HomeMy WebLinkAboutMinutes GEPB 081505,. I
General Employees Pension Fund
August 15, 2005
The General Employees Pension met on August 15, 2005 in the City of Palm Beach
Gardens, Council Chambers located at 10500 N. Military Trail, Palm Beach Gardens,
Florida. The meeting was called to order at 2:05 P.M.
Members Present: Stephen Parella, Kenneth Steele, Dindial Laljie and Allan Owens
Members Absent: Jami Smith
Also Present: Joseph Bogdahn o f Bogdahn Consulting
New Business:
Discussion of the transfer of funds to a new trustee
Presentation by prospective bond investors
Joseph Bogdahn of Bogdahn Consulting stated that there are three companies that will be
giving a presentation for the board's consideration as the new bond manager for the
pension fund. The companies that will be presenting are Sawgrass Management, Am
South Asset Management and MB I Capital Management Inc.
Sawgrass Asset Management
Joseph Bogdahn introduced Chris Greco, Senior Institutional Sales Executive from
Sawgrass Asset Management. Mr. Greco gave the board background information about
Sawgrass Asset Management. He discussed the Sawgrass strategy toward fixed income
investing. He discussed the advantages of a Put Bond Strategy and gave examples of the
bond strategy. He talked about Sawgrass' s performance over the past 10 years and the 10
year return. He also talked about the current attributes and holdings and the value that
Sawgrass has to offer. He also went over the management team and gave information
about their backgrounds.
Stephen Parella asked if the company is employee owned. Mr. Greco stated that the
company is 72% employee owned and 27 Yi percent is owned by Amsouth. The company
has 17 employees and the total assets are 1.08. Mr. Parella also asked how often
Sawgrass would attend Board meetings. Mr. Greco stated that they would be willing to
attend quarterly meetings.
The fee Sawgrass is offering is 45 basis points based on the million dollar account. That
would be managed in a separate account. They would be buying and selling bonds for the
account and at 45 points they would be able to customize the portfolio.
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Stephen Parella asked about corporate mortgage holding and how heavy is the company
involved in mortgage securities. Mr. Greco stated that the company actually has 10% less
mortgage bonds than the benchmark. They are currently overweight in corporate bonds
by 23% versus 39%. Mr. Parella added that Sawgrass does not offer custodian services.
AmSouth Asset Management
Joseph Bogdahn introduced Jim Leavy, Institutional Sales Executive of AmSouth Asset
Management. Mr. Leavy gave a b rief description of his experience and went the
background and overview of AmSouth Asset Management including the fact that they
have over 50 investment professionals including analysts and portfolio managers.
Stephen Parella asked if any part of the company is employee owned. Mr. Leavy stated
that they are 100% owned by AmSouth Bank. Mr. Parella asked how often they would
come to board meetings. Mr. Leavy stated that they would be willing to come to
quarterly meetings if necessary. He would also have a manager come to one meeting a
year.
Mr. Leavy gave a snapshot of the people who are part of the management team and gave
information about their backgrounds. He discussed AmSouth's fixed income philosophy
which included their objective and how they typically run a fixed income portfolio. He
also went over their strategy for implementing a successful fixed income. Mr. Leavy
discussed the characteristics of a core bond portfolio and core bond composite
performance.
Jim Leavy discussed the administrative services and fees. He stated that the services
included are investment management, custodial services, dedicated institutional
administrative services, monthly financial statements, internet access to plan information
and online trust statement. He also discussed what the pension services include such as
distributions to participants and beneficiaries, participant tax reporting, sponsor reports,
coordinate ACH & Direct Deposits, update tax tables annually and annual notification of
withholding to participants. The fee schedule would be 35 basis points which includes
fixed income management of the pension plan and custody of the pension plan.
MBIA Asset Management Group
Joseph Bogdahn introduced Thomas Tight, Regional Director of Assess Management
Group. Mr. Tight gave a broad overview of MBIA. He stated that they manage fixed
income exclusively. He discussed MBIA's fixed income capabilities and the company's
philosophy. He also discussed the 47 billion in fixed income assets. He went over the
asset allocation broken down by assets by type and assets by duration. He discussed
MBIA's total return philosophy. He stated that they generate excess return while taking a
below average risk. He went through the investment process which included
communication and their portfolio construction process. He also went over their
compliance and internal control process, and the intermediate composite makeup. The
composite make up included the sector distribution and the composite quality.
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• Board Comments and Discussion
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The Board discussed which company they wanted to use. Mr. Parella asked why
Sawgrass's fee was so much higher than the others. Mr. Bogdahn stated that since they
are a smaller firm there is more pressure on the fees. He stated that MBIA' s fee would be
30 basis points. They are the largest firm and can afford to charge less. He stated that
when looking at the returns over the past 5 years AmSouth would have added 3.07% to
the return of the portfolio, MBIA at 3.032% and Sawgrass at 2.992%. He went over the
risks and returns on each company. He said that all the companies offer excellent
service. Mr. Parella stated that he feels the bond portion of the portfolio needs to be
conservative because the equity's are the aggressive part of the portfolio. There was
discussion regarding the risks of all the companies and how similar the returns were for
all of the companies.
There was a poll taken of each board member for their choice of company to hire.
Each board members stated in order, their first, second and third choice for which
company to choose.
Dindail Laljie
Kenneth Steele
Stephen Parella
Allan Owens
MBIA, Sawgrass and AmSouth
Sawgrass, AMIA and AmSouth
MBIA, Sawgrass and AmSouth
MBIA, Sawgrass and AmSouth
Stephen Parella asked if Sawgrass would consider reducing their fee because they are
much higher than the other companies. He said that if Sawgrass would lower their fees
they would consider using them. Allan Owens agreed that he would to like use Sawgrass
but also went with MBIA because of the costs involved. Stephen Parella made a motion
to nominate Sawgrass as the new manager for the bond portion of the portfolio if they are
willing to match the 35 basis point fee. The motion passed 4-0.
Stephen Parella Yes
Dindail Laljie Yes
Kenneth Steele Yes
Allan Owens Yes
Stephen Parella made a motion that if Sawgrass is not willing to meet the 35 basis points,
they will use MBIA as their bond manager. Allan Owens seconded the motion and it
passed 4-0
Stephen Parella Yes
Dindail Laljie Yes
Kenneth Steele Yes
Allan Owens Yes
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Stephen Parella made a motion that Salem Trust will be the trustee to handle the custodial
portion of the General Employees Pension Plan. Allan Owens seconded the Motion and it
passed 4-0.
Stephen Parella Yes
Dindail Laljie Yes
Kenneth Steele Yes
Allan Owens Yes
Stephen Parella made a motion that Scott Christiansen will produce the contract for the
new bond manger. Allan Owens seconded the motion and it passed 4-0.
Stephen Parella Yes
Dindail Laljie Yes
Kenneth Steele Yes
Allan Owens Yes
With no further business to discuss the meeting adjourned at 2:57 PM .
Approved:
Allan Owens
/Ct?~
Kenneth Steele
'7
Dindial Laljie
Attest:
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