Police & Fire Retirement Board

Board of Trustees WwWfra@ @wd Wfrr.e W efufrw efrw@freL S gas 6emme Acff ffi$ffi A Pension Flan and Trwst Fund 41625 Ryan Rd. Sterfing Heights, Michigan 4831 4-3945 John Lamerato VanOverbeke, Michaud & Timmony, P.C. President Legal Counsel Kelly Burgan Secretary REGULAR MEETING MINUTES OFTHE Randall Schwarb STERLING HEIGHTS Trustee POLICE AND FIRE RETIREMENT SYSTEM, ACT 345 Robert Maleszyk AUGUST 20,2O2O Trustee VIDEO CONFERENCE CAL,L INFO: Mary Jaganjac https://zoom.us/i/962 774463 5 1?pwd=c3pTcH F6Ym FZaWlvZlYwUVlhTS9GZz09 City Treasurer 7. President Lamerato called the regular meeting of the Police and Fire Retirement System to order at 3:30 pm. z Board Members Present: John Lamerato, Kelly Burgan, Randy Schwarb, Rob Maleszyh Mary Jaganjac. Also present: Tom Michaud, l,egal Counsel; Tim Brice, representing The Brice Group/Morgan Stanley Graystone Consulting; and Kerrie Dzwonkowski, Pension Technician. 3 APPROVAL OF CONSENT AND REGULAR AGENDAS Motion by Schwarb, supported by Burgan, to approve the consent agenda as presented. Ayes: All. The motion carried. Motion by Schwarb , supported by Burgan, to approve the regular agenda as presented. Ayes: All. The motion carried. 4. APPROVAL OF MINUTES No corrections were made to the draft minutes of the regular meeting of July L6,2020. Motion by Schwarb, supported by Burgan, to approve the minutes as presented, Ayes: All. The motion carried. 5. CITIZEN PARTICIPATION There was no Citizen participation. 6. REPORT FROM LEGAL COUNSEL Mr. Michaud had no comments. CONSENT AGENDA 7, CORRESPONDENCE a. CorresPondence received from; 1. Morgan Stanley - market value monthly updates 2. Robbins Geller Rudman & Dowd LLP Regular Meeting Minutes - August 20,2020 Page Two CONSENT AGENDA B. BILLS AND EXPENDITURES a. Checking Account Summary Beginning Balance $4,096.84 7 /01./20 Additions (1) $5,000.00 Subtractions [4J $557.84 7. 7 /20 Ck 20BB $94.87 KD - Office Supplies 2. /20 7 Ck 2090 $15.8e KD - Zoom Meeting 3. 7 /23 Ck 2089 $316.00 Accident Fund /30 4_ 7 Ck2092 $131.08 City of SH - Accounting Electronicwithdrawals[6) $3,880.74 7. 7 /1 380.46 IRS Fed, Taxw/h 2. 7 /B 1104 DD 1,325.79 Contract Payment KD 3. 7 /10 87.84 Contract fee - Gurin & Gurin 4. /15 7 380.42 IRS Fed. Tax w/h 5. 7 /22 1105 DD 7,325.77 Contract Payment KD 6. /29 7 380.46 IRS Fed. Tax w/h Balance Ending $4,658.26 7 /31/20 d Transmittal of Checks 1. None 9 FUNDS MANAGEMENT a. a. The current value of funds as of fuly 31,,2020 is detailed below: Clearing account $ 1,41,9,242.76 Winslow $ 1,2,469,785.44 Janus $ 14,580,333.32 Eagle $ e,e:3,090.88 Confluence $ 6,518,747.99 Rothschild $ 13,15 6,463.63 Earnest $ 16,548,13 5.30 Aristotle $ 30,907,567.01. Western $ 22,664,1,73.93 MetWest $ 15,e27,603.48 Hancock $ zs,tt'1,,686.11 WCM $ 34,885,824.36 EIP $ 0,s99,790.77 Victory $ 5,957,L90.63 MS Cash $ 16,375.75 Checking account $ 4.658.26 TOTAL FUNDS $ 275,400,069.62 The Board received a copy of the Summary of Employer Contributions to the Police b. The System has and Fire Retirement Syri"- for the 2020 taxyear as of 7 /28/20. received $1,098,400.00 of the 2o2o/2l budget of $Lt,969,088'00. 394 C. Benefit Register Listing as of Augu st 1, 2020 from comerica Bank showing *ittt , pryort for August $1,708,88L'1'2 of and a total year-to- retirees/beneficiaries date of $15,631,883.77 d. ThecurrentMerrillLynchBondindexfor}uly2020is1,040/0, Regular Meeting Minutes - August 20,2020 Page Three REGULARAGENDA B. BILLS AND EXPENDITURES a. Disbursements other than retiree benefit payments (bills] 1' Disbursement to Morgan Stanley in the total amount of $166,732.71 for investment management fees for the quarter ending 6/20/20 for all accounts. 2. Disbursement to Eagle Capital Management, LLC in the amount of $U,776.46 for investment management fees for the quarter ending 6/30/ZO. 3. Disbursement to Metropolitan West Asset Management in the total amount of $73,747.44 for investment management fees for the quarter ending 6/zo/20. 