HomeMy WebLinkAboutAgenda Fire Fighters Pension 040705THE PENSION RESOURCE CENTE & LLC
4360 Northlakc Botilt~rd, Suite 206 4 Palm Beach Oadcns, FL 33410
Phone (561) 624-3277 .oI Fax (561) 624-3278 Q WWW.RE~~URCECENTERS.COM
PALM BEACH GARDENS FIREF’IGmm’
PENSION FUND
Meetiryl of Thursday, April 7,2005
Location: Palm Beach Gardens Fire Rescue - Station 1
lo500 North Milby Trail
Palm Beach Gardens, Florida 33410
(561) 7944300
Time; 11:OO A.M.
THE PENSION RESOURCE CENTER, LLC
4360 Northlake Boulevard, Suite 206 +:+ Palm Beach Gardens, FL 33410
Phone (56 1) 624-3277 +:+ Fax (561) 624-3278 +:+ WWW.RESOURCECENTERS.COM
, Margdt M. Adcock
Administrator
May 13,2005
City Clerk
City of Palm Beach Gardens
10500 North Military Trail
Palm Beach Gardens, FL 33410
RE: Palm Beach Gardens Firefighters' Pension Trust Fund
Investment Policy Statement
Dear City Clerk:
As you might know, we serve as the Administrator for the Palm Beach Gardens
Firefighters' Pension Trust Fund. At the Board of Trustees meeting on April 7,2005, the
Board adopted the enclosed Investment Policy Statement. We are providing you with the
Investment Policy Statement as the Plan Sponsor as required by Section 112.661, Florida
Statutes. By copy of this letter, I am also providing a copy of the Investment Policy
Statement to the Department of Management Services and the Fund's Actuary as required
by Section 112.661, Florida Statutes.
Thank you for your attention to this matter. Should you have any questions regarding
this, please do not hesitate to contact our office.
Sincerely,
Enclosure
cc: Charles Slavin, Department of Management Services (with enclosure)
Ward Foster, Actuary (with enclosure)
Mike Welker, Investment Monitor (with enclosure)
Robert Sugarman, Attorney (with enclosure)
City of Palm Beach Gardens Firefighters'
Pension Trust Fund
Investment Policy Statement
I. PURPOSE OF INVESTMENT POLICY STATEMENT
The Pension Board of Trustees maintains that an important determinant of future
investment returns is the expression and periodic review of the Fund's investment objectives.
To that end, the Trustees have adopted this statement of Investment Policy.
In fulfilling their fiduciary responsibility, the Trustees recognize that the retirement
system is an essential vehicle for providing income benefits to retired participants or their
beneficiaries. The Board also recognizes that the obligations of the Fund are long-term and
that investment policy should be made with a view toward performance and return over a
number of years. The general investment objective, then, is to obtain a reasonable total rate
of return - defined as interest and dividend income plus realized and unrealized capital gains
or losses - commensurate with the Prudent Investor Rule and any other applicable statute.
Reasonable consistency of return and protection of assets against the inroads of
inflation are paramount. However, the volatility of interest rates and securities markets make
it necessary to judge results within the context of several years rather than over short periods
of two years or less.
The Pension Board of Trustees will employ a professional Investment Management
firm(s) to invest the assets of the fund. Within the parameters allowed in this IPS, the asset
allocation of the fund is solely at the Investment Manager's discretion, including sector
weightings, security selection and investment style.
The Trustees, in performing their investment duties shall comply with the fiduciary
standards set forth in Employee Retirement Income Security Act of 1974 (ERISA) at 29
U.S.C. s. 1104(a) (1) (A) - (C). In case of conflict with other provisions of law authorizing
investments, the investment and fiduciary standards set forth in this section shall prevail.
11. INVESTMENT PERFORMANCE OBJECTIVES
The below listed performance measures will be used as objective criteria for
evaluating effectiveness of the investment manager.
A. Total Fund Performance
1. The performance of the total Fund will be measured for rolling three
and five year periods. These periods are considered sufficient to
accommodate the market cycles experienced with investments. The
performance of this portfolio will be compared to the return of a
blended index comprised of 55% Russell 3000 Stock Index, 10% MSCI
EAFE Index, 30% Lehman Brothers Intermediate Government / Credit
Bond Index and 5% of the 90-day U.S. Treasury Bill Index.
