Retiree Health Care Investment Board

CITY OF ROYAL OAK RETIREE HEALTH CARE INVESTMENT BOARD MINUTES OF THE REGULAR MEETING OF THE BOARD OF TRUSTEES A meeting of the Retiree Health Care Investment Board of Trustees was conducted in the City Hall Conference Room 309, Royal Oak MI, Thursday – January 5, 2017 at 1:30 p.m. The meeting was called to order by Chairperson Don Van Ochten at 1:30 pm Attendance PRESENT: Don Van Ochten- Chairperson Lee Collick- Vice Chairperson Dave Poulton- Trustee Pat Paruch- Trustee Don Johnson- Trustee ALSO PRESENT: Julie Rudd - Bd Chief Administrative Officer/ Bd Secretary/Bd Treasurer Tom Michaud - Bd Attorney with VanOverbeke Michaud and Timmony Leah Motyka- Administrative Assistant- Pension Technician John Lang - member of system and former board trustee Public Comment - none st Board approval of the draft minutes for December 21 , 2016 meeting st Moved by Dave Poulton to approve the December 21 , 2016 meeting minutes Supported by Pat Paruch MOTION ADOPTED 5/0 INVESTMENTS Selection of investment consulting firm – discussion. Julie Rudd presented a summary comparison of investment returns of the firms interviewed (Independent Portfolio Consultants, Dahab Associates, The Bogdahn Group, and Morgan Stanley) and SEI. The summary sheet reports the total average return vs. indices for year-to-date as of June 30, 2016, 1 year, 3 year, 5 year, and 10 year, utilizing the detailed data provided by the firms (these st detailed spreadsheets were emailed to trustees prior to the firm interviews on December 21 2016. The comparison shows that for the 10 year return, the Bogdahn Group outperformed Morgan Stanley by approximately 41 basis points (relative to the indices) and Bogdahn Group outperformed SEI by approximately 3 basis points (relative to the indices). A 41 basis point different could amount to over $450,000 of gains from investments. The proposed fee for Morgan Stanley is $75,000 annually. The Bogdahn Group proposed fee is $90,000 1yr, $105,000 2yr, $120,000 3yr, $135,000 4yr, and $150,000 5yr. The Bogdahn Group reports a 99% retention rate since inception 18 years ago. The Bogdahn Group reports to consult for numerous municipal trusts including OPEB trusts. Brian Green is also the corporate liaison for MAPERS. There would be a fee discount to use SEI if SEI consulted for both the retirement system and the retiree healthcare trust. Dahab was ruled out by consensus due to not willing to perform as a “manager of managers”. Independent Portfolio Consulting was ruled out as the firm as they did not have a 10 year performance history. Don Johnson stated that he sees an advantage to having a different firm other than the retirement board’s firm because it allows for comparison. Don Johnson stated that he has been informed that when the retirement system used the Brice Group, the Brice Group created inefficiencies for the finance department. Dave Poulton stated that Brian Brice/Morgan Stanley is knowledgeable and he is comfortable with the Brian Brice, and that they are local. Don Van Ochten stated that he likes that the city has had a relationship with Brian Brice and is comfortable with them. Lee Collick stated that due to (most importantly) the reported historical performance that he selects Bogdahn Group. Moved by Don Johnson to select The Bogdahn Group as the investment consulting firm subject to legal review of a contract Supported by Lee Collick MOTION ADOPTED 3/0 (Don Johnson, Lee Collick, Pat Paruch) No vote: Don Van Ochten and Dave Poulton Selection of custodian bank Moved by Dave Poulton to select 5/3 as a custodian bank subject to legal review of a contract Supported by Pat Paruch MOTION ADOPTED 5/0 LEGAL None OTHER BUSINESS None NEXT MEETING AND ADJOURNMENT Next regular meeting is scheduled for immediately following the retirement system board meeting at nd approximately 1:30 pm on Thursday – February 2 , 2017 at City Hall room 309. nd Moved by Lee Collick to adjourn the meeting (2:08 pm.) and confirm next meeting for February 2 , 2017 immediately following retirement system board meeting at approximately 1:30 pm Supported by Pat Paruch MOTION ADOPTED UNIANIMOUSLY 5/0