4. Disbursement to WCM in the amount of $70,187.60 for investment management fees for the quarter ending 6/30/20. Motion by Bugan, supported by Schwarb, to approve the bills as presented. Ayes: All. The motion carried. b. Disbursements to retirees/members other than monthly benefit payments 1. Michael Kunath - Annuity Withdrawal Michael Kunath of the Police Department entered EROP effective June7, 2020. At the time of EROP participation, he requested to take his annuity withdrawal at the beginning. All paperwork is on file in the Pension Office. Motion by Schwarb, supported by Burgan, to approve the Annuity withdrawal disbursement. Ayes: All. The motion carried. 9, FUNDSMANAGEMENT f. Quarterly Performance Report 1. The Brice Group Mr. Brice reviewed the summary report of manager performance. Enclosed in this report was the Board's summary of investment policies and objectives second quarter 2020 AIM Market Focus report. Also included was an executive summary of the Composite, MetWest, Western, Intercontinental, fohn Hancock, Confluence, Eagle, Rothschild, Winslow, Janus, Earnest, WCM, Aristotle, Fidelity, Victory, Harding Loevner and Energy Income reports. The following manager specific comments were discussed: MetWest a. The total portfolio return in the second quarter was 4.94o/o. ranking in the 29th percentile of the IM U.S. Broad Market Fixed Sample. It exceeded the BC Aggregate Bond index (2.09o/o). b. Their total portfolio return was 4.61.0/o since inception (4/1,/L5). This exceeded the BC Aggregate Bond index (3-7 60/o). c. The market value as of June 3A, 2020 as $15,659,800.01; which represented 7 .75o/o of the total portfolio. Western * The total portfolio return in the second quarter was 5.670/o, ranking inthel6trpercentileofthelMU.S.BondMarketFixedSample.It exceeded the BC Aggregate Bond Index (Z'900/o)' b. Their total portfolilo return was 4.85o/o since inception 17 /1/1,1). This exceeded the BC Aggregate Bond index (3'81%)' c. The market value is of ;r.,. 30, 2o2O was $22,092,620.28; which represented L0.680/o of the total portfolio' Regular Meeting Minutes - August 20,2020 Page Four REGULARAGENDA 9, FUNDSMANAGEMENT f. Quarterly Performance Report - cont. 7. The Brice Group Western a. The total portfolio return in the second quarter was 5.670/o, ranking in the 16tr percentile of the IM u.S. Bond Market Fixed Sampre. It exceeded the BC Aggregate Bond Index (2.90o/o). b. Their total portfolio return was 4.85o/o since inception {7 /r/11). This exceeded the BC Aggregate Bond index [3.81%). c. The market value as of June 30, 2020 was 922,092,620.28; which represented 10.680/o of the total portfolio. Intercontinental a. The total portfolio return in the second quarter was 0.42o/o. b. Their total portfolio return was 1,1.77o/o since inception (7 /7/0\. c. The market value as of June 30, 2020 was $843,408.00; which represented 0.41o/o of the total portfolio. Iohn Hancock a. The total portfolio return in the second quarter was 2B.B3o/o, ranking in the lstpercentile of the IM U.S. Large Cap Core Equity. It exceeded the S & P 500 Index (20.54o/o). b. Their total portfolio return was 7.460/o since inception (4/7/tB). This trailed the S & P 500 Index (9.52o/o). c. The market value as of fune 30, 2020 was $1,3,550,474.72; which represented 6.55o/o of the total portfolio. Confluence a. The total portfolio return in the second quarter was \7.87o/o, ranking in the 40th percentile of the IM U.S, Large Cap Value Equity. It exceeded the Russell 1000 Value Index (14.29o/o). b. Their total portfolio return was 9.5!o/o since inception (4/1'/1.6). This exceeded the Russell 1000 Value Index (5.89o/o). c. The market value as of fune 30,2020 was $6,196,81'4.29; which represented 3.00o/o of the total portfolio. Eagle a, The total portfolio return in the second quarter was 19.08%0, ranking in the 30th percentile of the IM U.S. Large Cap Value Equity. It exceeded the Russell 1000 Value Index (74.29o/o). b. Their total portfolio return was 1,2.75o/o since inception (L0/1./1.2). This exceeded the Russell 1000 Value Index [8.65%)' c. The market value as of June 30, 2020 was $8,486,518'31; which represented 4.L\o/o of the total portfolio. Rothschild a. The total portfolio return in the second quarter was 72.87Vo, ranking in the 91't percentile of the IM u,s. Large cap value Equity. It trailed the Russell 1000 Value Index (74.29o/o). b. Their total portfolio return was 6.06%o since inception (a/7/76)' This