HomeMy WebLinkAbout2014-04-24 MinutesLioneld Jordan Chairman
Sondra E. Smith Secretary
Roy Cate Position 1 Retired
Firemen's Pension and Relief Fund
Board of Trustees Meeting Minces
April 24, 2014
Page 1 of 5
Pete Reagan Position 2 Retired
Dennis Mullens Position 3 Retired
Ron Wood Position 4 Retired
Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
April 24, 2014
A meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees was held at
3:00 PM on April 24, 2014 in Room 326 of the City Administration Building.
Mayor Jordan called the meeting to order.
Present: Roy Cate, Pete Reagan, Ron Wood, Mayor Jordan, Lisa Branson, Deputy City
Clerk, Kit Williams, City Attorney, Dee McCoy, City Clerk's Office, Glenn Atkins and
James Bell of Garrison Financial.
Absent: Sondra Smith, Dennis Mullens
Garrison Financial:
1st Ouarter reports — March, 2014
James Bell, Garrison Financial: Thank you guys for having us again this quarter. I will start on
the second page of our report, the one with the chart. We ended the quarter, March 31, 2014 the
portfolio was about $3.6 million total. Your asset allocation was about 66% equities, about 30%
bonds and fixed income, about 4.5% cash. Your policy is 60% equity. We are a little overweight
on the equities at this point, as we have been all throughout the last eighteen months or more and
that's been a good thing. The equity market has been very strong, so that was the correct call.
Given where we are with interest rates and a low interest environment we are comfortable with
that slight overweight on the equity side so we will probably continue to see that going forward.
On the cash, you've got close to $200,000 at the end of the quarter. We work to keep the cash
level right around there so that we have ready cash available for disbursements as they come in
most months.
Turning forward to the purchase and sale page, we did sell a partial positions and a handful of
stocks over the first quarter, Emerson Electric, General Electric, G1axoSmithKline, and Pfizer.
That's not really a call on our part on their investment criteria at all. In fact, you continue to hold
some of those positions. Those sells were made to rebalance the portfolio to keep from getting
Firemen's Pension and Relief Fund
Board of Trustees Meeting Minuses
April 24, 2014
Page 2 of 5
too overweight in equities and to continue to fund that cash portion of the portfolio so that the
cash is ready for disbursement.
Turning a couple pages more toward the performance summary page, for the quarter your equity
portion of the portfolio returns just over 2% for the quarter versus 1.81% on the S&P 500, which
is our benchmark. The fixed income or bond portion of the portfolio returned 2.37% versus 1%
on our bond index. Overall you were up just over 2% on your portfolio versus just over 1.5% on
our blended index. We feel good about our performance this year. It was close to a flat market
and our returns were good. Given the low interest rate environment that we are seeing right now
we don't anticipate any major changes as far as the weight towards stocks and bonds in the near
future. We will continue to focus conservatively on income and capital appreciation.
Glenn Atkins, Garrison Financial: As James mentioned, thanks for having us in again this
quarter. If you'll remember the last couple of quarters we had talked about selling part of that
treasury of bond that we held, $400,000 in your portfolio. Even though it was paying, and still is
paying, a high coupon of 4% the maturity was so short that the yield was around 1.47%. We did
sell half of that position and we reinvested $100,000 of it into the Federated Intermediate
Corporate Fund that is yielding 4.17%. We went out just a little bit in maturity, not much, and
tripled the yield. We invested the other $100,000 into the Loomis Sayles Bond Fund which is
yielding around a 3.48%. We may look to do that with the rest of them, just depending upon
how the market reacts. On the face of it you look and say well it has a 4% coupon, but it's
trading at such premium that the yield is low. If we sell it and reinvest it in something that has a
higher yield it's better for you.
I looked at the performance of the treasury since the day that we sold it versus the performance
of the two funds that we put it in. We sold the treasury on March 24"' so it's been basically a
month. The Treasury bond itself was up .23%, so one quarter of a percent almost. The Federated
Intermediate Corporate Fund was up three times that a .68%. The Loomis Sayles Bond Fund,
over that roughly one month period, was up 1.29%. So far so good for the month. As the market
conditions warrant, we may do that with the rest of it. We may look to do that with the IBM
Bond, particularly since the maturity's a little bit longer than perhaps is called for right now. On
the sale of that $200,000 treasury piece, we had an approximate gain of about $17,000. We got
$221,000, we invested exactly $200,000, $100,000 in each of those funds, and then the $21,000
just remained in cash to fund operations or whatever else that we need.
Next I would like to call your attention to this heart monitor chart. The first page is the yield on
the ten year Treasury bond. As you know, we use this as market proxy for the quarter since
we've been here last. The take away from that is the volatility continues and we are trying not to
get in the way of it. The second page is the same ten year Treasury bond basically over the last
year. If you'll remember back in April and May of last year was when rates really began to run
up. They topped out at a little over 3%, twice. Once in early September and once at the very end
of the year. As the market rallied into the March period, that sort of pushed us over the edge to
take that treasury off, sell it and reinvest it.
