MINUTES OF THE
BOARD OF TRUSTEES MEETING OF THE
COLUMBUS GEORGIA EMPLOYEES' PENSION PLAN
September 12, 2007
A meeting of the Board of Trustees for the Columbus Georgia Employees? Pension
Plan was held September 12, 2007 at 2:00 P.M. in the Mayor?s Conference Room.
PRESIDING: Mr. Joe Smith, Co-Chairman
PRESENT: Isaiah Hugley, City Manager; Pamela Hodge, Finance Director
and Secretary/Treasurer; Morton Harris, Trustee; Omagene Holland, Trustee;
Mary Strozier-Weaver, Trustee; Col. R. George Plummer, Trustee; Harvey
Milner, Trustee
ABSENT: Mayor Jim Wetherington, and Alan Rothschild, Trustee
GUESTS: Denise Baxter, Investment Officer - Revenue Division; Tom
Barron, Human Resources Director; Richard Swift and Henry Swift (Smith
Barney);
Mr. Joe Smith, Co-Chairman called the meeting to order. Ms. Julia Rasch,
Recording Secretary, recorded the attendance.
MINUTES OF THE PREVIOUS MEETING:
The minutes from the August 1, 2007 meeting were presented for approval. A
motion was made and seconded to accept the minutes as submitted. The vote was
unanimous.
INVESTMENT UPDATE:
INTERIM REPORT (MR. RICHARD SWIFT)
First, let?s look at the stock market from June 1st to September 1, 2007. The
market has had a very choppy environment over the last rolling three months.
The market went down then peaked in mid July, dropped down in mid August and
then rallied back in September.
The yield on the Ten-Year Bond Market, started the period at 4.95%, peaked in
mid June and then since has been dropped to 4.54%, indicating a better bond
market. In reviewing the performance report you will see that the bonds have
done quite well and the equities have had a tough time.
The fixed managers, Synovus, Tattersal and Madison went from a combined $84,410
million to $87,037 million, up 3.11% vs. the LB Gov Credit (GVI) up 1.11%. Out
performance from the bond managers and that?s why there are bond managers, to
hold up when the market place is going through a tough period.
Growth Managers: Santa Barbara, Rittenhouse, and Trusco. Rittenhouse and
Trusco did quite well, down 57 basis points and down 15 basis points. Santa
Barbara had a tough time over the last three months, down 3.65%. The growth
space as a whole was down 1.52% vs. Russell Growth down 1.98%. This is a good
out performance from the growth managers.
Value Managers, this is a combination of Deutsche/TCW, Deutsche/Cambiar and
Spears. This group had a terrible time during this period. The combined value
was down 7.41% vs. the Russell Value, down 6.79%. Value, especially the
Russell Value, has been running pretty good, out performing all other asset
classes, and therefore has been the index to beat has finally dropped off and
had a pretty difficult period of time.
Core Managers, Knott out performed nicely, down 1.28%. Madison was basically
in line with the S&P, down 4.14%. The total core space was down 2.75% vs. the
S&P 500 down 4.04, a good out performance for the core managers as a whole.
Knott recently called to discuss their performance because they had been
dragging in their performance and needed better numbers.
Lazard, down 3.38% compared to the EAFE, down 3.85% again an out performance by
Lazard. Lazard has the opportunity to buy emerging, small international stock
and large international stock. They have had an exposure to small cap for a
long run but they feel like it now extended and done so well that they feel
like it?s over priced so they?re coming out of Small Cap completely.
The combined fixed was up 3.11%, the fixed index was up 1.11%, the combined
equity was down 3.88% vs. the S&P down 4.04% just for benchmarks.
The total city account was down 1.17% vs. 60/40 blends being down 1.98%. With
the market place as choppy as it has been, it?s good to see the managers out
performing the indexes because this is what they are hired to do.
FOR MORE DETAIL, PLEASE REFER TO THE REPORT PRESENTED BY MR. SWIFT.
A copy of the evaluation reports and the other information presented to the
board is retained in the Finance Director?s Office by the Board Secretary and
is available for review upon request.
Mr. Swift stated that he had another topic to bring before the board and since
it was included in the booklet with the interim report he would continue at
this time. Last month this board approved the pension fund going into and
funding mid-cap, small-cap and also using the exchange trade fund for the index
as it relates to the large cap asset classes. That was voted and approved by
the board at the last meeting. At the last meeting, it was agreed that
specific recommendations and Step I Phase-In would be presented to the board
for approval to take action in this venture.
Referring to the second section in his report, Mr. Swift stated that what this
shows is from where the money will be taken, where it will be dispersed and how
the portfolio will look following the transfer of funds. Referring to the dark
gray shaded bars, those are the totals for the asset class, and what will
happen is 2 million dollars each will be pulled from fixed, growth and value
and 2 million dollars each will be added to international, mid-cap and
small-cap. Money will be also pulled from different managers to fund the
different indexes within the asset class. This will take place at the end of
the month.
Morton Harris asked that Mr. Swift go through the methodology using the growth
manager as an example to show how the money will be moved.
Looking at the growth space, we?re going to take $2 million from Santa Barbara,
Rittenhouse and Trusco each for a total of $6 million. $2 million is going to
go to a whole other asset classes, the other $4 million is going to fund the
Russell 1000 Growth.
There were a few minutes of discussion between Mr. Harris and Mr. Swift
regarding the methodology for funding these new asset classes and indexes.
For more detail, please refer to the handout presented by Mr. Joe Smith at the
board meeting.
Mr. Swift, addressing the board, stated that he?d like the board to think about
this change as we?ve carved out some money to give us some exposure in an asset
class that we didn?t have before and we?re only putting less than 1% in each
asset class for right.
Mr. Harris confirmed that he supports the recommendation of the committee and
he made the motion to accept the recommendation of the sub-committee and Col.
Plummer seconded the motion. The motion was voted upon and accepted by the
board.
PRESENTATION: Rittenhouse Asset Management (Suzanne M. Cunningham)
Portfolio Review as of 08/31/07
Annualized performance comparison report
Equity Diversification Analysis
Common Stock Positions
Quality Update
Leaders and Laggards
Significant Transactions
Philosophy and Process
Differentiating Characteristics
Investment Process
Fundamental Research ? What they look for
Disciplined Risk/Reward Analysis
Portfolio Construction Guidelines
Sell Discipline
Market Perspective and Outlook
Market Valuation Is Reasonable
Corporate Earnings Remain at Record Levels
Economic Growth Is Solid
Favorable Outlook For Large High Quality Growth
Portfolio Holdings
New Business: Mr. Milner announced that his term expired on June 30, 2007 and
this was his last meeting. Mr. Hugley stated that his office would be
appointing a replacement for Mr. Milner and thanked him for his dedicated
service to the Pension Board.
Old Business: None
With no further business for discussion, the meeting was adjourned.
The next regular meeting is scheduled for October 3, 2007 at 2:00 p.m. in the
Mayor?s Conference Room. The guest speaker(s) will be from Madison Fixed
Income and TCW.
______Julia A. Rasch ____
Julia A. Rasch
Recording Secretary
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