PB 02/16/2010 Minutes - Laserfiche WebLink

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Police/Fire Pension Board Alleeting February 16, 2010 Page 2 ® Presentation b n Bizzell — Salem Trust • A presentation was made by Brian Bizzell of Salem Trust. Salem Trust is the custodian of pension plan assets. An update to the fee schedule for services provided by Salem Trust was proposed. The schedule was discussed and some revisions were required. MOTION: Moved by William Nas to approve the new fee schedule for Salem Trust subject changes discussed. Motion was seconded by Daniel Glancy and carried unanimously on a 3 — 0 voice vote. 7. Presentation by Mike Welker — Bogdahn Consult Mr. Mike Welker representing Bogdahn Consulting gave a presentation evaluating the performance of the pension plan investments in equities and debt instruments and the managers who direct the investment portfolios. The economic environment now favors upper tier quality stocks where previously lower tier stocks were experiencing the most rapid growth. This bodes well for the plan portfolio. Inflation is a concern and the portfolio will position itself to hedge against it. Presently, while there is price volatility in some areas overall inflation is expected to remain stable for the near term. The allocation of the portfolio at December 31, 2009 was reviewed. The investment policy was changed and approved at the previous board meeting. Manning and Napier will be moving about 5% of the pension plan total assets out of domestic securities and add them to the international portfolio. The target allocation going forward is 50% domestic, 15% international and 35% fixed income. The plan overall grew for the quarter ended December 31, 2009 after fees and expenses $221,750 primarily from capital appreciation. This equated to a 3.66% change for just the first quarter of fiscal year 2010. It is a little below plan policy of 3.86% and ranks at the 3 9th percentile compared to other public pension plans. The plan target is to achieve 8% annual growth each year. Over the last twelve months the plan has appreciated 27.14%. Plan policy based on various indices was only 20.42%. The plan investments and its managers have been very successful. The pension plan is at the 9t" percentile compared to other public pensions. Since plan inception average annual growth is 4.78% and is above plan policy of 3.66%. The domestic portfolio managed by Manning and Napier grew at a rate of 39.08% over the last twelve months. It outperformed plan policy (26.46%) by 12.62% which is extremely praiseworthy. The international investments exceeded policy by 6.66% which is also very good. The fixed income portfolio managed by Galliard grew 13.58% for twelve months compared to policy of 9.69%. Bogdahn is "bearish" on fixed income investments going into 2010. Growth in the low single digits will be a win in 2010. If interest rates rise and inflation returns bond prices will be adversely affected. Current performance in the fixed income category cannot be expected to continue. Emphasis will be made toward equities and repositioning against inflation Bogdahn proposes an increase in fees effective April I to all inclusive minimum $15,500 compared to $10,500 presently. The fees would be guaranteed for three years and would