Police & Fire Pension

POLICE & FIRE PENSION BOARD MEETING DATE: November 16, 2015 CITY HALL, ROOM 112 TIME: 10:02 A.M. Present: Douglas Bagwell, Gail Budrow-Bradstreet, Stan Chubinski, John Hausman and Joe Newman. Absent: None. Also Present: Jim Baird and Jeremy Tollas from Plante Moran Financial Advisors; Linda Morrison, Finance and Revenue Services Director. Chair Newman asked for approval of the agenda. Motion Chubinski, seconded Bagwell to approve the agenda. On a voice vote, motion carried. Minutes of the regular meeting of October 26, 2015 were presented. Motion Hausman, seconded Chubinski to approve the minutes as presented. On a voice vote, motion carried. A summary of assets prepared by Comerica Bank was presented. As of 10/31/15 the market value of our portfolio was $130,083,860, a gain of $3,435,557 since 9/30/15. As of today the market value of our portfolio is $127,711,256, presently a loss of $2,372,604 since the 10/31/15 month end. Motion Hausman, seconded Bagwell to accept the financial report as submitted. On a voice vote, motion carried. Board Reports Bagwell: none. Budrow-Bradstreet: New hires: William Payne, Timothy Raymond and Jared Willman all on 11/16/15 in the Fire Department; Brice Kerschen on 11/23/15 – in police department. Retiree Alan Tolf died 11/4/15. A letter was sent to his spouse, Nancy, who will receive 60% survivor benefits, or $1,661.60 per month. Chubinski – none. Hausman – none. Newman – none. Old Business Disability retirement application – scheduled with P&F IME, Dr. Tatineni, on November 11; VA having some difficulty determining if they can act as his physician for the purpose of providing a determination of disability. Service Retirement Policy – presented a draft; Chair appointed Hausman & Budrow- Bradstreet, with input from Finance & Revenue Services Manager Linda Morrison, to review the draft and bring it back to the Board in January. New Business Portfolio – Market Update and Review: Police & Fire Pension Board November 16, 2015 Page 2 of 2 - Official Jim Baird, CFO, gave an economic update for the Board. What is taking place behind the scenes – the impact to the market, both equities and bonds. High points:  2015 – economy started soft; picked up in the middle; back to soft. Global economy is slowing, driven predominantly by China; strength of dollar has hurt; domestic economic situation is not bad and should not have a large impact; just starting to see a little wage pressure; employment going well; inflation still very low; sharp decline in oil and other commodities has kept inflation down; however, retail sales have been flat.  Feds still talking about raising interest rates – thinking they may finally do something in December; that is being priced in the market now.  In the past when interest rates were raised it usually caught the market off guard; now market is prepared so shouldn’t impact too much; then it should be a gradual increase;  In general, in the past, when interest rates go up, a year from now market has increased;  Bond side – rising interest rates mean bond prices fall (illustrated on PMFA report, pg 33).  Ultimately rising rates is a positive for the investor – may diminish returns in the short but long term is beneficial.  Feels we will be compensated, over the long term, for the risks we are taking. Jeremy Tollas gave an update of the portfolio noting the following:  Harding Loevner – although HL has emerging market stocks, when you compare this to the MSCI EAFA benchmark, it is not apples to apples – EAFA has no emerging market stocks. Compared to MSCI ACWI index they have done okay; HL is positioned for gains.  Lazard- overweight stock selection in Japan.  Small cap investments – relative to larger companies they are more expensive (P/Es much higher); economic factors have a larger, faster impact on small companies (such as the pressure on wage increases); still feel we should continue to hold small cap stocks,  Robeco holing up due to higher quality stock selections;  Loomis Sayles – underperforming due to lower quality bonds and associated risk.  Lazard proposed to lower the fees – due to negotiations with PMFA, the fees may be reduced to .60% period – no tiered rate. Motion Hausman, seconded Bagwell to accept the fee reduction for Lazard. On a voice vote, motion approved. PMFA proposing to raise cash with an additional $2 million needed. Will raise the funds from the actively managed large cap funds – Robeco and Boston Company $1,000,000 each. Public Comment – none. Next regular meeting: Tuesday, December 22, 2015 at 10:00 a.m. Meeting adjourned at 11:23 a.m. Respectfully submitted, Gail Budrow-Bradstreet, Secretary __________________________________ _________________________________ Board Member signature Board Member signature