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HomeMy WebLinkAboutMinutes Fire Pension 050113PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND MINUTES OF MEETING HELD May 1, 2013 A meeting of the Board of Trustees was called to order at 1:03 PM. 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 Ed Morejon Doug Lozen, Actuary Mark Joyce Brad Coats, Investment Manager Martin Cohen Troy Brown, Investment Consultant Alan Owens – Finance Director Mary Anderson – Alan Owens PUBLIC COMMENTS The Trustees welcomed Mr. Cohen to the board. Mr. Cohen briefly reviewed his background and stated that he also served on the City’s budget committee board as well. MINUTES The Board reviewed the minutes of the regular meeting held on March 11, 2013. A motion was made by Ed Morejon to approve the minutes of the March 11, 2013 regular meeting. The motion was seconded by Tom Murphy and carried 5-0. The Board reviewed the minutes of the special meeting held on March 18, 2013. A motion was made by Mark Joyce to approve the minutes of the March 18, 2013 special meeting. The motion was seconded by Tom Murphy and carried 5-0. INVESTMENT MONITOR REPORT: THE BOGDAHN GROUP (TROY BROWN) Mr. Brown reviewed the process of the ICC and Vanguard transition that took place in between meetings and he commented that it went very well. He explained that the board chose to use CAPIS for the transition manager per his recommendation and the process went very smooth. The transition was completed on April 1, 2013 and the total cost of the transition was $4K. Mr. Brown noted that the plan did save a lot of money by using the transition manager instead of just having ICC liquidate their portfolio because ICC did lose money in April due to gold selling off. He reported to the board that the Bogdahn Group did visit with ICC Capital in their office in early April, and the outcome of the meeting left Bogdahn with the recommendation to all their ICC clients to seek another alternative. Lastly Mr. Brown stated that they will use ConvergEx for all future transitions and that CAPIS was a one time deal, although now the board does have a current contract with both transition managers. Mr. Brown reviewed the funds performance for the quarter ending March 31, 2013. He noted that it was a strong quarter with the mid cap sector leading. Interest rates are still very low, which are making investors move into lower debt and higher risk stocks. International equity had a positive quarter, but fixed income posted negative returns. Mr. Brown reviewed the plans current asset allocation and commented that he does have a 2 recommendation for rebalancing in which he will address later on in his presentation. The total fund slightly underperformed for the quarter ending March 31, 2013 net of fees at 6.71% versus the benchmark at 6.76%. Although for the fiscal year to date they are ahead of the benchmark and also the plans assumed rate of return at 8.08% versus 7.83% net of fees. Mr. Brown reviewed each mangers performance during the quarter and stated that ICC, Manning, and American Realty outperformed, but Agincourt was negative (although still ahead of the benchmark). He noted that he is comfortable with the current portfolio and the funds that are being held, and therefore he does not have any recommendations for changes at this time other than looking for a replacement manager for ICC and rebalancing back to target. Lastly he noted that since the quarter ended the Plan is up another 0.6% for April, which puts the fiscal year to date return at 9%. Mr. Brown continued to explain that since the quarter ended ICC has been removed from the portfolio and now the board needs to look at other all cap managers to replace them. The Trustees discussed why they would want to replace ICC with another active manager instead of purchasing another index fund. Mr. Brown provided the board with an active manager search and reviewed the top 3 managers; Segall Bryant, Fiduciary Management, and Broadview. He compared those 3 managers to ICC and noted that all of them did have a strong long term performance record. He explained the difference between the managers investment style and commented that all their fees where inline with each other. Mr. Brown recommended interviewing all 3 managers so that the board can get a feel for all the different investment styles and processes that are involved in the all cap funds and to also ask any questions that they may have. The Trustees concurred and noted that they will invite Segall Bryant, Fiduciary Management, and Broadview to their next meeting for interviews. Mr. Brown stated that he does have a recommendation in regards to the plans current asset allocation because there is a lot of money currently sitting in cash. Therefore he is recommending that the board transfer $725K from the cash account and allocate $200K to the Manning and Napier account and $525K to the Templeton account. Mr. Brown explained that both managers are outperforming and with the market going up, you want to have as much invested in it as you can. The Trustees discussed the recommendation and noted that they do not need that much in cash and concurred with Mr. Brown’s recommendation. A motion was made by Ed Morejon to move $725K from the cash account and allocate $525K to the Templeton fund and $200K to the Manning and Napier fund per the recommendation of the Consultant. The motion was seconded by Martin Cohen and carried 5-0. Lastly Mr. Brown noted that after the ICC transition took place there was still a small amount of cash left in the portfolio due to earnings. He stated that he needs the board’s permission at this time to completely close out the ICC account and transfer the remaining cash over to the Plan’s receipt and disbursement account. A motion was made by Tom Murphy to closeout the ICC Capital account and transfer any remaining funds from that account over to the plans receipt and disbursement account per the recommendation of the Consultant. The motion was seconded by Mark Joyce and carried 5-0. 