Pursuant to authority of Ordinance C-00-34, Article II, this regular meeting of the Police & Firefighters' Pension Board convened at 12:30 P.M., Wednesday, February 8, 2006 in the Pension Board Conference Room, 888 S. Andrews Avenue, Suite 202, Ft. Lauderdale, Florida 33316.
PRESENT: Dee Seibert, Chairperson
Romney Rogers, Secretary
Mark Burnam, Trustee
Ian Kemp, Trustee
Steve Cypen, Board Attorney
Bernard Wray, Ex-Officio
Lynn Wenguer, Administrator
Laurie DeZayas, Pension Aide
Renee Lipton, Recording Secretary
ABSENT: Tom Topor, Trustee
Allan Curry, Trustee
ALSO PRESENT: Ray Mannion, Finance Department
Jason Pulos, Asset Consulting
Pat Kelly, Agincourt Cap. Mgmt.
Pat O'Hara, Agincourt Cap. Mgmt.
Terry Paquette, INTECH
Russell Bjorkman, INTECH
Brenda McCormack, Paradigm Asset Mgmt.
Joe Robinson, President, Retirees' Assoc.
Fuzzy Larkin, Vice-President, Retirees' Assoc.
Jack Chew, Executive Board, Retirees' Assoc.
Bill Paton, Executive Board, Retirees' Assoc.
Linda Soloman-Duffey, Secretary, Retirees' Assoc.
Nancy Cone, Treasurer, Retirees' Assoc.
Harry Wood, Retirees' Assoc.
Mike Salzano, Local 765
ASSET VALUE as of February 8, 2006: $446,323,517.
Agincourt Capital Management: Pat O'Hara gave an overview of this firm. Agincourt is 100% employee-owned and has over $2.7 billion in assets; sole focus is fixed income. They discussed the firm's philosophy. They have added 12 new clients; five of which are Florida public funds.
Pat Kelly discussed the Fed's current policies with the new chairman in place. The economy is healthy; labor market and capital investment is growing. Housing has peaked. He then reviewed the weighting of corporate bonds, mortgage backed securities, asset backed securities and treasuries and agencies in the portfolio. He then reviewed the duration of this portfolio in relation to the Lehman Aggregate Index. This fund is overweighted in mortgage and asset backed securities and underweighted in treasuries and agencies.
As of January 30, 2006, the effective yield of this portfolio is 5.4% and the Lehman Aggregate Index is 5.1%.
Chairperson Seibert thanked Mr. Kelly and Mr. O'Hara for their review.
INTECH: Russell Bjorkman and Terry Paquette reviewed their portfolio. Their strategy is to add value using natural stock price volatility through a mathematically based risk controlled process. As of September 30, 2005 they manage $38.2 billion in assets. The initial funding of this account was on March 18, 2004 with $33.1 million dollars. The market value as of December 31, 2005 was $39.4 million dollars.
From inception, this fund earned 4.22% above the S&P 500 Index. For one year, the earnings were 4.39% above the S&P 500 Index. They also discussed their total trading cost vs. the industry. They stated that the bottom line is there is less cost and more return. The maximum they pay is 2 cents per share commission.
Chairperson Seibert thanked Mr. Bjorkman and Mr. Paquette for their review.
Mr Kemp arrived at 1:10 P.M. Chairperson Seibert then called the meeting to order as a quorum was present.
MINUTES: January 11, 2006. Mr. Rogers made a motion to approve the minutes as corrected. Mr. Burnam seconding the motion. The motion was approved UNANIMOUSLY by the Board.
BENEFIT REVIEW: POLICE DEPARTMENT – New Retirees - Termination of DROP Retirement – Frank DelRio, Police Officer. Date of DROP retirement June 5, 2001 with 20.00 years of credited pension service and 24.72 total years of service. Termination date March 2, 2006. Monthly pension benefit $3,287.42. DROP account total $223,155.11.
Richard P. Herbert, Jr. Sergeant. Date of DROP retirement April 1, 2001 with 22.00 years of credited pension service and 26.82 total years of service. Termination date January 27, 2006. Monthly pension benefit $4,129.59. DROP account total $285,905.71.
