MINUTES OF THE
BOARD OF TRUSTEES MEETING OF THE
COLUMBUS GEORGIA EMPLOYEES' PENSION PLAN
May 7, 2008
A meeting of the Board of Trustees for the Columbus Georgia Employees? Pension
Plan was held May 7, 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;
Mary Strozier-Weaver, Trustee; Col. R. George Plummer, 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: Morton Harris, Trustee; Omagene Holland, Trustee; and Alan
Rothschild, Jr., Trustee;
GUESTS: Ms. Clare A. Polidore and Mr. Eric M. Anderson (TCW) and Mr.
David D. Halford (Madison Equity)
Mayor and Chairman Jim Wetherington called the Pension Board Meeting for May 7,
2008 to order. Ms. Julia Rasch, Recording Secretary, recorded the attendance.
MINUTES OF THE PREVIOUS MEETING:
The minutes for the April 2, 2008 were not prepared due to the absence of Ms.
Rasch who was out on medical leave.
INVESTMENT UPDATE: (Richard Swift)
Quarterly Report:
This report covers the official results of the fiscal quarter from January 1,
2008 through March 31, 2008. The total fixed income was at 2.05% vs. the index
at 3.01% a hundred Pension Board Meeting
May 7, 2008
Page 5
basis points off in fixed income. Evergreen is down -.39 basis points vs. the
other two fixed managers who are ahead of the index substantially.
Large Growth ? The total asset class was down -8.42%, the Russell 1000 Growth
was down -10.19%. So relative to the benchmark, a good performance from the
managers. Mr. Swift stated that looking at the Russell Growth account, down ?
3.88% vs. ?10.19%, that?s due to two things. First of all, there is cash in
that account that hasn?t been invested. More importantly, the money that came
from Santa Barbara went into the Russell Growth account as a holding tank and
it just so happened that we hit the market at a time right before it came up so
it helped bring that return up.
Large Value as a category, down ?8.83% vs. the Russell 1000 Value, down ?8.72%
for the index. Most of the managers in that asset class are in line, Cambiar,
down ? 6.36% vs. ?8.72% for the Russell 1000 Value; Spears Grisanti, a little
behind, -11.03% vs. ?8.72%, but all in all the total value was in line with the
benchmark.
Large Core, down ?6.15% vs. the S&P 500, down ?9.45%, again good results from
all the different accounts that we have in core, all ahead of the benchmark.
International was down ?7.72% vs. ?8.91% for the MSCI EAFE Index.
Mid Cap down ?4.49% vs. ?9.99%, Small Cap down ?4.42% vs. ?9.90%.
The total fiscal quarter down ?3.77% vs. the indexes at ?3.32% and ?3.94%. The
trailing 12 months 1.84% vs. 1.91% and 1.21% for the indexes and since
inception 7.85% vs. 8.02% and 8.21% for the indexes.
So for the quarter, although down, a very good quarter relevant to the
benchmark for most of the managers. However, with a third of the fixed income
with Tattersal was a drag on the total fund in that they were off by a hundred
basis points. The comments that were received from Tattersal are as follows
and are very important to understand. They said, two issues, they had 17% of
their portfolio in commercial mortgage backed securities. These are AAA rated,
very, very good credits, however, with what?s gone on with the mortgage
companies, they basically have come down with the ship. The Lehman Bros. Gov?t
Credit Index has zero percent in this asset class. The point is, that Tattersal
has always had asset-backed securities or mortgage backed securities but they
really concentrate on the higher quality end of that spectrum. They don?t feel
like they are a risky asset class but they did come down with everything that?s
gone in that market place. That compared to the Lehman Brothers Government
Credit Index having zero exposure to commercial mortgage backed securities.
The other type of security that they own is Non-agency residential mortgage
securities, also AAA, also very high quality, 19% vs. the Lehman Brothers
Government Credit at zero percent, so basically, 36% of their portfolio is in
an asset class that isn?t represented in Lehman Brothers Government Credit
Index, although high quality, AAA securities, still they?re in an asset class
that was under great pressure when all this was going on with the financial
institutions that drove the bond prices down. Looking at the exposure or the
performance of Tattersal, they have traditionally been one of the better
performing fixed income managers. Probably picking up a little bit of their
returns in this category where they?re over-weighted and there?s not any
exposure to the Lehman Bros. Index. It doesn?t make it any better but, it?s an
exposure they decided to take, a risk they decided to subject themselves to,
they?re not an index fund manager, they?re not buying the index, they?re buying
bonds they feel are going to appreciate. And this particular category hurt
them. I don?t feel any problems with Tattersal but if this doesn?t correct, we
need to take another look at them.
Interim Report:
This is for the three months ending April 30, 2008. The total fixed income was
down ?0.79% vs. the index down ?0.61%
The combined growth was up 2.28% vs. the Russell Growth at 2.20%, slightly
ahead.
The value managers combined was up 0.28% vs. the index down ?0.95%.
The core managers were up 0.48% vs. up 0.51% for the S&P 500.
Lazard, the international manager was up 5.21% vs. 4.87% for the EAFE Index.
The small cap funds up 1.26% vs. .73% for the index and the mid cap funds up
1.48% vs. 2.48% for the Russell Mid Cap.
The total combined fixed down ?0.79% vs. ?0.61% for the index and the combined
equity 1.72% vs. 0.51% for the index.
The total City account is up .67% vs. the 60/40 up .06%.
The funds from three months ago have gone up about one million dollars, from
$214,245 million to $215,682 million.
PRESENTATION(S):
The first report was from TCW Relative Value Large Cap (Eric M. Anderson,
representative and Clare A. Polidore, portfolio manager)
TCW Overview
Philosophy and Process
Portfolio Characteristics
Performance
Performance Attribution
Appendix:
Biographies
Quarterly Commentary
Performance Footnotes
(PLEASE SEE REPORT FOR DETAILS)
The second report was from Madison Equity (David D. Halford)
Account and Performance Summary
Portfolio Characteristics
Investment Strategy
The stock market outlook
Nowhere to hide
Back on trend
Market Support
New Investments
Portfolio Appraisal
(PLEASE SEE REPORT FOR DETAILS)
OLD BUSINESS:
a. The subcommittee met April 30, 2008 they interviewed three large cap growth
managers to replace Santa Barbara. The committee will meet again briefly
following the pension board meeting to readdress some of the presentations that
were heard and some of the data that the committee has put together. They
anticipate in bringing a recommendation before the board at the June meeting.
b. Rittenhouse is another large cap growth manager that has been downgraded by
the consultant group, from a recommend to a not recommend. The reason for it
is, the decision of John Watterman to retire. Mr. Watterman is a key figure at
Rittenhouse, the consulting group put Rittenhouse on watch basically because he
was unclear as to renewing his contract. He renewed his contract through July
2009 and they were removed from the watch. Since that time, Madison-Dearborn,
a private equity firm has purchased Nuveen who owns Rittenhouse, therefore John
Watterman basically has said he is going to retire this year. The consulting
group said without John they feel like there are some problems. Their
performance is better since all this has taken place, but there seems to be a
lot of noise at the company right now. This issue is being addressed within
the sub-committee, as well.
NEW BUSINESS:
None
The meeting was adjourned, the next scheduled meeting will be June 4, 2008 at
2:00 p.m. in the Mayor?s Conference Room. Knott Capital will be here to
present their report to the board.
_______Julia A. Rasch ____
Julia A. Rasch
Recording Secretary
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