Columbus, Georgia

Georgia's First Consolidated Government

Post Office Box 1340
Columbus, Georgia, 31902-1340
(706) 653-4013
fax (706) 653-4016

Council Members

MINUTES OF THE

BOARD OF TRUSTEES MEETING OF THE

COLUMBUS GEORGIA EMPLOYEES' PENSION PLAN



June 4, 2008





A meeting of the Board of Trustees for the Columbus Georgia Employees? Pension

Plan was held June 4, 2008 at 2:00 P.M. in the Mayor?s Conference Room.





PRESIDING: Mayor and Chairman Jim Wetherington





PRESENT: Isaiah Hugley, City Manager; Pamela J. Hodge, Finance Director;

Morton Harris, Trustee; Omagene Holland, Trustee; Mary Strozier-Weaver,

Trustee; Col. R. George Plummer, Trustee; Alan Rothschild, Trustee; Maj. Lem

Miller, Trustee; Joe Smith, Trustee; Reather Hollowell, Trustee; Richard Swift

and Henry Swift, (Smith Barney); Tom Barron, Human Resources Director; and

Denise Baxter, Investment Manager





ABSENT: None





GUESTS: Ms. Savonne Monell and Mr. Phillip Craighead (Columbus Water

Works)









Mayor and Chairman Jim Wetherington called the Pension Board Meeting for June

4, 2008 to order. Ms. Julia Rasch, Recording Secretary, recorded the

attendance.





MINUTES OF THE PREVIOUS MEETING:



The minutes for the April and May, 2008 meetings were presented for approval.

A motion was made and seconded to accept the minutes as submitted. The vote

was unanimous.





INVESTMENT UPDATE: (Richard Swift)



Interim Report:



Pension Board Meeting

June 4, 2008

Page 5



This is the rolling three-month period from 02/29/08 to 05/30/08. On 2/29/08

the S&P 500, was at 1330.63 and at the end of the three months (05/30/08) it

went to 1400.38, slightly higher so an improvement in the stock market. Next

is the 10 Year Treasury Bond yield, it went from 3.53% to 4.04%, rising

slightly indicating a weaker bond market.



The fixed income managers, Synovus, Tattersal and Madison, down ?0.61% vs. the

Lehman Brothers Gov?t Credit index, down ?2.51%.



The growth managers, Rittenhouse, Trusco and the Russell Growth Account; the

total combined growth 7.04% vs. 8.10% for the index.



The value managers, TCW, Cambiar, Spears and Russell Value Account; up 4.31%

vs. the Russell Value at 3.24%, so slightly ahead.



The core managers, Knott, Madison and the S&P 500 Account were at 3.62% vs. the

S&P 500 index, up 5.24%. They are behind in the Core space.



Lazard, the combined international was up at 4.20% vs. the EAFE index at

7.35%. So the combined really under performed the EAFE.



The Small Cap, Mid Cap, both under the index, 5.79% vs. 9.09% for small cap,

mid cap 8.84% vs. 9.61%.



The combined fixed was down ?0.61% vs. ?2.51% for the index. The combined

equity was up 4.99% vs. the S&P 500 at 5.24%. The total city account was at

2.62% vs. 2.14% for the combined 60/40 Index.



The total fund went from $211,868 million to $217,423 a nice increase over the

last three months.





PRESENTATION: Knott Capital



Their presentation followed the outline below:



Knott Capital?s Investment Process



Their goal is to properly account for risk and opportunity in the

market, with a forward-looking bias



Understanding what is and what is not fully discounted by the markets

holds the key to protecting principal and producing exceptional investment

returns



Mortgage Rates



They are not responding to the Fed easing and lending standards are tightening





Household debt has not been supported by wage growth



Growth of average hourly wage and household debt



Job Growth ? from ?slowing? to ?contraction?



