Plan's Custodial Bank holds the accounts with TWIN Capital placing the trades. Mr. Gerber then reviewed the active performance cyclicality of the U.S. Equity Large Cap Core Universe in detail, noting that nearly all outperforming active equity funds experienced drawdowns relative to peers and benchmarks over the one, three, and five-year periods and nearly half of the outperformers underperformed by at least 20%. The Standard Deviation of Monthly Residual Returns of the S&P 500 was reviewed along with the historical Market Concentrations from 1974 through 2022. Mr. Gerber then reviewed the issues with Passive Management in detail with the Board, noting that passive index funds that track the indices have also become more concentrated and could suffer from large drawdowns. The Enhanced Index Overview was reviewed with the Board along with the risks and fees comparison between active, passive, enhanced and smart -beta managers. Mr. Gerber then reviewed the investment philosophy of TWIN Capital, which focuses on adding value while controlling risk. The TWIN Prime Enhanced Index Portfolio Goal is to participate in up markets and consistently add value over time. The Strategy has a low tracking error so in periods of underperformance, the fund remains close to the market index return and does not require as much recovery. The TWIN Prime Portfolio holds 120 to 200 stocks diversified across all GICS sectors. The Fund has a market -like beta of 0.98 to 1.02 and relatively low turnover with an average annual turnover rate of 27.5%. The Fund's benchmark is tied to the Russell 1000 Index. Mr. Gerber then reviewed the TWIN Prime Performance since inception with a net return of 10.09 (Gross 10.32%), beating the benchmark rate of 9.26%. Secretary Brad Seidensticker asked if the investment decisions are made by the manager or via a committee, which Mr. Gerger informed the Board that all investment choices are decided upon by a committee. Mr. Gerber then reviewed the TWIN Capital Fee Proposal for the Plan, reporting that the minimal quarterly base fee would be 2.5 basis points (0.10% annual base fee) with an annual performance fee of 25% of the annual value-added in excess of the 0.1% annual base fee. The Board of Trustees, Mr. Gerber, and Plan Attorney Bonni Jensen had a detailed conversation regarding the fee structure along with examples of how the fee structure works. Mr. Gerber concluded his presentation by answering questions from the Board about the investment strategy and how the Fund prepares for the possibility of a recession. Chairman Jay Spencer and the Board of Trustees thanked Mr. Gerber for the presentation. Upon the departure of Mr. Gerber, the Board, Plan Attorney, and the Plan's Investment Monitor discussed the possibility of investing with TWIN Capital. Attorney Bonni Jensen recommended that the Board have AndCo bring a comparison of TWIN Capital and a few other similar Investment Managers. There was a detailed discussion regarding the fee structure and Mrs. Jensen reminded the Board that the Investment Policy Statement has a 5% cap on a single stock. Jennifer Gainfort informed the Board that TWIN Capital is currently in the compliance approval process and informed the Board that the seven AnclCo Clients that invest in TWIN Capital had those investments before they became clients. Attorney Report (Bonni Jensen, Klausner Kaufman Jensen & Levinson) Attorney Bonni Jensen gave the Board an update to add language to the Pension Plan that will clearly include the lumpsum payments as pensionable pay and the update to the gainshare COLA ordinance language. Administrator Report (Scott Baur & AC Lovingood, Resource Centers) PRI Data Rreach Scott Baur informed the Board that PBI, the company used for death searches by the Custodial Banka and his firm had a data breach; however, the breach was contained to a handful of PBI's clients. Neither Salem Trust nor The Resource Centers were affected. 4. OTHER BUSINESS There was no other business to discuss at this time. 5. ADDITIONAL REPORTS There were no additional reports at this time. 6. PUBLIC COMMENTS No members of the public had any comment. 7. ADJOURN There being no further business, Chairman Jay Spencer adjourned the meeting at 11:47 AM. Respectfully submitted, Brad Seidensticker, Secretary Minutes: June 23, 2023 Page 2 Jensen reminded the Board that the Investment Policy Statement has a 5% cap on a single stock. Jennifer Gainfort informed the Board that TWIN Capital is currently in the compliance approval process and informed the Board that the seven AndCo Clients that invest in TWIN Capital had those investments before they became clients. Attorney Report (Bonn! Jensen, Klausner Kaufman Jensen & Levinson) Attorney Bonni Jensen gave the Board an update to add language to the Pension Plan that will clearly include the lumpsum payments as pensionable pay and the update to the gainshare COLA ordinance language. Administrator Report (Scott Baur & AC Lovingood, Resource Centers) PRI Data Rreach Scott Baur informed the Board that PBI, the company used for death searches by the Custodial Banka and his firm had a data breach; however, the breach was contained to a handful of PBI's clients. Neither Salem Trust nor The Resource Centers were affected. 4. OTHER BUSINESS There was no other business to discuss at this time. 5. ADDITIONAL REPORTS There were no additional reports at this time. 6. PUBLIC COMMENTS No members of the public had any comment. 7. ADJOURN There being no further business, Chairman Jay Spencer adjourned the meeting at 11:47 AM. Minutes: June 23, 2023 Page 2