HomeMy WebLinkAbout1991-06-27 Minutesgo
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MINUTES OF A MEETING OF THE FIRE PENSION BOARD
A meeting of the Fayetteville Fire Pension and Relief Fund Board of
Trustees was held on Thursday, June 27, 1991, at 11:00 a.m. in Room
362 of City Hall.
PRESENT: Firemen Marion Doss and Danny Farrar, Retirees
Richard Baird and Darrell Judy, City Manager Scott
Linebaugh, Accountant Emma Badgely, and City Clerk
Sherry Thomas.
ABSENT: Finance Director Ben Mayes
CALL TO ORDER
The meeting was called to order by City Manager Scott Linebaugh.
MINUTES
Judy, seconded by Farrar, made a motion to approve the minutes from
the April and May meetings. The motion passed unanimously.
PENSION LIST
City Clerk Sherry Thomas explained the schedule attached to the
minutes showed the make-up check in the amount of $6,604.37 to Roy
Skelton for the 15% difference between the line of duty disability
and regular retirement amounts which includes 10% interest. Thomas
stated that his July check will commence with the normal 65%.
Judy, seconded by Farrar, made a motion to approve the pension
list. The motion passed unanimously.
NEW BUSINESS
MERRILL LYNCH REPORT
Richard Yada addressed the Board stating that he didn't have
anything new as far as an update. He introduced Chuck Dunler from
New Mexico Capital Management who manages the portfolio with a
balance of $2,252,000 as of last month. For the past year and a
half, they have been working on getting the maximum potential out
of this account without any undue risks, following the investment
policy as to how assets would be allocated, who would manage it,
etc., for the best return possible. New Mexico Capital Management
was hired to manage a balanced portfolio with stocks and bonds.
Roxbury is strictly a stocks portfolio. The balance of the fund is
divided between CD's, treasuries, corporate bonds, and other
investments as become appropriate. The New Mexico Capital
Management balance was $2,244,877 at the end of April, and
presently is at $2,296,000.
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June 27, 1991
Baird asked whether there was any need to ask for an actuary study
to determine the possibility for an increase in retiree benefits at
this time, and Yada responded that it would take a substantial
increase to get it above the required 35%, and offered to further
explain this to him following the meeting.
Chuck Dunler of New Mexico Capital Management addressed the Board
with a print-out reporting on NMCM, who has been managing money for
14 years. Dunler explained that NMCM was a balanced manager, and
over time will do much better in the stock market than in bonds.
In order to smooth out the volatility in the stock market, NMCM
invests in bonds which are essentially without risk. Dunler
explained that NMCM screens 3000 companies on an automatic basis,
looking for 22 different attributes which a company has to meet to
show up in a NMCM portfolio, and they currently have 60 companies
who meet all requirements. In addition, they do have a few foreign
stocks which have to meet the same requirements and be readily
tradeable in this country. NMCM is not a trader, they buy their
stocks for the long term. Typical turnover is at 20% per year.
Transaction costs are minimized through batching their stock
trading.
Dunler reported that NMCM has four full-time portfolio managers in
Albuquerque with 60 years combined years of money management
experience, two graduates of West Point, one former investment
officer for the State of New Mexico, and one graduate of the
University of Chicago School of Business and former trust officer
of Harris Trust and Northern Trust in Chicago.
Dunler reported NMCM's median rate of return in the past 10 years
is slightly over 15% per year. NMCM started managing this account
in January 1990, and even though it was the first down year in the
market since 1981, Dunler reported a 4% return at the end of 1990.
In January 1991, the market took off and has evened off in the last
four months.
Dunler presented a portfolio report to those present and explained
that the total value of the account (stocks, bonds and cash) as of
June 21, 1991, was $2,296,451. At the present time, there is 52.7%
in the stock market, 38.4% in fixed income (U.S. Government Bonds),
and 8.8% in cash (New Orleans Money Market Fund). Dunler reported
performance figures of a 12.09% return, 8.34% increase in the
account since the first of the year, and 1.13% return since the end
of March 1991. Dunler reported that in the last eight recessions,
the market was higher at the end than in the beginning, as post
recession recovery is anticipated. Dunler reported stock averages
(average earning growth in last 5 years) of 21.49% per year, which
indicates rapid growth in the companies; dividend growth (average
increase in dividends in last 5 years) of 14.62%; market cap
(average size of companies in portfolio) is 12,436,000,000. He
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June 27, 1991
reviewed the market sector list of stocks in the portfolio, and
reported that bonds are currently yielding 8.4%.
Dunler responded to questions of the Board regarding risk and
explained that 40% bonds and 60% stocks has shown to be the best
combination in terms of total return and minimizing risk. In
addition, he welcomed questions and recommendations from the Board.
ADJOURNMENT
The meeting was adjourned at 11:58 a.m.