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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. 1 i j • • 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. 2 .--------------------------------------------------- / • Board Comments and Discussion • 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 3 I • • 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: 4