3 INVESTMENT MANAGER REPORT: AGINCOURT CAPITAL (BRAD COATS) Mr. Coats introduced himself and gave a brief overview of his firm. He stated that Agincourt is 100% employee owned and they currently have over $4B in assets. Mr. Coats reviewed the investment team and noted that their professionals are broken up into 4 different teams. Agincourt’s number one goal regarding investing is to have consistent returns with low volatile. They have a top down sector management approach with security selection and yield curve duration management as well. Mr. Coats reviewed the plans portfolio and commented that corporates did better than treasury’s and that the lower rated securities did better in regards to the stocks during the quarter. As of March 31, 2013 the portfolio was negative but ahead of the benchmark at -0.07% versus -0.12%, but for the one year they are ahead at 4.56% versus the benchmark at 3.77%. Mr. Coats gave his brief outlook on the market environment. He stated that the Federal Reserve has increased the number of Governmental securities which has stimulated the market for the time being, but inflation still remains low and that they will need to be concerned when inflation does happen. Lastly he commented that for disclosure purposes Agincourt was audited by the SEC in 2001 and 2008 for minor deficiencies that were considered low risk, but they have since been cleared on everything. PRESENTATION OF THE 9/30/2012 ACTUARIAL VALUATION REPROT: FOSTER & FOSTER, INC. (DOUG LOZEN) Mr. Lozen reviewed the summary sheet he created that compares this years valuation results to last years valuation that was completed by the prior actuary GRS. He noted that 2008 rolled off which was very beneficial to the plan because 2008 was a double digit negative. Mr. Lozen stated that the plan had an actuarial loss of ($296,437) during the fiscal year, but the plans total assets did increase to over $50M which is a new all time high for this plan. The funded ratio also increased this year to 71.9% from 61.6% last year and this was mainly due to the benefit changes that took place. Therefore the estimated City contribution for the fiscal year beginning 10/1/2013 is 36.17% of covered payroll. He noted that the City’s contribution amount would have been a lot higher before the benefit changes where put into place. Mr. Lozen stated that overall this plan had a good year and broke even due to no salary increases, but they had a great investment year. Mr. Owens stated that the Board made a motion back in September 2012 to have the Actuary reflect both methods of the City’s contribution funding; fixed dollar amount and percentage of payroll. Mr. Lozen commented that he can calculated the City’s contribution rate either way, but the percentage of payroll is more accurate because payroll changes throughout the year. Also he noted that if the City wants a fixed dollar amount to fund for the fiscal year beginning 10/1/2013, then they would need to revise this report. The Trustees had a lengthy discussion and commented that they will leave this years report as is and will have a special meeting with the Actuary in the near future to discuss changing the funding method going forward. A motion was made by Ed Morejon to approve the September 30, 2012 Actuarial Valuation as presented setting forth the contributions for the fiscal year beginning October 1, 2013. The motion was seconded by Mark Joyce and carried 4-1 (Mr. Cohen objected to the vote). Lastly Mr. Lozen explained that currently the DROP account assets are commingled with the plans assets and because of that it brought down the Plans return for the fiscal year ending 9/30/2012, which had a small negative impact on the plan. The Trustees 4 discussed this and stated that they recently had this conversation with their Auditor and concluded at that time that the Division would accept the report either way and that it was just the preference of the board. Although if commingling the DROP assets with the plans assets caused a negative impact to the Plan, the Trustees noted that they do not want it reported that way going forward. A motion was made by Ed Morejon to authorize that the DROP assets are not commingled with the Plans assets going forward. The motion was seconded by Tom Murphy and carried 5-0. Mr. Ross noted that she will notify the Auditor of the change in recording the DROP and plan assets. ATTORNEY REPORT: SUGERMAN & SUSSKIND (PEDRO HERRERA) Mr. Herrera noted that he did attend the City Commission meeting earlier this month for the 1st reading of the pension Ordinance as requested by the board. The Commission did pass the 1st reading of the Ordinance and the 2nd reading is schedule very soon. Mr. Herrera commented that he did review the CAPIS agreement prior to the transition with ICC and Vanguard. He noted that there were no issues with the agreement. Mr. Herrera stated that all Senate Bills that were proposed during this past Legislative session have been tabled indefinitely. ADMINISTRATIVE REPORT: RESOURCE CENTERS (AUDREY ROSS) DISBURSEMENTS The Board reviewed the disbursements presented for approval by the Administrator. A motion was made by Mark Joyce to approve the disbursements that were presented by the Administrator. The motion was seconded by Martin Cohen and carried 5-0. Ms. Ross stated that the Division of Retirement sent out a notice of confidentiality request for all Cities to execute on behalf of the public safety officers that they employ. She noted that the City’s Finance Director did sign off on the confidently notice and it was submitted back to the Division of Retirement. OLD BUSINESS Ms. Herrera explained that since amended Ordinance is going to be in effect soon, now the board needs to work on setting up a self directed DROP account option. The Trustees discussed all the options and what providers offer this type of service. Per the recommendation of the Attorney, the Trustees asked Mr. Brown to bring back some quotes from a couple of different service providers that offer self directed DROP accounts to the next meeting. NEW BUSINESS The Trustees asked Ms. Ross to coordinate a special meeting in June to meet with the Actuary and the investment consultant to review the plans current assumptions methods and the self directed DROP accounts. 5 There being no further business, the meeting adjourned at 5:16 PM. Respectfully submitted, Tom Murphy, Secretary