2014-10-22-RB-min - Laserfiche WebLink

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Minutes of the October 22, 2014 Retirement Board Meeting Present: Robert Cunha, Alan Fields, Joe Foley, Rob Addelson, Marguerite Oliva and Karen Marchant Bob Cunha called the meeting to order at 8:00 AM. NEW MEMBERS: (4) Kirk Varjian, SSI; Maureen Rynn, Visitor Center Manager; Susan Lusk, Administrative Assistant, Carl Tritto, Custodian RETIREMENTS: None DECEASED: Robert Leslie, Policeman, 10/5/14; Terese Kealy, Survivor of William, 10/10/14; Guy Busa, Policeman, 10/13/14 Bladen Burns presented the Fiduciary Management annual review. As of 9/30/14, FMI has $20.9 Billion in assets. The portfolio value for Lexington as of 9/30 was $8,925,477. The annualized performance since inception in May 2012 is 18.35 %, net of fees. The year to date is 6.47% which is lagging the S &P Index benchmark by almost 2 basis points. The performance of the FMI Large Cap Fund was helped by holdings with Microsoft Corp and Berkshire Hathaway and hindered with Danone ADR and Willis Group. FMI has 10% held in cash as a defensive move. If he had the choice, Mx. Burns stated he would hold 20 — 30% in cash. He feels the holdings will do OK. Performance has done well 80-95% on the upside. Alan mentioned an alternative to FMI would be an index fund but feels that the FMI Investment is currently acceptable. Steve MacLellan from Meketa feels there will be a better idea of the performance in the next quarter or two while the market is unpredictable. Steve went on to present the 9/30/14 interim report. He focused first on the 3`d quarter World Markets benchmarks. Most declined significantly due in part to the tension in Europe. US equity markets have done better than foreign markets although the fixed income markets are weak. GDP growth through the second quarter is positive and the U.S. unemployment has been reported as 5.9 %. The portfolio as of 9/30/14 was $1 36.5 down from $1 40.2. The performance decreased 2.1% which is not outside the norm. PRIM is moving out of core bond and moving to 20+ year treasuries. The Wellington Opportunistic investment is the largest holding in the portfolio at 14 %. There was a discussion on the possibility of curtailing the amount held. Steve will see about having Meketa check in on Wellington's rationale. Steve also mentioned that Matthews has performed exceptionally well. Ignacio Galaz and Yinyin Wu presented the PIMCO annual review. The first item discussed was the new CIO structure due to the resignation of Bill Gross, who has accepted a positon with Janus. Dan Ivascyn was promoted from Deputy CIO to Group CIO and others that had been Deputy CIO's are now CIO's. The succession plan had been implemented last year after Mohammad left. The outflows that began after Bill Gross' departure have lessened and most are now taking a "wait and see" approach to see how the new management team does. Lexington Retirement's All Asset investment is currently $9.3 million with a year to date return after fees of 3.8 %. Realizing the PIMCO could be affected by the change in management, Meketa recommends issuing an RFP for the real return mandate to test the market in case the Board