HomeMy WebLinkAboutMinutes Fire Pension 112607PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND
MINUTES OF MEETING HELD
November 26, 2007
A meeting of the Board of Trustees was called to order at 9:30 A.M. at Station 3, Palm
Beach Gardens, Florida. Those persons present were:
TRUSTEES
Ed Morejon
Rick Rhodes
Tom Murphy
Steve Rogers
Richard Hitchins
MINUTES
OTHERS
Margie Adcock, Administrator
Ken Harrison, Attorney
Dave West, Investment Monitor
Mike Dana, Investment Manager
The Board reviewed the minutes of the meeting held September 24, 2007. A motion was
made, seconded and carried 5 -0 to accept the minutes of the meeting held September 24,
2007.
INVESTMENT MANAGER REPORT: DANA INVESTMENT ADVISORS
Mike Dana appeared before the Board. He discussed the market environment, including
the sub prime issues. The positive aspects of the market right now are that consumers are
still spending; the international economy is where everyone is invested in; and the
unemployment levels are low. He stated that this is a down market, but not a recession.
He stated that there is a concern about inflation down the road. He stated that he thinks
equities will do pretty well relative to the bond market. He stated that they need to be
careful where they go in the bond market right now. Mr. Dana stated that they had a
horrible 3`d Quarter. They have since turned that around and are ahead of the benchmark
right now. He stated that they usually shine in a down market and that is what they are
doing right now.
Mr. Dana reviewed the performance of the portfolio. The total market value of the
portfolio as of September 30, 2007 was $16,517,799. The total portfolio was down .08%
for the quarter while the benchmark was up 1.97 %. Since inception, the portfolio was up
7.88% while the benchmark was up 7.61 %. The equity portion of the portfolio was down
.84% for the quarter while the benchmark was up 1.55 %. The fixed income portion of the
portfolio was up 2.27% for the quarter while the benchmark was up 2.87 %. The asset
allocation as of September 30, 2007 was 65% in equities; 19% in bonds; and 16% in
cash. Mr. Dana reviewed the treasury yield curve. The Board asked if there were any
securities in the portfolio that the Board should be concerned about. Mr. Dana responded
in the negative. It was noted that Dana had investments in Merrill Lynch as of September
30, 2007. Mr. Dana stated that he thought they sold out of that investment. Mr. Harrison
stated that there is a class action against Merrill Lynch. Mr. West stated that they do not
want to micro - manage or direct the Manager on what to invest in. He stated that Dana
could continue to invest in Merrill Lynch if Dana thinks that is the best investment. The
Board could still continue to participate in the class action as well.
2
Mr. Dana reviewed the asset allocation. As of September 30, 2007 the asset allocation
was 54% in large cap equities; 12% in small cap equities; 17% bonds; 2% in ARMs; and
15% in cash. He reviewed the large cap and small cap sector distribution as of
September 30, 2007.
INVESTMENT MONITOR REPORT
Dave West appeared before the Board. He discussed the investment performance for the
quarter ending September 30, 2007. The Fund was up .43% for the quarter while the
benchmark was up 2.04 %. For the fiscal year the Fund was up 10.88% and beat the
actuarial assumption. The benchmark for that same time period was 13.45% and that was
the first time that the performance of the Fund fell below the benchmark. The total
market value of the Fund as of September 30, 2007 was $22,444,000. The asset
allocation at market was 48% in equities; 28% in fixed income; 5% in REIT; 8% in
international; and 11 % in cash.
The total market value of the equity portfolio was $12,555,000. Equities for the quarter
were down .96% while the benchmark was up 1.66 %. The equity portfolio managed by
Dana was down .94% for the quarter while the benchmark was up 1.55 %. The total
market value of the equity portfolio managed by Dana was $10,803,000. The fixed
income portfolio managed by Dana was up 2.22% for the quarter while the benchmark
was up 2.88 %. The total market value of the fixed income portfolio managed by Dana
was $3,158,000. There was a very lengthy discussion on the performance of Dana with
respect to the fixed income portion of the portfolio. Mr. West stated that he would
monitor Dana very closely. He recommended elevating the level of probation. He needs
to see the strategy work out at least hopefully within the next quarter, but certainly within
the next two quarters. Mr. West reviewed the history and philosophy of Board when they
originally hired Dana fixed income in June 2002. He stated that the Board has to decide
if the bond product is still consistent with the overall philosophy of the Board given that
other strategies are now available, as the Fund has grown in size. Mr. West stated that
there appears to be a philosophical shift on the part of the Board to maybe not stay with a
preservation process but rather focus on the total return. Additionally, there seems to be
a re- emerging dependence on duration when Mr. West thought there was going to be a
movement away from that.
The fixed income portfolio managed by Galliard was up 2.94% for the quarter while the
benchmark was up 2.79 %. The total market value of the fixed income portfolio managed
by Galliard was $3,088,000. The international equities managed by Voyageur Asset
Management were down 1.13% for the quarter while the benchmark was up 2.23 %. The
total market value of the international equity portfolio was $1,752,000. The REIT
portfolio was up 4.42% for the quarter while the benchmark was up 3.00 %. The total
market value of the REIT portfolio was $1,086,000.
Mr. West discussed the Investment Policy Statement. The only thing that is changing is
Schedule A.
Mike Dana departed the meeting.
Richard Hitchins departed the meeting.
3
ATTORNEY REPORT
Mr. Harrison discussed again the law that was passed that required the State, not
municipalities, to divest security holdings in Iran and Sudan. He stated that they sent a
letter to the investment managers asking them to identify any companies that the
managers are invested in with regard to security holdings in Iran and Sudan. He advised
that they received confirmation from all of the managers that they do not have any
holdings as set forth in the report where the State identified certain prohibited securities
in Iran and Sudan.
Mr. Harrison stated that he was willing to discuss their proposal for increasing the fee for
legal services. Ms. Adcock provided the Board with a list of five pension attorneys and
the hourly rates that each would charge the Fund as was requested at the last meeting.
There was a lengthy discussion. A motion was made and seconded for discussion to
approve an hourly rate with the law firm of Sugarman & Susskind of $285 for three
years. There was discussion of a retainer. Mr. Harrison stated that they do not really
compete with three of the firms on the list. He stated that they really only compare
themselves to Klausner & Kaufman. The motion was withdrawn. A motion was made
and seconded for discussion to enter into a retainer with Sugarman & Susskind if the
Board can negotiate a better retainer fee and hourly rates outside of the retainer for three
years. There was further discussion. The motion was withdrawn. A motion was made,
seconded and carried 4 -0 to approve an hourly rate with the law firm of Sugarman &
Susskind of $285 for three years. The Board requested that Mr. Harrison discuss with
Mr. Sugarman the possibility of a retainer of $2,500 a month with a two -year guarantee.
ADMINISTRATIVE REPORT
Ms. Adcock presented the list of disbursements to be made. She noted that there was an
additional disbursement for the Attorney for October in the amount of $450.00. A
motion was made, seconded and carried 4 -0 to approve the disbursements listed and
include the disbursement for the Attorney for October.
OTHER BUSINESS
It was noted that at the last meeting the Board decided to change from monthly meetings
to bi- monthly meetings. The Board scheduled the meetings for 2008 as follows:
February 11; April 21; June 16; August 18; October 20; and November 17. The meetings
would start at 10:00 A.M. and be held in the City Council Chambers.
There being no further business, the meeting adjourned.
Respectfully submitted,
Tom Murphy, Secretary