On a relative basis, each investment manager (SEE ATTACHED
MANAGER ADDENDUMS) will be compared against the top forty
percent of the appropriate universe and index for the most recent
quarter, fiscal year to date, trailing twelve months, trailing three years,
trailing five years, and any other agreed upon time period
2.
3. On an absolute basis, it is expected that total return of the combined
equity, fixed income, and cash portfolio, will equal or exceed the
actuarial earnings assumption (8 %), and equal or exceed the
Consumer Price Index plus 3% over three to five-year periods.
B. Eauitv Performance
The equity portion of the portfolio, defined as common stocks and convertible
bonds, is expected to perform at a rate at least equal to 85% of the Russell
3000 Stock Index and 15% of the MSCI EAFE Index and be in the top 40% of
the Mobius Universe over the trailing three and five-year time periods.
C. Fixed Income Performance
The overall objective of the fixed income portion of the portfolio is to add
stability, consistency and safety to the total fund. The fixed income portion of
the portfolio, defined as fixed income and preferred stocks, is expected to
perform at a rate at least equal to the Lehman Brothers Intermediate
Government / Credit Bond Index, and in the top 40% of the Mobius Universe
over the trailing three and five-year time periods.
111. INVESTMENT GUIDELINES
A. Authorized Investments
All investments made or held in the fund shall be limited to:
1.
2.
3.
4.
5.
Time, savings, and money market deposit accounts of a national bank, a
state bank or a savings and loan institution, insured by the Federal
Deposit Insurance Corporation, provided the amount deposited does not
exceed the insured amount.
Obligations issued by the United States Government or obligations
guaranteed as to principal and interest by the United States Government
or by an agency of the United States Government.
Stocks, commingled funds administered by national or state banks,
mutual funds and bonds or other evidences of indebtedness, issued or
guaranteed by a corporation organized under the laws of the United
States, any state or organized territory of the United States or the District
of Columbia, provided:
a. Individual securities meet the following criteria:
I. Fixed Income: Standard & Poor's Investment Grade or
Moody's Investment Grade, except that
15% of the fixed income securities can be
invested in securities not meeting this
requirement.
No restrictions .. 11. Equities:
iii. Money Market: Standard & Poor's AI or Moody's PI.
iv. Real Estate: Commingled private placements and direct
investments must be independently
appraised at least annually.
b. Not more than 5% of the Fund's assets shall be invested in the
common stock or capita! stock of any one issuing company, nor
shall the aggregate investment in any one issuing company
exceed 5% of the outstanding capital stock of the company.
c. The value of bonds issued by any single corporation shall not
exceed 10% of the total fund.
Commingled stock, bond or money market funds whose investments
are restricted to securities meeting the above criteria.
Foreign securities.
B. Limitations & Portfolio Composition
1. Investments in corporate common stock and convertible bonds shall not exceed
65% of the Fund assets at cost or 75% of the fund assets at market value.
Foreign securities shall not exceed 10% of the value at cost of the fund. 2.
C. Absolute Restrictions
There will be no investment activity in the following:
1.
2. Tax-exempt bonds.
3.
4. Venture capital.
5.
6.
7.
Short sales, margin purchases, or borrowing.
Repurchase Agreements, unless the Master Repurchase Agreement has been
approved by the Board of Trustees
Illiquid investments, as described in Chapter 215.47, Florida Statutes
Any investment prohibited by State or Federal Law.
Any investment not specifically allowed as part of this policy.
D. TradinP Parameters
When feasible and appropriate, all securities shall be competitively bid. Except as
otherwise required by law, the most economically advantageous bid shall be selected.
Commissions paid for purchase of securities must meet the prevailing best-execution
rates.