Three-month average change



U.S. Consumers Under Duress



S&P 500 Earnings Growth Slowed Significantly in 2007



High-quality companies have continued to outperform in the face of economic and

market uncertainty yet still show relative under-valuation versus peers



Current Sector Positioning as of 03/31/08



Earnings Consistency



In an environment of slowing or even negative earnings, consistency and

predictability of earnings becomes more important than absolute level.



Growth is more likely to outperform Value in a slowing economy, driven by

companies that consistently meet and exceed expectations.



International Revenue Growth



2/3 of portfolio holdings derive more than 40% of revenue overseas



Weak and/or falling dollar enhances revenue growth rate



While they are not proponents of ?Decoupling,? they do believe Foreign

economies will slow at a lesser rate than the U.S.



Mr. Richard Swift stated that he had a couple of comments while the Knott

representatives were still present. Since Knott Capital was hired on June 30,

2005 there were three out of four quarters where they actually looked so bad

they looked like they didn?t know what they were doing, then suddenly things

turned around and they were out-performing on the other end of the spectrum.

It?s seems to us that they aren?t going to be anything like the S&P 500, they

are going to under-perform in periods and they?re going to out-perform in

periods but their net results have been since they were hired, over almost

three years, 8.82% vs. 5.87% for the index, about 300 basis points of out

performance. Over the last twelve months, they?re up nearly 7% vs. down -5%

for the S&P. Again, there will be a period when we report that they are behind

yet since inception they are ahead.



Mr. Swift informed the board that it was very unlikely that the fund will make

the actuarial assumption of 7% this year. With that said, the fund was way

ahead of the assumption at 13% for the last fiscal year. This year is going to

be slightly positive and the goal is to stay ahead of it over a long period of

time. We will know more in March when the actuaries study is complete.



Next, Mr. Swift gave an update on the funds that have been averaged into the

new small cap, mid cap and index accounts. These accounts are 85% to 90%

invested. He presented a chart showing that funds were added in October 2007,

November 2007, January 2008 and April 2008. The goal by funding these

different accounts was to further diversify the plan, to have some money in the

indexes when the market was in speculative period, and also to add to these two

asset classes, small cap and mid cap. He stated that there was no indication

the market would fall off, but that?s why it was done, just in case there was a

time when more assets were needed when the market was falling. It?s worked in

this plans favor to average in over time.





OLD BUSINESS:



a. The sub-committee is in the process of hiring a large cap growth manager.

They have gone through the search process, the interview process, and they

reconvened after the last pension meeting and discussed going back to the

search and updating it for numbers that would include the first quarter of 2008

and in hopes that a new manager might pop up that could be considered. That

data has been gathered but has not been sent out to the sub-committee with a

summary of our recommendations. This process is a slow one because the

sub-committee wants to ensure that the recommendation that is made is the right

one for the plan and not jump to one of these managers that they may not feel

is the best.





b. Meeting Calendar for 2008-2009



Mr. Swift presented the new meeting calendar to the board members for their

review and approval. He asked that everyone review the calendar and then at

the August meeting the board can vote to approve it.



The Mayor asked Mr. Hugley and Ms. Hodge if they had any comments or

questions. Mr. Hugley asked how not meeting the 7% actuarial assumption would

affect the pension fund and the city?s contribution.



Ms. Hodge stated that it would affect the 2010 contribution to the budget but

not the 2009 budget.



Mr. Swift reminded the board that it?s a three year rolling number so even

though this year?s numbers are slightly negative, last year?s return was over

the 7% so when you average them out we?re pretty close to the 7% actuarial

assumption.

NEW BUSINESS:



The Mayor and the board members thanked Ms. Mary Strozier-Weaver for her eight

years of service to the pension board and she was presented with a gift from

the Mayor?s office.



The meeting was adjourned, the next scheduled meeting will be August 6, 2008 at

2:00 p.m. in the Mayor?s Conference Room. Grisanti & Brown/Madison Fixed will

be here to present their report to the board.











_______Julia A. Rasch ____

Julia A. Rasch

Recording Secretary

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