MINUTES OF THE
BOARD OF TRUSTEES MEETING OF THE
COLUMBUS GEORGIA EMPLOYEES' PENSION PLAN
August 1, 2007
A meeting of the Board of Trustees for the Columbus Georgia Employees? Pension
Plan was held August 1, 2007 at 2:00 P.M. in the Mayor?s Conference Room.
PRESIDING: Mayor Jim Wetherington, Chairman
PRESENT: Isaiah Hugley, City Manager; Morton Harris, Trustee; Omagene
Holland, Trustee; Mary Strozier-Weaver, Trustee; Alan Rothschild, Trustee;
Harvey Milner, Trustee; Joe Smith, Trustee; Chief Robert Futrell, Trustee;
Richard Swift, (Smith Barney); Tom Barron, Human Resources Director
ABSENT: Pamela J. Hodge, Finance Director; Col. R. George Plummer,
Trustee;
GUESTS: Denise Baxter, Investment Officer - Revenue Division
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 June 6, 2007 meeting were presented for approval. A
motion was made and seconded to accept the minutes as submitted. The vote was
unanimous.
INVESTMENT UPDATE:
QUARTERLY REPORT (MR. RICHARD SWIFT)
For the fixed income managers, Synovus, Evergreen, Madison, the portfolio was
down 21 basis points vs. the Lehman Brothers Intermediate/Government Credit,
which was down 14% for the quarter. Of the trailing 12 months, which is the
fiscal year, the total fixed income was up about 5.5%, slightly below the
Index, but still a good number for the fixed income.
Large Growth, Rittenhouse, Trusco, and Santa Barbara. Rittenhouse was up 7.58%
vs. the Russell 1000 Growth at 6.86%. Trusco and Santa Barbara were under the
index for the quarter and the trailing 12 months, but looking at the total
growth portfolio, they were at 6.33% for the quarter, which was slightly below
the index but still a good return. For the 12 trailing months the portfolio
was at 18.19%, slightly below the Russell Growth but still a very good absolute
number for the growth managers.
Large Value, Cambiar and TCW are taking Deutsche?s place and since they started
on 05/31/07 they?ve had a shaky start with the market being as volatile as it
has. Their returns are above their index even though they?re down on an
absolute basis. Spears, Grisanti had a great quarter blowing the index out
with a 9.21% vs. 4.92% and for the year 25.65% vs. 21.84%. Total value,
including Spears, what little there is with Cambiar and TCW and also the
quarter that Deutsche managed some of the money, the total quarter was 6.89%
vs. 4.92% for the Russell Value, so good results for the quarter. In the
trailing 12 months, the Value Managers were up 20.64% vs. 21.84% for the
index, so again slightly below the benchmark, but good numbers for the value
managers.
Large Core is a different story, continued disappointment with Madison and
Knott. Knott is doing a little bit better but these managers have been
managing money for two years and have had really fairly poor performance.
These two managers are on the manager watch by the sub-committee. The
sub-committee is looking at some allocation changes and at that time they?ll
look at addressing these two managers but for now we are disappointed in their
performance for the quarter and for the trailing 12 months. They were up
13.81% vs. the S&P up 20.59%, putting them way off the benchmark.
Lazard, fiscal quarter, 6.75% vs. the EAFE at 6.40% and the trailing 12 months
was 24.89% vs. 27.00%. They, too are a little below the benchmark, but still a
good absolute return.
The total year-end number is 13.34% and for the quarter it was 3.63%. The
13.34% is obviously the number used for the actuarial assumption and it?s good
to not only beat the assumption but to provide a good cushion against the
assumption, which is 7.0%.
INTERIM REPORT (04/26/07 ? 07/30/07)
Synovus, Tatterasal and Madison, the combined fixed managers went from $84,925
million to $85,105 million, up 21 basis vs. the index which was down 70 basis
points.
Santa Barbara, Rittenhouse and Trusco, the growth managers went from $36,950
million to $37,094 million, up 39 basis points vs. the index at 52 basis
points, slightly below the Russell Growth.
Deutsche/Cambiar, Deutsche/TCW and Spears Grisanti, the value managers, had a
tough time during this period. The combined value space went from $37,405
million to $36,549 million. The Value Space was down -2.29% vs. the index down
-3.75%. Good performance relative to the Russell Value.
