HomeMy WebLinkAbout1994-03-24 - Agendas - Final•
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MINUTES OF A MEETING OF THE FIRE PENSION BOARD
A meeting of the Fayetteville Firemen's Pension and Relief Board
was held on Thursday, February 24, 1994, at 11:15 a.m. in Room 326
of the City Administration Building, 113 W. Mountain, Fayetteville,
Arkansas.
PRESENT: Pete Reagan and Ron Wood, Retiree Richard Baird, City
Clerk Sherry Thomas, and Treasurer Glyndon Bunton
ABSENT: Marion Doss, Darrell Judy, and Mayor Hanna
CALL TO ORDER
Pete Reagan called the meeting to order.
MINUTES
Baird, seconded by Wood, made a motion to approve the minutes of
the January 27, 1994 meeting. The motion was approved unanimously.
PENSION LIST
Wood, seconded by Baird, made a motion to approve the pension lists
for March 1994. There were no changes in the pension list. The
motion was approved unanimously.
OLD BUSINESS
DROP PLAN
Reagan stated there is a meeting scheduled with LOPFI, the
Governor's Task Force on Pension Systems, and the old pension plan
for the middle of March to discuss the Drop Plan. He hopes to have
some information from this meeting for the March Fire Pension Board
meeting.
NEW BUSINESS
INVESTMENT REPORT
Richard Yada, Merrill Lynch, introduced Chuck Dumler, with New
Mexico Capital Management, who was present to give the year end
report.
Dumler stated the portfolio balance was $4,225,468.40 as of
December 31, 1993. There is 3.2% in cash, 67.7% in equities, 28.2%
in bonds, and .9 percent in accrued income on the books. The 4th
quarter rate of return was 5.9%, which makes the account up 20.9%
for 1993. The stock market was up 10% in 1993, and the portfolio's
stock accounts were up 26.7%. Dumler stated 1993 has been a great
year, and he warned the returns will not always be this good.
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February 24, 1994
The annualized return since inception for the account is 13.3%.
This is better than the bench mark indices. He stated since 1926,
the stock market has gone up better than 2/3 of the time. An
investor has to be willing to take a down year every now and then.
New Mexico Capital only buys cheap stocks, those selling close to
their value. Therefore, they make money on the stocks with less
risk of them going down. A large portion of the account is
invested in 20-25 stocks, and they are about the same stocks that
were invested in last year. New Mexico keeps a stock investment on
an average of 3-4 years.
Dumler stated the cash is in a money market fund, T-bills, and in
short term paper and earns 2.8%. The fixed income account is
primarily government obligations, U.S. treasury bills, and fanny
mae's. There is $1,081,391 invested in the fixed income account,
and it earned 7.2% in 1993. Bonds move only due to changes in the
stock market. For the last 10 years, the declining interest rates
have made a perfect environment for bonds. However, these rates
have bottomed out during the last 6 months. Alan Greenspan has
increased interest rates once in order to keep inflation in check,
and it is anticipated he will do so again. New Mexico Capital
invests only in high quality bonds, with basically no risk. He
stated they do not anticipate interest rates going any lower.
Dumler stated in the equity portfolio, New Mexico has invested in
capital goods stocks. One good stock in the portfolio is Boeing.
They have a $90 million backlog in orders, so their stock should be
good for quite some time. Other good stocks in the portfolio are
Precision Castparts, Rockwell, and United Technologies. In the
consumer durables market, Archer Daniels Midland, Delta Woodside,
Hanson PLC, Mercantile, Russ Berrie, and Rykoff are all good
stocks. The Royal Dutch stock was bought at $75 and is now selling
for around $109. It is the best of the big international oil
stocks. He stated New Mexico has begun buying Coors Brewery Co.
stocks because they are now selling cheap. Coors has increased
their market share over the past few years by spending a lot on
advertising. They feel it is a good company that is managed well.
There is still family money and management in Coors.
Reagan asked if these figures included the Roxbury money.
Yada stated it did. There was $853,233 deposited from Roxbury.
Reagan stated there were six different investment companies that
were interested in the $245,000 the pension board invested last
month, and he appreciates the kind of returns New Mexico has shown
this past year.
Yada stated the 1993 actuary report should be ready in the next 3
to 4 months.
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February 24, 1994
Bunton asked how the trend was running for investments according to
what was needed for the fund to be actuarially sound.
Yada stated they looked at this in 1987. Between 1982 and 1987,
the fund was not doing very well because it was invested primarily
in CD's and not earning much interest. In 1990, the fund had a
full range of investments. In 1989, the fund was about $2 million
short. In 1991, the fund needed about $1.4 million to be 100%
funded. For 1993, the fund needs about $800,000 to be sound. So,
the trend has been running toward the fund becoming actuarially
sound.
ADJOURNMENT
The meeting adjourned at 12:04 p.m.
FIRE PENSION
AGENDA ITEMS
FOR
3-24-94
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