James T. Pott, Police Officer. Date of DROP retirement March 10, 2001 with 20.00 years of credited pension service and 25.00 total years of service. Termination date March 9, 2006. Monthly pension benefit $3,265.70. DROP account total $236,706.71.
Carl Witherspoon, Police Officer. Date of DROP retirement March 31, 2004 with 23.31 years of credited pension service and 25.13 total years of service. Termination date January 24, 2006. Monthly pension benefit $4,087.86. DROP account toal $95,712.47.
DROP Retirees: Christine Nelson-Lott, Police Officer. Date of DROP retirement January 12, 2006 with 20 years of service. Monthly pension benefit $3,539.47 (100% joint & survivor).
William H. Walker, Detective. Date of DROP retirement January 27, 2006 with 20.00 years of service. Monthly pension benefit $3,555.25 (100% joint & survivor).
Vested Retirement: Clinton B. Ward, Police Officer. Last day worked February 18, 2005. Benefits to commence February 10, 2006. Years of service 19.03. Monthly pension benefit $3,360.12.
Beneficiary (Retiree Death): Barbara Gerwens (dependent upon Joseph Gerwens). Date of retirement October 17. 1992. Retiree death January 29, 2006. Monthly pension benefit $7,495.04 for one year; reduced to $4,497.02 thereafter (60%).
Mr. Rogers made a motion to approve these benefit payments with Mr. Kemp seconding the motion. The motion was approved UNANIMOUSLY by the Board.
BILLS: Essex Investment Management submitted a bill for investment management services from October 31, 2005 through December 31, 2005 in the amount of $66,909.87.
Agincourt Capital Management submitted a bill for investment management services from October 31, 2005 through December 31, 2005 in the amount of $39,063.48.
InTech submitted a bill for investment management services from October through December, 2005 in the amount of $34,275.81.
Rhumbline submitted a bill for investment management services for the 4th quarter 2005 in the amount of $15,297.87.
Standish Mellon submitted a bill for investment management services for the 4th quarter of 2005 in the amount of $9,792.79.
The Bank of New York submitted a bill for custodial fees for the 4th quarter of 2005 in the amount of $21,655.04.
Atkinson, Diner, Stone, Mankuta & Ploucha, P.A. submitted a bill for legal fees and deposition services in the total amount of $1,533.88.
Koch Reiss submitted a bill for audit work in the amount of $500.
Cypen & Cypen submitted an interim invoice for professional services rendered from 12/01/05 through 12/31/05 in the amount of $379.71.
Mr. Rogers made a motion to approve payments of these bills with Mr. Kemp seconding the motion. The motion was approved UNANIMOUSLY by the Board.
INPUT FROM ACTIVE & RETIRED POLICE OFFICERS & FIREFIGHTERS: Mr. Larkin asked about the possibility of a cost of living adjustment. He was advised that the actuary had stated that "it didn't look good". The cost of living is based on a rolling four year average and the bad years are dropping off.
Mr. Robinson urged the Board to step up their efforts in providing the academic incentive pay to the retirees.
ADMINISTRATOR'S REPORT - Trustee Election: The administrator advised the trustees that to date, two applications have been received for this position and, therefore, an election will be held in the Police Department for a trustee.
Academic Incentive Pay: The committee has met and they are working on looking into hiring a bookkeeper. The retirees will have an option to pay back this money or have it deducted. The next committee meeting will provide dollar figures. Ms. Wenguer will keep the trustees apprised of progress on this issue.
Share Plan: The paperwork will probably be sent to the firefighters with the next payroll. Mr. Salzano questioned the accountability of sending the information with the payroll. The trustees discussed this and decided that the administrator would send an e-mail to the firefighters to alert them to look for this information attached to their paychecks.
Me Too II - Mr. Cypen advised that this item has been scheduled for trial in May. However, he was advised that one of the attorneys will be out of the country and will ask for a continuance.
Commission Dollars: Ms. Wenguer advised that the account held by Merrill Lynch will be used for the payment of this month's bills.
Mr. Cypen left the meeting at 1:45 P.M.