That's all the formal comments we have at this time. We would love to take questions or hear
ideas, feedback, criticisms or suggestions. We are here to answer what we can.
Firemen's Pension and Relief Fund
Board of Trustees Meeting Minuses
April 24, 2014
Page 3 of 5
Pete Reagan: Your comment earlier, James, on thinking about doing the other $200,000 out of
the IBM.
Glenn Atkins: My first choice would be the Treasury bill simply because there's $200,000 left
in there, Pete. That would be my first choice because the yield is so low relative to the bond
funds that we could invest in. The IBM would be the second choice only because of its maturity
in 2025. It is only 11.5 years which is not bad it was much longer than that when it was
originally purchased. I'm less inclined to do the IBM because of the high coupon and it is paying
a good yield. There is going to be more volatility in a ten year bond than there is going to be in a
five year mutual fund, but it might be worth it given the 7% coupon. The first look would be
perhaps to pair some of that treasury down especially if we were to get another rally in the
market. It is paying a good rate of interest. It's a good investment but if we get a rally we might
peel a little bit more of it off and put it into the funds.
Pete Reagan: Can you tell me a little bit about the Fed Interm Corp Bond that we purchased.
Can you tell us what that is?
Glenn Atkins: The Federated Fund is a well -diversified corporate bond fund that is managed by
Federated Investors which is a big name in the industry and has been around forever. We use this
fund in our other accounts that either require or are so small that we need to use mutual funds in.
The average duration on it, which is a measure of maturity, is only 3.9 years. It is investment
grade rated at Triple B. They tend to manage money like we would manage money if we were
able to do individual securities. I think we've mentioned in the past that's the kind of funds that
we try to pick in situations where we have to use mutual funds. We try to pick funds that are
primarily invested in corporates that are high quality investment grade and that seem to manage
money like we would if we could use individual securities. The same thing is true on the Loomis
Sayles, although the duration on that one is 5.7 years, so a year and a half roughly longer.
Pete Reagan: Thank you. Thank you for what you do.
Mayor Jordan: Absolutely.
Glenn Atkins: You're welcome. We enjoy it and we love coming here every quarter.
Garrison Privacy Policy 04/14/14
Mayor Jordan: What is the Garrison Privacy Policy?
Glenn Atkins: We probably sent you a privacy policy that says we aren't going to sell your
information and we're not going to go down to the mall and pass it out. We're required to send
that out once a year by the Securities and Exchange Commission.
James Bell: Obviously all that information is secure and private and not shared with anyone. We
take that very serious.
Firemen's Pension and Relief Fund
Board of Trustees Meeting Minuses
April 24, 2014
Page 4 of 5
Approval of the Minutes:
Approval of the January 23, 2014 meeting minutes
Pete Reagan moved to approve the January 23, 2014 meeting minutes. Ron Wood seconded
the motion. Upon roll call the motion passed 4-0. Sondra Smith and Dennis Mullens were
absent.
Pension List Changes:
Charlie Jordan deceased February 4, 2014. His spouse Sandra K. Jordan will receive his benefit
beginning March, 2014.
Lisa Branson, Deputy City Clerk: That's just informational. It will change the pension list, so
you will need to re -approve the March and April lists because those have already been approved
at the last meeting then vote to approve the May, June and July pension lists.
Approval of the Pension List:
Re -approval of the March and April, 2014 pension lists
Pete Reagan moved to re -approve the March and April, 2014 pension lists. Roy Cate
seconded the motion. Upon roll call the motion passed 4-0. Sondra Smith and Dennis
Mullens were absent.
Approval of the May, June and July, 2014 pension lists
Pete Reagan moved to approve the May, June and July, 2014 pension lists. Roy Cate
seconded the motion. Upon roll call the motion passed 4-0. Sondra Smith and Dennis
Mullens were absent.
New Business:
Revenue & expense report: lHf Quarter — March 31, 2014 report
Lisa Branson: That's just informational. Accounting does that every quarter for you and there's
a copy of that in your agenda.
Firemen's Pension and Relief Fund
Board of Trustees Meeting Minuses
April 24, 2014
Page 5 of 5
Election:
Nine (9) Pensioners were nominated to serve
The following four (4) are willing to serve:
Pete Reagan
Roy Cate
Ralph Tate
John Jenkins
Lisa Branson: Our office sent out forty nomination letters. We received thirteen by the deadline
and one after the deadline. Nine pensioners were nominated. Out of those nine, four are willing
to serve, and that is Pete Reagan, Roy Cate, Ralph Tate and John Jenkins. We will send out the
ballots by May 1st. We are working on that now.
Schedule a special meeting to open ballots
Mayor Jordan: So I guess the big question is when would y'all like to schedule a special
meeting to open the ballots?
A discussion followed on a date for a special meeting to open the ballots.
Kit Williams: Definitely need to have Sondra here.
Informational:
2014 meeting schedule
Lisa Branson: That's just information and there is a copy of that in your packet.
Adjourn: 3:19 p.m.