MINUTES OF THE
BOARD OF TRUSTEES MEETING OF THE
COLUMBUS GEORGIA EMPLOYEES' PENSION PLAN
April 11, 2007
A meeting of the Board of Trustees for the Columbus Georgia Employees? Pension
Plan was held April 11, 2007 at 2:00 P.M. in the Mayor?s Conference Room.
PRESIDING: Mayor Jim Wetherington, Chairman
PRESENT: Isaiah Hugley, City Manager; Pamela J. Hodge, Finance Director,
Omagene Holland, Trustee; Mary Strozier-Weaver, Trustee; Col. R. George
Plummer, Trustee; Harvey Milner, Trustee; Joe Smith, Trustee; Richard Swift and
Henry Swift, (Smith Barney); Tom Barron, Human Resources Director
ABSENT: Morton Harris, Trustee; Alan Rothschild, Trustee; Chief Robert
Futrell, Trustee
GUESTS: Mike Mayfield, Richard Boutin and Britton Smith (Santa Barbara
Asset Management)
Mayor Jim Wetherington called the meeting to order. Ms. Julia Rasch, Recording
Secretary, recorded the attendance.
MINUTES OF THE PREVIOUS MEETING:
The minutes from the February 7, 2007 meeting were presented for approval. A
motion was made by Col. Plummer and seconded by Joe Smith to accept the minutes
as submitted. The vote was unanimous.
INVESTMENT UPDATE: Interim Report (Mr. Richard Swift)
First on the investment update agenda was the interim report for the period of
03/06/07 to 04/10/07, showing what has happened with the pension fund since the
last meeting. The stock market (S&P500) went from 1395 to 1448 showing a rally
in stocks. The yield on the Ten Year Treasury Bonds went from 4.52% to 4.72%.
This indicates an increase in rates, which means bond prices decreased.
Second were the performance numbers over the last 30 days for the money
managers. PLEASE REFER TO THE REPORT PRESENTED BY MR. SWIFT. The combined
fixed was down 60 basis points, the combined equity was up 3.71% and the total
city account ended the period at $203,944 million, up 1.95% increasing the fund
by $4,000,000 dollars.
Mr. Joe Smith addressed the board and made the recommendation to change this
interim report from a monthly to a rolling three-month report. He feels that
the monthly report distorts the figures and that by showing them over a
three-month cycle really reveals a much better picture of the performance of
the managers and the market as a whole and it smoothes out the fluctuation of
the market.
Mr. Swift agreed. He felt a rolling 90-day report would be beneficial in that
it would show a longer cycle and should smooth out the volatility that is seen
in some 30-day periods. He said that he would prepare that for the next board
meeting.
Mr. Hugley asked for assurance that within this report the actual value of the
fund would be depicted in the figures.
Mr. Swift assured the board that the report would show a rolling 90-day
performance and would include the actual value of the fund each month.
Next on Mr. Swift agenda was a memo that was sent out to each board member
regarding a change in management within Trusco Capital.
SunTrust has announced Mr. Joe Ransom will be replacing the two people who were
in charge of overseeing the city?s portfolio were both retiring. The letter
from Trusco was dispersed to each member of the board. Apparently, from
Trusco?s point of view, the strategy, the philosophy, the discipline is the
same, it?s just the person who?s overseeing the top of the portfolio is
changing. Mr. Ransom and Mr. George Smith, our account representative will be
invited down to meet with and talk with the sub-committee. So far, the
performance has actually been fairly good.
Last, Mr. Swift stated that they had prepared, based on the last meeting from
the actuaries a presentation of facts to the pension board that they feel is
important for the pension board to revisit. He stated that everything they
have put in this booklet they have said a million times to this committee but
there are some things, statements of fact, in terms of performance, in terms of
the history of the fund that they felt like the board ought to review. They
will be sending that out to the pension board shortly with a memo that explains
everything in the booklet. It mostly talks about the risk-adverse nature of
this board. They are asking the board to read it over and call us with
comments.