Knott and Madison, the core managers; Knott was up 2.07% and Madison was down ?
2.02% so the core managers were flat for the period vs. the S&P being down ?
1.36%. The Core managers out-performing the benchmark for the period. The
sub-committee will continue to talk about Knott and Madison as their
performance has been disappointing.
Last is the international manager, Lazard, who went from $19.298 million to
$19,125 million, down 90 basis points vs. the EAFE down 75 basis points, a
pullback in the international marketplace.
The total account for the rolling three-month period was down 34 basis points
the fund was able to stay above the $210,995 marker.
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.
SUB-COMMITTEE REPORT (Joe Smith)
There was a sub-committee meeting on July 19, 2007, on asset allocation and
also using an index as part of our investments.
In February the investment policy was changed to include the small-cap and
mid-cap asset. The sub-committee has two recommendations based on the
sub-committee July 19, 2007 meeting to bring before the board.
Recommendation No. 1.
Add a 2.5% position in small-cap and a 2.5% position in mid-cap stocks as part
of the fixed investments. The sub-committee, at a later date, will present the
board with their recommendation for the small and mid-cap manager(s).
Recommendation No. 2.
In the Large Cap and International Asset Classes, incorporate the benchmark as
an investment vehicle with @ 25% exposure within the asset class:
Large Cap Growth : Russell 2000 Growth
Large Cap Core : S&P 500
Large Cap Value : Russell 1000 Value
International : EAFE
For more detail, please refer to the handout presented by Mr. Joe Smith at the
board meeting.
The sub-committee consisted of Joe Smith, Allen Rothschild and Morton Harris
and Mr. Swift stated that he really appreciates them being willing to serve and
help to come a conclusion with regard to extending the asset classes and he
thinks it?s going to be a good change for the plan.
A motion was made and seconded to accept the recommendations of the
sub-committee. The vote was unanimous.
PRESENTATION:
Trusco Capital Management (Joe Ransom and George Smith)
OVERVIEW
The Firm ? Trusco Capital Management, Inc.
-- Registered Investment Adviser since 1985
-- 73.3 billion in assets under management as of 06/30/07
-- Boutique Structure includes Seix Advisers and Zevenbergen Capital
-- Focus on Institutional Asset Management and Service
Investment Professionals
--Over 95 investment professionals with over 20 years experience
New Boutique Structure
-- Growth Equity Boutique
-- Large Cap Core Growth
Investment Process Overview
-- They use a consistent investment process, which is grounded in fundamental
analysis and includes sophisticated risk management and stock selection
techniques
Investment Process
Information Management ? Quantitative Analysis
-- Weekly quantitative analysis of over 3,000 companies, using multiple
factors, optimized by sector and seeking to produce a high frequency of out
performance
Fundamental Analysis ? Qualitative Analysis
-- Sector portfolio managers have a sector-specific focus and support the
growth
portfolios
PORTFOLIO CONSTRUCTION
Risk Management
-- Assessment of all types of exposure relative to the benchmark, reducing
unintended exposures thereby driving performance through stock selection
Sell Discipline ? portfolio positions are:
-- Trimmed when valuation levels reduce reward potential
-- Exited when there is a material negative fundamental change
-- Replaced when a better investment opportunity exist
PORTFOLIO REVIEW
Portfolio Composition
-- Total Equity ? 92.1%
-- Cash Equivalent ? 7.9%
Performance Comparisons
-- See Booklet
APPENDIX
Economic Overview
--Disclosure
-- See Booklet
OLD BUSINESS:
a. The meeting/manager calendar schedule, which was deferred from the June 6,
2007 meeting, was presented to the board for approval. A motion was made and
seconded and the vote was unanimous to accept the calendar as submitted.
NEW BUSINESS:
None
With no further business for discussion, the meeting was adjourned.
The next regular meeting is scheduled for September 12, 2007 at 2:00 p.m. in
the Mayor?s Conference Room. The guest speaker(s) will be from Rittenhouse.
______Julia A. Rasch ____
Julia A. Rasch
Recording Secretary
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