PB 06/14/2011 Minutes - Laserfiche WebLink

Home Browse Search

Police/Fire Pension Board Meeting June 14, 2011 Page 2 Consulting. The information contained in the booklet is as of March 31, 2011. Market Environment/Yield Curve Mr. Welker reviewed the international, emerging markets and US stocks. All performed well in this quarter. Larger cap equity markets have performed better because they are less risky. Interest rates have gone down, causing bond prices to go up as evidenced by the .4% increase in this quarter. Bonds are still performing positively as of the meeting date. They have been a safe haven for investors. Mr. Welker then reviewed the Russell 1000 index, a blended index of large cap value and growth sectors. Although the industrial sector is very cyclical, it provided an 8.9 % market return for the quarter. Energy was the best performing sector, providing a 12.9% return. The plan did not get the full benefit of the good returns in these sectors for this quarter due to a limited investment in these sectors. The plan was under invested in energy and over invested in information technology for this quarter, so the plan did not perform as well as the overall market. Mr. Welker then reviewed the chart on page 8 which reflects bond performance for the past quarter and year. Bond ratings below BBB are high yield bonds because they are riskier. This area of the market has been in high demand. Investors turned to buying riskier bonds to get better returns due to low interest rates. Asset Allocation Asset Allocation information on page 14 was reviewed. Tile total plan value is $9,082,829 as of March 31, 2011. Manning & Napier manages the domestic and international equity funds, Galliard manages the domestic fixed funds and Templeton/PIMCO manages the global fixed income funds. Based on the market values, the percentage allocation is within 1.5% of the target allocation. This is well within compliance and no rebalancing is recommended. Financial Information. The Financial Reconciliation on page 17 was then reviewed. The plan assets for the fiscal year went from $7,861,827 to $9,082,829. Contributions to the portfolio were $387,721, fees were $25,612, and the return on investment was $878,997, showing that the largest increase to the plan value was from investments. Comparative Performance: The Comparative Performance Trailing Review on page 18 showed that the plan was up $309,000 or 3.38% net of investment fees. The plan underperformed 50 basis points for the quarter as compared to the index. This is due to the over/under weights in energy and information technology as described above. It is illustrated by the 160 basis point under performance in domestic equity as compared to the index. The fiscal year-to-date column shows that the total fund returned 10.67% and the target is 8%. In 2007, the manager was changed to Manning & Napier. The three year figures show a 2.51 % return over the index, indicating that Manning & Napier has managed the plan well. The manager performance on page 19 reflects a 29.18% return in international equity. Galliard Fixed Income is a comingled fund of $2.5 million. This has shown a 5.37% return since 2007 when Manning & Napier took over. This places the plan in the 91" percentile for performance and the plan has underperformed the index by only 45 basis points. The performance as compared to the index has become positive when the 3 -year and 1 -year performance is reviewed. There is volatility inherent in the structure of Galliard investments, so a change may be required in the future. PIMCO and Templeton were added on January 1, 2011. Performance in these funds has been positive, making them a nice complement to the other investments.