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.
PRESENTATION (S): Santa Barbara Asset Management (Mike Mayfield,
President/CEO/CIO; Richard Boutin, Managing Director; and Britton Smith,
Portfolio Manager)
Mr. Swift introduced the team from Santa Barbara and they presented their
annual report with the following outline.
Firm Overview
They manage equity and balanced portfolios for individuals,
corporations, foundations and trusts. The company was founded in 1987 and is
located in Santa Barbara, CA with an office in Pasadena, CA. The company
employs 33 people, which includes 14 investment professionals.
Investment Process Overview
The portfolio consists mainly of Large Cap, Stable Growth companies.
The investment philosophy and process have remained unchanged since inception
and they are benchmarked against the Russell 1000 Growth and the S&P 500.
Research Team ? Their senior professionals average over 20 years of
investment experience. The chief investment officer oversees the investment
strategy and the director of research manages the security research process.
The analyst employs traditional, bottom-up fundamental analysis.
Investment policy - they primarily invest in companies that exhibit
stable and consistent earnings growth. Defendable competitive advantages,
strong management, and low dependence on capital markets are three key
qualities that drive stable earnings growth.
Investment Methodology ? each analyst is a generalist and encouraged to
explore myriad sources for investment ideas. A significant portion of an
analyst?s compensation is driven by the performance of his or her investment
ideas and the diligence he or she employs in the research process.
Sell Discipline ? The analysts regularly review the portfolio companies
in order to ensure that their underlying investment profiles remain intact.
Investment Guidelines
Explains the account strategy, allocation ranges, income requirements,
restrictions, and the benchmark for the portfolio.
Performance Update
Outlines the absolute performance, the relative performance, client
objectives and the asset allocation with market value, net contributions,
adjusted value and net gain from the year-to-date through March 31, 2007 and
from inception through March 31, 2007.
Portfolio Characteristics/Appraisal
List of holdings by Santa Barbara in the portfolio
Top Ten Holdings
Portfolio Characteristics
Capitalization Distribution
Portfolio Sector Weights ? SBAM vs. Benchmark
Market Out look
Please refer to report submitted by Santa Barbara
Professional Credentials
Please refer to report submitted by Santa Barbara
Following a brief question and answer session they were thanked for their
presentation and dismissed from the meeting.
OLD BUSINESS:
Deutsche Asset Management - Mr. Swift reported that there have been some
administrative issues with Deutsche Asset and they will have to be worked
through before the contract can be solidified. If the issues cannot be worked
through then the sub-committee will be reconvened to possibly select a new
manager.
NEW BUSINESS:
Mr. Tom Barron addressed the board with a presentation from Buck Consultants.
It addresses how the city is paying the un-funded liability, which is the
amount of money other than the current cost of operating the plan. What this
report basically showed was how the city?s budget is affected with the current
cost of operating the fund and how it would affect the budget if the
contribution to the fund each year were extended out to 15 to 20 years.
Mr. Joe Smith stated that his concern is the big picture. On what basis are
they making this recommendation? Will the number of retirees grow and does
this projection take those numbers in consideration.
Mr. Henry Swift was concerned that Morton Harris and Alan Rothschild were not
present at this meeting to discuss this issue. He feels that they are two very
important board members who need to be included in any discussion on any
changes with the funding of the un-funded liability.
Mr. Hugley recommended that they get together with Mr. Henry Swift, Mr. Richard
Swift, Mr. Harris, and Mr. Rothschild in the week or so and just discuss this
issue and they will report to the board what will be their recommendations.
With no further business for discussion, the meeting was adjourned.
The next regular meeting is scheduled for May 2, 2007 at 2:00 p.m. in the
Mayor?s Conference Room. The guest speaker(s) will be from Madison Equity.
_______Julia A. Rasch ____
Julia A. Rasch
Recording Secretary
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