ASSET CONSULTING GROUP - Jason Poulos reviewed the markets for this quarter. Domestic indices posted positive returns for the third quarter. The S&P 500 Index return 2.09%. Growth outperformed value, while mid cap stocks were favored over small cap and large cap stocks. International equities had another strong quarter with the MSCI EAFE Index returning 4.08%.
The total fund market value was $441.3 million as of the end of the year, an increase of $20 million from the September 30, 2005 market value of $421.7 million. The one year total return for the Fund was 6.8%.
Systematic large cap value portfolio slightly underperformed the Russell 1000 Value Index during the fourth quarter by posting returns of 1.1% versus 1.3%. Over the past one and three year time period, the portfolio outperformed the Russell 1000 Value Index by 4.4% and 2.9% respectively, and ranked in the top quartile among peers in the large cap value manager universe.
Intech Institutional Large Cap Core Fund outperformed the benchmark by posting returns of 2.8% relative to 2.1% for the S&P 500 Index. Over the past year, the portfolio significantly outperformed the S&P 500 Index by delivering 4.3% of excess return.
Essex large cap portfolio outperformed the Russell 1000 Growth Index by posting returns of 3.4% relative to the Index return of 3.0% for the quarter ending December 31, 2005. For the one-year time period ending December 31, 2005, this portfolio trailed the Russell 1000 Growth Index by 70 basis points.
RhumbLine large cap portfolio, which tracks the S&P 500, matched the performance of the index for the fourth quarter. Over the past ten years, their strategy has produced slightly less risk than the benchmark while replicating the S&P 500 Index.
Rhumbline mid-cap portfolio, which tracks the S&P 400, produced 20 basis points of excess return by delivering returns of 3.5% relative to 3.3% for the index. Over time, the mid cap portfolio has produced returns consistent with the benchmark.
Lazard Freres International Portfolio underperformed the MSCI EAFE Index by 40 basis points. Over the past year, the portfolio underperformed the index and ranked in the 82nd percentile.
Oechsle outperformed the MSCI EAFE Index by 2.9% for the fourth quarter. Over the past year, the portfolio outperformed the Index and ranked in the 51st percentile.
Agincourt's performance for the fourth quarter was in line with the Lehman Brothers Aggregate Index by producing returns of 0.6%. Over the past five years, the portfolio has outperformed both the Citigroup Broad Investment Grade Index and the Lehman Aggregate while ranking in the top half of the core bond manager universe.
Mellon Lehman Aggregate Index strategy matched the return of the benchmark by posting returns of 0.6% for the fourth quarter. Corporate credit was the worst performer of all the major sectors, which produced negative returns during the quarter.
For one year, the total fund returned 6.8%. Systematic's portfolio returned 11.5% with InTech returning 9.2%. RhumbLine Large Cap returned 4.9%. Essex Investment returned 4.6%. RhumbLine Midcap Fund returned 12.9%. Lazar returned 11.3% with Oeschsel returning 15%. Agincourt returned 2.6% with Mellon returning 2.4%.
Mr. Burnam asked Mr. Poulos to address the question of if we started with this money now, would we invest it the same way as it is presently invested. In answer to this question, Mr. Poulos reviewed several different variations on different mixes for the portfolio. He also discussed strategies such as equity long-short and real estate investments for managing the risk-return of the portfolio. He reviewed the current mix of the portfolio and several alternatives for the trustees to consider.
After discussion, Mr. Rogers made a motion to instruct Mr. Poulos to bring back to the Board recommendations of style type and a group of candidates for the trustees review. Mr. Burnam seconded the motion. The motion was approved UNANIMOUSLY by the Board.
Mr. Poulos will also come back to the board with propsed language for the manager's guidelines.
Chairperson Seibert thanked Mr. Poulos for his portfolio review.
Mr. Kemp requested that a letter be sent to the Fire Chief and the City Manager to request that they allow the trustees to attend every meeting, as it is vital for the Plan. The trustees agreed and it was decided that Chairperson Seibert would send this letter.
FOR YOUR INFORMATION: No action.
There being no further business to be brought before the Board, Mr. Burnam made a motion to
adjourn at 2:55 P.M. with Mr. Kemp seconding the motion. The motion was UNANIMOUSLY approved.