PB 02/14/2012 Minutes - Laserfiche WebLink

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Police /Fire Pension Board Meeting February 14, 2012 Page 2 carried unanimously on 5 -0 voice vote. 5. Audience Participation There was no audience participation. 6. Presentations Mr. Mike Welker, the Bogdahn Group reviewed the I" quarter fiscal year (4''' quarter calendar year) performance. Market Environment /Yield Curve: The top right of page 3 shows the indices current quarter performance. The good economic environment is shown by the bars going to the right, indicating positive performance. Large cap and midcap stocks were up about 12 %, and the small cap stocks were up by about 16 %. This is normally driven by. International equity also showed about 3.5 % positive performance. The United States markets were much more positive in the quarter than the international markets. Bonds continued to improve. In reviewing the 1 year performance, large cap stocks were up about 1 -2% last year due to dividends as opposed to growth. International markets were horrible last year due to the economic environment in Europe. Interest rates fell, sparking a preservation of capital. Page 5 shows sector performance. Every sector was positive in the 4"' quarter. The best performers were energy, materials and industrials. When people feel there is prosperity, people invest in these sectors because the companies benefit from a growing economy. The 3rd quarter was completely opposite. The value index over the last 3 years underperformed as compared to the growth index. Financial sectors have to participate in a rebound in order for total market conditions to improve since they make up such a large part of the economy. Page 12 shows a "Stock Market Almanac ". During the last 21 time periods, 17 out of 21 of the periods show positive markets in election year. This created good market return. Asset Allocation: Domestic equity allocation is pictured on page 17. The current allocation of domestic equity is right on target. Allocation of international investments is slightly under the target. Mr. Welker recommends holding this position. Domestic fixed income is slightly over allocated, while global fixed income is slightly under allocated. There are no recommendations to change anything for the asset allocation. As the plan grows and the market conditions change, Bogdahn may then suggest changes. Financial Information: A chart depicting the financial reconciliation is shown on Page 19. The Pension Fund balance at October 1, 2011 was $8.6M. Moving across the chart, transfers are movement within the portfolio, contributions are money coming into or leaving the fund, fees are the cost to administer the plan, return on investment is depreciation, dividends and coupon payments. All of these transactions result in an ending fund balance at December 31, 2011 of $93M. This shows good growth in the portfolio. The Comparative Performance Trailing Return on Page21 shows the plan was up 5.5% for the first quarter (net). The total fiend is also shown at gross. All plan sponsors are shown at gross in order to have an equal comparison. The City's Pension Plan underperformed as compared to peers last year. Mr. Welker stressed he has no recommendation for change & no issue with Maiming & Napier at this time. Comparative Performance: Excited on their position going into FY12. 1 year shows the plan underperformed 3.7% against the plan policy of 7 %, reflecting an underperformance of 4.46 %. Regardless, the plan has still outperformed. The Pension Board hired Manning & Napier in 2007 It will be 5 yrs since Maiming & Napier was hired in October 2012. The 3 -5 year data reflects the new management structure. The gross for 3 and 5 years (business cycle) reflects the plan