IV. COMMUNICATIONS
A. On a monthly basis, the custodian shall supply an accounting statement that will
include a summary of all receipts and disbursements and the cost and the market value
of all assets. On a quarterly basis, the manager shall provide a written report affirming
compliance with the security restrictions of Section I11 above and a summary of
common stock diversification and attendant schedules. In addition, the manager shall
deliver each quarter a report detailing the Fund’s performance, adherence to the
investment policy, forecast of the market and economy, portfolio analysis and current
assets of the Trust. Written reports shall be delivered to the Trustees within 60 days
of the end of the quarter. A copy of the written report shall be submitted to the person
designated by the City, and shall be available for public inspection. The manager will
provide immediate written and telephone notice to the Trustees of any significant
market related or non-market related event, specifically including, but not limited to,
any deviation from the standards set forth in Section I11 above.
The manager will disclose any securities that do not comply with section I11 in each
quarterly report.
If the Fund owns investments, that complied with section I11 at the time of purchase,
which subsequently exceed the applicable limit or do not satisfy the applicable
investment standard, such excess or noncompliant investments may be continued until
it is economically feasible to dispose of such investment in accordance with the
B.
C.
D.
E.
F.
V.
A.
B.
C.
D.
VI.
prudent man standard of care, but no additional investment may be made unless
authorized by law or ordinance.
The Trustees shall retain a monitoring service to evaluate and report on a quarterly
basis the rate of return and relative performance of the Fund.
The Trustees will meet quarterly to review the monitoring service's Performance
Report. The Trustees will meet with the investment manager and appropriate outside
consultants to discuss performance results, economic outlook, investment strategy and
tactics and other pertinent matters affecting the Fund on a periodic basis.
At least annually, the Trustees shall provide the Investment Manager with projected
disbursement needs of the plan, so that the investment portfolio can be structured in
such manner as to provide sufficient liquidity to pay obligations as they come due. To
this end, the Investment Manager should, to the extent possible, attempt to match
investment maturities with known cash needs and anticipated cash-flow requirements.
COMPLIANCE
It is the direction of the Trustees that the plan assets are held by a third party
custodian, and that all securities purchased by, and all collateral obtained by, the plan
shall be properly designated as plan assets. No withdrawal of assets, in whole or in
part, shall be made from safekeeping except by an authorized member of the board of
Trustees or their designee. Securities transactions between a broker-dealer and the
custodian involving purchase or sale of securities by transfer of money or securities
must be made on a "delivery vs. payment'' basis to insure that the custodian will have
the security or money in hand at conclusion of the transaction.
At the direction of the Trustees, operations of the fund shall be reviewed by
independent certified public accountants, as part of any financial audit periodically
required. Compliance with the Trustees' internal controls shall be verified. These
controls have been designed to prevent losses of funds that might arise from fraud,
error, or misrepresentation by third parties or imprudent actions by the Board or
employees of the plan sponsor, to the extent possible.
Each member of the Board of Trustees shall participate in a continuing education
program relating to investments and the Trustee's responsibilities to the fund. It is
highly suggested that this education process begin during the Trustees' first term.
With each actuarial valuation, the Board of Trustees shall determine the total expected
annual rate of return for the current year, for each of the next several years and for the
long term thereafter. This determination shall be filed promptly with the Department
of Management Services, the plan's sponsor and the consulting actuary.
CRITERIA FOR INVESTMENT MANAGER REVIEW
The Board wishes to adopt standards by which judgments of the ongoing performance
of a portfolio manager may be made. If, at any time, any one of the following is breached, the
portfolio manager will be warned of the Board's serious concern:
A.
B.
C.
D.
E.
F.
G.
Four consecutive quarters of total Fund performance below the 50th percentile in manager
performance rankings.
Trailing three-year standard deviation for the Fund in excess of 120% of the policy.
Trailing three-year standard deviation of the Equity portfolio in excess of 150% of the
benchmark.
Loss by the manager of any senior investment personnel.
Any change in basic investment philosophy by the manager.
Failure to attain a 60% vote of confidence by the Board of Trustees.
Failure to observe the security quality restrictions of section 111.
Nothing in this section shall limit or diminish the Trustees’ right to terminate the manager at any
time for any reason.
VII. FLORIDA STATUTES 112,175 AND APPLICABLE CITY ORDINANCES
If, at any time, this document is found to be in conflict with Chapters 112 and 175,
Florida Statutes, or the applicable City Ordinances, the Statutes and Ordinances shall prevail.
