MINUTES OF THE
BOARD OF TRUSTEES MEETING OF THE
COLUMBUS GEORGIA EMPLOYEES' PENSION PLAN
February 6, 2008
A meeting of the Board of Trustees for the Columbus Georgia Employees? Pension
Plan was held February 6, 2008 at 2:00 P.M. in the Mayor?s Conference Room.
PRESIDING: Joe Smith, Vice-Chairman
PRESENT: Isaiah Hugley, City Manager; Pamela J. Hodge, Finance
Director, Morton Harris Trustee; Omagene Holland, Trustee; Carol
Strozier-Weaver, Trustee; Alan Rothschild, Jr., Trustee; Major Lemuel Miller,
Trustee; Richard Swift and Henry Swift, (Smith Barney); Tom Barron, Human
Resources Director; Savonne Monell (Columbus Water Works)
ABSENT: Col. R. George Plummer and Reather Hollowell, Trustee
GUESTS: Mr. Frank Sposato from Lazard International
Mr. Joe Smith, Vice-Chairman called the meeting to order. Ms. Julia Rasch,
Recording Secretary, recorded the attendance.
MINUTES OF THE PREVIOUS MEETING:
The minutes from the January 9, 2007 meeting was presented for approval. A
motion was made by Ms. Mary Strozier-Weaver and seconded by Mr. Alan Rothschild
to accept the minutes as submitted. The vote was unanimous.
INVESTMENT UPDATE: Quarterly Report (Mr. Richard Swift)
Mr. Swift apologized for the delay in getting the quarterly reports out
sooner. As he passed out the booklets to the members, he stated that within
the smaller book is the summary of the quarterly report along with the interim
report.
The report began with the quarterly performance report for the fourth quarter
ending December 31, 2007. First were the fixed income managers,
Synovus/Globalt up 2.81%, Evergreen up 2.87%, Madison up 3.12% vs. the LB Int
Gov/Cr Index up 2.91%. The total fixed income came in up 2.93% vs. the index
at 2.91% for the quarter.
Under the Large Growth space, Rittenhouse was down ?3.25%, Trusco up 1.28%,
Santa Barbara down ?3.29% and the Russell Growth Account was down ?0.22%. The
total Growth space was
?1.59% vs. the index at ?0.76%.
For the Large Value space, Cambiar at ?5.07%, TCW at ?6.13%, Spears Grisanti at
?4.03% and the Russell Value Account at ?2.22%. The total Value space was down
?4.47% vs. the index at ?5.80% for the quarter.
The Large Core space has Madison Equity coming in at ?1.42%, Knott Capital up
3.11% and the S&P Account at ?1.16%. The total core space was up 0.58% vs. the
index down ?3.33%.
Next is the International manager. Lazard, at the end of the quarter the large
cap was up 2.17% and the emerging & small-cap was up 3.62% vs. the MSCI EAFE
Index at ?1.75%. The total international space closed at 1.87% vs. the index at
-1.75%.
Lastly are the Small and Mid Cap accounts, Mid Cap Funds down ?1.65% vs. the
Russell Mid Cap down at ?3.56%. The Small Cap Funds down ?2.25% vs. the Russell
2000 down at ?4.58%. The total fund was up 0.41% vs. the 50% S&P / 50% LB Int.
Gov/Cr down at ?0.21% and 55% S&P / 45% LB Int. Gov/Cr down at ?0.52%.
INTERIM REPORT:
The interim report is inclusive of January 2008 therefore it covers the period
from 10/31/07 to 01/31/08. The S&P 500 was at 1549.38 at the beginning of this
period and ended at 1378.55 a strong move down for the stock market. The Ten
Year Treasury yield dropped significantly from 4.47% to 3.63% indicating a
better bond market.
Next are the returns, the fixed managers, Synovus, Tattersal and Madison, up
4.26%, 3.51% and 5.19%, respectfully, total fixed was up 4.29% vs. the index at
3.51%. This was a really good performance for the fixed income managers.
The growth managers, Santa Barbara down ?11.51%; Rittenhouse down ?5.49%;
Trusco down -10.43%; and Russell Growth Account down ?2.74%. The total growth
down - 8.54% compared to the Russell Growth benchmark being down ?11.78%.
Although this is a negative performance, compared to the benchmark, the
managers held up pretty well.
The value managers, TCW, down ?5.69%; Cambiar, down ?4.49%; Spears, down ?8.42%
and the Russell Value down ?3.92%. The combined value went down ?6.51% and
the Russell Value was down ?10.24%.
The core managers all were ahead of the benchmark, Knott, down ?5.16%; Madison,
down ?5.27%; S&P 500 Account, down ?5.06%. The combined core was down ?5.20%
vs. the S&P index down ?11.03%.
Lazard, the international manager was down ?5.60% and the EAFE account was down
?6.64%. The combined international was down ?5.60% vs. EAFE (EFA) down ?8.52%.
Small Cap funds were down ?5.65% vs. the Russell 2000 which was down ?13.90%.
Mid Cap funds were down ?2.44% vs. the Russell Mid Cap down at ?11.78%. Keep
in mind the small cap and mid cap accounts, don?t have ETF?s in them. Those
are funds that are actively managed so they?re not necessarily going to track
in those indexes.
The combined fixed was up 4.29%, combined equities down ?6.54% and the total
city account was down ?2.28% vs. 60/40 benchmark being down ?5.21%.
This has been a really terrible report but the managers are doing what they
were hired to do and that is to stay ahead of the benchmark in a really
volatile market.
The last two pages of the report were put into the report for the board to
review. One showed the ten worst quarters since 1940 and the subsequent one
showed the 5 and 10 year annualized returns.
PRESENTATION(S):
Mr. Swift stated that there were two managers originally scheduled for today
but that TCW was reassigned because of a management change within the company.
Frank Sposato from Lazard International presented his report at this time.
Lazard?s Investment Philosophy
Philosophy
-- Focus on those companies that are financially productive and
inexpensively valued
-- Add value through stock selection and portfolio management
Objectives
-- Outperform relevant benchmark over a full market cycle
-- Participate in rising markets; preserve capital in falling markets
-- Outperform our investment competitors
-- General consistent results
Changing market Environment
International markets have been led by cyclicals for nearly five years
In that environment riskier assets have been rewarded
Equity markets have been volatile since mid-July
Mega caps began to outperform small caps
Sector selection beginning to matter again
Emerging stocks and resources are still strong
Performance Review
Performance
Composition as of December 31, 2007
Statement of Changes 2007
Capitalization Effect - Returns by Market Cap
Speculative Excess in Some Deep Cyclicals
Cyclical Valuations at Historical Highs
2008 Outlook/Issues
Great stock opportunities
Mega cap is attractive
Fed cuts may not stabilize market
Emerging markets / small caps
Risks/China bubble, etc.
MSCI Index changes
Holdings by Sector and Country ? All Country World Equity ex. U.S.
OLD BUSINESS:
At the last meeting it was voted to fire Santa Barbara, therefore, that money
has been moved into the Russell 1000 Growth. A large cap growth manager search
has been launched and the Mayor needs to appoint a sub-committee to whom the
results will be presented. Another topic that the sub-committee needs to
address is the funds exposure to the international market.
NEW BUSINESS:
None
The meeting was adjourned and the next meeting is scheduled for March 5, 2008
at 2:00 p.m. in the Mayor?s Conference Room. Buck Consultants will be here to
present the actuarial report.
_______Julia A. Rasch ____
Julia A. Rasch
Recording Secretary
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