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HomeMy WebLinkAboutMinutes Fire Pension 110512PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND MINUTES OF MEETING HELD November 5, 2012 A meeting of the Board of Trustees was called to order at 9:06.M. at Council Chambers, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES OTHERS Rick Rhodes, Chair Audrey Ross, Administrator Tom Murphy, Secretary Pedro Herrera, Attorney Donna Wisneski Troy Brown, Investment Consultant Ed Morejon Steve Stack, Investment Manager Mark Joyce Vitto Fratta , Investment Manager PUBLIC COMMENTS N/A MINUTES The Board reviewed the minutes of the regular meeting held on September 10, 2012. A motion was made by Donna Wisneski to approve the minutes of the September 10, 2012 regular meeting as amended. The motion was seconded by Tom Murphy and carried 5-0. INVESTMENT MANAGER REPORT: ICC CAPITAL (STEVE STACK & VEDO Mr. Stack introduced Mr. Fratta to the board and stated that he is the portfolio manager for this fund and is based out of the California office. Mr. Fratta has been with ICC Capital for the last 8 years and has been the portfolio manager for this funds portfolio for the last 5 years. Mr. Fratta addressed the boards concern regarding ICC’s recent underperformance and explained the events that lead up to it. When the market tanked in 2008 their strategy could not keep up. He reviewed ICC historical performance and commented that in the past their strategy has always outperformed the markets during changing and challenging environments. Mr. Fratta explained that their portfolio is now starting to turn around and they are now starting to make up for some of the underperformance. He continued to explained that within the last 2 months, they have had radical changes to their portfolio which has helped add to their recent over performance. For the quarter ending September 30, 2012 the total fund slightly outperformed the benchmark at 6.44% versus 6.23%, but for the 1 year and since inception they are behind at 17.62% versus 30.20% and -4.68% versus 7.60%, respectively. He did note that their portfolio is positioned well going forward and also updated the board on their future outlook. Mr. Fratta explained that ICC thinks their situation will start to divert and that the will accelerate throughout the end of the year and going forward. Also he stated that dividends are starting to be paid out again and ICC is taking advantage of them. The Trustees asked multiple questions and had a lengthy discussion regarding the impact of Storm Sandy on the fund, as well as the future events that may impact the fund as well. Mr. Stack explained that in January the market will have a big adjustment due to the elections, but ICC has been steadily following this and is prepared if the economy does 2 push the market place back into a recession. The Trustees noted that it seems like ICC is trying to change their strategy from the original one that was proposed to the board when they were hired. Mr. Fratta confirmed that they are starting to change their strategy and explained that they are doing this because of the historic market environment. He continued to explain that ICC use to be very aggressive during the times that they needed to be, but right now they need to lay low and not be so aggressive because of the market conditions. Although he stated that the time will come back around where they will need to start being more aggressive again. INVESTMENT MONITOR REPORT: THE BOGDAHN GROUP (TROY BROWN) The Trustees had a lengthy discussion on the ICC presentation. Mr. Brown noted that ICC is still currently 12% behind the benchmark since inception, and they are more sector weighted which means they take more risk in the portfolio. The board reviewed and discussed ICC investment philosophy, returns, and their relationship with the board. Mr. Brown stated that if the Fund sold out of ICC right now, then they would be selling off on the down side. After the boards discussion Mr. Brown reported that some of his other funds split off some of their domestic equities into index funds. Index funds are more cost effective and have more stable performance with an easier cash flow. He noted that the most successful portfolios that he runs have index funds in their asset allocation. Mr. Brown compared the fees associated with the index fund to the fees the plan is currently paying between both of their equity managers, and noted the huge difference in savings. Mr. Brown briefly explained that index funds mirror the benchmark and they are held in a mutual fund account. Ms. Wisneski commented that she would like more information regarding the index funds to review. Mr. Brown reminded the board that he is not looking to replace a manager with an index fund, but rather add an index fund in along side of the managers. Mr. Brown noted that he will bring more information in on the index funds to the next meeting, along with an asset allocation to index funds as well. Mr. Brown reviewed the September 30, 2012 quarterly investment report. He commented that this is the first time in a while that US stocks outperformed International stocks. He reviewed the market environment during the quarter and stated that unemployment is still high and inflation still remains low. European stocks went up during the quarter and this plans manager, RBC benefited from it. Fixed income rates still