VIII. REVIEW AND AMENDMENTS
It is the Trustees intention to review this document periodically and to amend this
statement to reflect any changes in philosophy, objectives, or guidelines. In this regard, the
money manager’s interest in consistency in these matters is recognized and will be taken into
account when changes are being considered. If, at any time, the Investment Manager feels that
the specific objectives defined herein cannot be met, or the guidelines constrict performance, the
Trustees should be notified in writing. By initial and continuing acceptance of this Investment
Policy Statement, the Investment Manager concurs with the provisions of this document.
CITY OF PALM BEACH GARDENS
FIREFIGHTERS’ PENSION TRUST FUND
5
CITY OF PALM BEACH GARDENS FIREFIGHTERS’
PENSION TRUST FUND
Addendum to Statement of Investment Policy
For
Dana Investment Advisors
Dana Investment Advisors has been retained by the City of Palm Beach Gardens
Firefighters’ Trust Fund to manage a portfolio of fixed income securities and U.S.
domestic stocks ranging fiom Large Capitalization in nature to Small Capitalization.
Dana Investment Advisors was retained for this assignment based on their qualifications
and experience in managing equity portfolios as well as fixed income portfolios.
Addendum
This addendum is a part of the City of Palm Beach Gardens Firefighters’ Trust
Fund’s Investment Policy and is intended only to complement the objectives and
guidelines outlined therein. By signing this addendum the investment manager
understands and agrees to adhere to the guidelines, investment manager
responsibilities, and other conditions therein.
Guidelines
Within the guidelines contained in the Statement of Investment Policy established for the
City of Palm Beach Gardens Firefighters, Dana Investment Advisors may invest and
reinvest the assets of the Plan in a diversified portfolio of:
0 Equities (stocks)
0 Fixed Income (bonds)
0 Cash equivalent securities
In order to comply with the guidelines for the entire City of Palm Beach Gardens
Firefighters’ Trust Fund as outlined in the Statement of Investment Policy, the Dana
Investment Advisors investment portfolio shall comply with the following criteria:
1. The equity portfolio characteristics are expected to exhibit a large capitalization
value orientation.
2. 85% of fixed income securities should be rated Investment Grade by Moody’s &
S&P. The remaining fixed income securities can fall below investment grade.
3. Cash securities shall not exceed 10% of the market value of the total portfolio.
4. Not more than 5% of the Fund’s assets shall be invested in the
common stock, capital stock, or fixed income security of any one issuing
company, nor shall the aggregate investment in any one issuing company exceed
5% of the outstanding capital stock of the company.
Investment 0 bjectives
Dana Investment Advisors has been retained as a Multi-Cap core portfolio manager as
well as the sole fixed income manager. The assets of the Plan managed by Dana
Investment Advisors shall be invested with the following objectives:
Total Portfolio:
The primary objective of the Dana Investment Advisors portfolio shall be to achieve a
return over the longer term (3 to 5 years) in excess of a Target Index. The Target Index
for the Dana Investment Advisors Portfolio is defined as the Russell 3000 for the equity
component and the Lehman Brothers Intermediate Gov’tlCredit Bond Index for the fixed
income component.
The secondary objective of the Dana Investment Advisors portfolio shall be to achieve a
rate of return over the longer term (3 to 5 years) which ranks above average (top 40%)
when compared to a representative universe of other, similarly managed portfolios.
The volatility of the Fund’s total returns is expected to be similar to that of the target
index and will be evaluated accordingly.
Policy Review
It is the intention of the Board of Trustees of the City of Palm Beach Gardens Firefighters
to review the Statement of Investment Policy and this Addendum from time to time and
to amend them if necessary to reflect any changes in philosophy or objectives. However,
if at any time the investment manager believes that the specific objectives defined herin
cannot be met, or that the guidelines unnecessarily constrict performance, the Trustees
shall be so notified in writing.
airman, Board of Trustees
City of Palm Beach Gardens
Firefighters’ Retirement Plan
CEO / Dana Investhent Advfsors
5/3/05.
Date