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HomeMy WebLinkAbout1991-06-27 Minutesgo • • 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. • • • 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 • • • 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.