remain low, but there was a positive return across all sectors during the quarter. Mr. Brown stated that the bond managers are trying to find yield, so they are all moving up to all high yield bonds, which puts an overweight to AA and AAA. He reviewed this funds performance and asset allocation and commented that the fund is very well diversified at this time. The fund is inline with the policy and is also outperforming the benchmark. The total fund net of fees outperformed the index at 4.90% versus 4.78%, but for the fiscal year to date they are slightly behind at 18.28% versus the index at 19.99%. Mr. Brown noted that for the quarter all managers outperformed and for the fiscal year all managers also outperformed with the exception of ICC Capital. He then briefly reviewed each mangers performance for the quarter and fiscal year. On the fixed income side and Real Estate, all the managers are performing well for the kind of market that they are having to deal with. Mr. Brown stated that he is comfortable with all the managers at this time and does not have any other recommendations. Mr. Brown reviewed the preliminary report and allocation worksheet as of October 31, 2012. He noted that as of current there is extra cash sitting on the sidelines that he would 3 like to allocate to Dana Advisors. Therefore Mr. Brown is recommending transferring $150K from the cash account to the Dana Core fund. The board discussed. A motion was made by Ed Morejon to approve and authorize the transfer of $150K from the Plans cash account to the Dana Advisors Core Fund. The motion was seconded by Donna Wisneski and carried 5-0. ATTORNEY REPORT: SUGERMAN & SUSSKIND (PEDRO HERRERA) Mr. Herrera noted that the draft pension Ordinance changes regarding the IRS regulations, self directed DROP accounts, etc. have been submitted to the City’s Attorney for review. He was notified that this Ordinance will go on the City Council agenda for first reading in January 2013. Mr. Herrera noted that once this Ordinance is passed, then he will need Mr. Brown’s assistance is creating a self direct DROP account. Mr. Brown commented that ICMA is the only firm that he knows of that will do self directed DROP accounts for public pension plans. Mr. Herrera commented that he has reviewed the Foster & Foster actuarial agreement and stated that it is ready to be executed by the board. Mr. Herrera reviewed the October 31, 2012 securities and litigation report from Sheppard, Finkelman, Miller & Shah. He reported that there were no claims filed, nor where there any settlements during the month. ADMINISTRATIVE REPORT: RESOURCE CENTERS (AUDREY ROSS) DISBURSEMENTS The Board reviewed the disbursements presented for approval by the Administrator. A motion was made by Donna Wineski to approve the disbursements that were presented by the Administrator. The motion was seconded by Mark Joyce and carried 5-0. BENEFIT APPROVALS The Board reviewed the applications to enter the DROP for Catherine Mauser and Gary Bussey. A motion was made by Tom Murphy to approve the applications to enter the DROP for Catherine Mauser and Gary Bussey. The motion was seconded by Mark Joyce and carried 5-0. Ms. Ross presented the board with the 2013 meeting dates. They asked Ms. Ross to coordinate with the other service providers to schedule a January 2013 date. Also due to a scheduling conflict, Mr. Herrera asked the board to move their quarterly meetings dates to a Wednesday at 1PM instead of a Monday at 9AM. Ms. Ross noted that she will revised the 2013 meeting dates and send out a revised list. A motion was made by Tom Murphy to revised the 2013 meeting dates to reflect a January 2013 meeting date and to also change the quarterly meetings to Wednesday’s at 1PM. The motion was seconded by Mark Joyce and carried 5-0. 4 OLD BUSINESS Mr. Murphy noted that PRC’s website needs to be updated. Ms. Ross presented the board with a confirmation from the City on the Trustee term expiration dates. She noted that the terms should be 4 years effective in 2010, but Ms. Wisneski received a letter in 2012 stating that her term expires in 2015, which is 3 years from now. Ms. Ross stated that she will follow up with the City and will report back at the next meeting. Ms. Ross explained that they are in the process of transiting the information between Actuaries. GRS has provided F&F with the basic “transition data/ information” that they usually provided when this type of event occurs. F&F is stating that they may need additional information from GRS, but if they do GRS will charge the fund. The board discussed the transition and commented that the Chair can authorize in between meetings the request from F&F to GRS. A motion was made by Tom Murphy to authorize the Chair to give authority between meetings on the data requests from Foster & Foster to GRS regarding the transition in Actuaries. The motion was seconded by Ed Morejon and carried 5-0. Lastly Ms. Wisneski shared her feelings regarding the recent Ordinance that was passed and the delay that was experienced. She stated that the only effect it had was the perception of the board. The Trustees discussed what had happened in-between meetings that caused this delay. They also discussed what they can do in the future to make sure this kind of delay does not happen again. There being no further business, the meeting adjourned at 12:42PM. Respectfully submitted, Tom Murphy, Secretary