HomeMy WebLinkAboutMinutes Fire Pension 011205PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND
MINUTES OF MEETING HELD
January 12, 2005
A meeting of the Board of Trustees was called to order at 11:40 A.M. at Station 3, Palm
Beach Gardens, Florida. Those persons present were:
TRUSTEES OTHERS
Ed Morejon Margie Adcock, Pension Resource Center,
Tom Murphy Administrative Manager
Steve Rogers Joe Bodgahn, Bogdahn Consulting,
Richard Beladino Investment Monitor
Robert Sugarman, Attorney
MINUTES
The Board reviewed the minutes of the meeting held November 15, 2004. A motion was
made, seconded and carried 4 -0 to accept the minutes of the meeting held November 15,
2004.
INVESTMENT MONITOR REPORT
ASSET ALLOCATION PRESENTATION
Joe Bogdahn appeared before the Board to discuss asset allocation. It was noted that the
Administrator sent a letter to the Mayor, Finance Director, City Manager, Fire Chief and
Union Representative to invite them to this special meeting. It was noted that the
Administrator received no response from any of the individuals invited and it was further
noted that none of the individuals invited was in attendance. Mr. Bogdahn provided the
Board with a booklet on asset allocation. Mr. Bogdahn illustrated the basic model of
asset allocation. He noted that the average Florida municipal fund has an assumed rate of
return of 8 %. Mr. Bogdahn showed an illustration of the historical asset growth from
1926 to 2003. He noted that asset allocation is the largest factor in expected
performance. Mr. Bogdahn then reviewed the short term risk of volatility and the
"Efficient Frontier" which is the curve of expected returns. He noted that the
recommended allocation is 65% in equities, 10% in real estate, and 25% in fixed income.
The recommended equity allocation is comprised of 38% in large cap, 10% in mid cap,
7% in small cap, and 10% in international. It was noted that the current equities of the
Fund are managed by Dana and they do large to mid cap. They have gone as high as
40% in mid cap but average about 27 %. It was stated that the way to pay for benefit
increases comes from three sources: contributions, 175 monies and /or investment returns
in excess of actuarial assumptions. However, in this Plan only contributions or
investment returns can increase benefits as the 175 monies go toward the share accounts.
Mr. Bogdahn then discussed the process involved for asset allocation. The Board needs to
review the current allocation, identify asset classes to add, find efficient investment
vehicles, adjust the guidelines and then implement the strategy. Mr. Bogdahn stated that
the large and mid cap asset classes are covered pretty well in the Fund. He noted that the
Fund has no small cap and no international. He stated that Dana is more on the value side
and maybe one possibility would be to find a core growth manager to complement Dana.
However, he thought the Board should really focus on small cap and international. He
then reviewed several products that Dana has. He reviewed the calendar year returns,
index relative risk statistics, market capture ratios, return versus risk, risk analysis and
trailing returns. He noted that the additional cost to maintain the portfolio from a custody
standpoint would be nominal given the potential returns. Mr. Bogdahn recommended
that the Board have Dana implement an all cap strategy while the Board goes through the
process of looking an opportunistic manager or a growth manager. He stated that this
would not necessarily require an amendment to the investment guidelines but that the
Board may want to put maximums on small and mid cap in the guidelines as a safety
measure. Mr. Bogdahn then reviewed the investment guidelines and recommended
changes to be made. It was noted that the Ordinance should be amended to allow 10%
for real estate. The Board directed Bob Sugarman to amend the Ordinance to allow for
10% in real estate. A motion was made, seconded and carried 4 -0 that, based on the asset
allocation study and recommendation of Joe Bogdahn, to change to the all cap all world
strategy of Dana consistent with the investment policy.
DISCUSSION ON CUSTODIAL FEES
Mr. Sugarman stated that he invited AmSouth to the February meeting to discuss the
proposed fee increase. The Board reviewed a proposal from Salem Trust as well as from
the Pension Resource Center. It was noted that the Fund would still need someone to
custody the assets if Pension Resource Center did the check writing functions. Mr.
Sugarman recommended that the Board wait to see if AmSouth attends the February
meeting before making any decision.
ADMINISTRATIVE REPORT
Margie Adcock presented the list of disbursements to be made. A motion was made,
seconded and carried 4 -0 to approve the disbursements listed.
OTHER BUSINESS
There being no further business, and the next meeting being scheduled for Tuesday,
February 22, 2005 at 11:00 A.M., the meeting adjourned at 1:55 P.M.
Respectfully submitted,
Ed Morejon, Secretary