exceeded the Russell 1000 Value Index [5'89%)' c. The market value as of June 30, 2o2o was $5,476,559.99; which represented 2.650/o of the total portfolio' Regular Meeting Minutes - August 20,2020 Page Five REGULARAGENDA 9. FUNDSMANAGEMENT f, Quarterly Performance Report 1. The Brice Group - cont. Vanguard Russell 1000 Value a. The total portfolio return in the second quarter was i,4.2zo/o, ranking in the B0th percentile of the IM u.S. Large cap value Equity. It trailed the Russell 1000 Value Index (14.29%). b. Their total portfolio return was l4.ZZo/o since inception (a/!ZO). This trailed the Russell 1000 Value Index (74.29o/o). c. The market value as of fune 30, 2020 was $7,201,,175.88; which represented 3.48o/o of the total portfolio. Winslow Investment Counsel a. The total portfolio return in the second quarter was 2B.7Bo/o, ranking in the 29ti, percentile of the IM U.S. Large Cap Growth Equity. It exceeded the Russell 1000 Growth Index (27.84o/o). b. Their total portfolio return was 15.450/o since inception [4/7/12). This trailed the Russell 1000 Growth Index (15.54o/o). c. The market value as of June 30,2020 was $4,242,567.80; which represented 2.05o/o of the total portfolio. Janus Investment Counsel a. The total portfolio return in the second quarter was 26.614, ranking in the 50tt' percentile of the IM U.S. Large Cap Growth Equity. It trailed the Russell 1000 Growth Index (27.B4o/o). b. Their total portfolio return was 15.58% since inception (1/7/L0). This exceeded the Russell 1000 Growth Index (15.460/o). c. The market value as of fune 30, 2020 was $14,238,891.60; which represented 6.8% of the total portfolio, Vansuard Russell 1000 Growth b. The total portfolio return in the second quarter was 27.92, ranking in the 37tt, percentile of the IM U.S. Large Cap Growth Equity, It exceeded the Russell 1000 Growth Index (27.84o/o). b. Their total portfolio return was 27.92o/o since inception (a/7/20)' This exceeded the Russell 1000 Growth Index (27.84%). c, The market value as of June 30, 2020 was $7,933,443.51'; which represented 3.84o/o of the total portfolio. Earnest Partners a. The total portfolio return in the second quarter was 21.260/o, ranking in the 70th percentile of the IM u.s. SMID Cap Core Equity. It trailed the Russell 2500 Index 124'61'%). b. Their total portfolio return was 9.45o/o since inception (70/7/06). This exceeded the Russell 2500 Index (B'14o/o)' c. The market value as of fune 30, 2o2O was $15,908,391.34; which represented 7.690/o of the total portfolio' Regular Meeting Minutes - August 20,2020 Page Six REGULARAGENDA 9, FUNDSMANAGEMENT e. Quarterly Performance Report 1,. The Brice Group - cont. Aristotle a. The total portfolio return in the second quarter was 1.7.OBo/o, ranking in the 55th percentile of the IM International Equity. It exceeded the MSCI AC World x US net 11,6.720/o). b. Their total portfolio return was -6.760/o since inception (10/L/I9). This trailed the MSCI AC World x US net (-3.060/0). c. The market value as of fune 30, 2020 was $20,769,127.05; which represented 10.04o/o of the total portfolio. WCM a. The total portfolio return in the second quarter was 25.98o/o, ranking in the 13th percentile of the IM International Equity. It exceeded the MSCI AC World ex US net (1.6.1.20/o). b. Their total portfolio return was L4.280/o since inception (7 /7/17). This exceeded the MSCI AC World x US net (L.L3o/o). c. The market value as of |une 30,2020 was $33,056,296.32, which represented 15.98o/o of the total portfolio. Fideliw a. The total portfolio return in the second quarter was L7.B4o/o, ranking in the B0th percentile of the IM International Equity. It trailed the MSCI AC World ex US net (22.83o/o). b. Their total portfolio return was L7.B4o/o since inception (a/L/20). This trailed the MSCI AC World x US net (22.83o/o). c. The market value as of fune 30, 2020 was $2,721-,098.70, which represented 1.32o/o of the totalportfolio. Victory a. The total portfolio return in the second quarter was 26.24Vo, ranking in the 24th percentile of the IM International Equity. It exceeded the MSCI AC World ex US net [19.88%). b, Their total portfolio return was 23.24o/o since inception (a/1/20). This exceeded the MSCI AC World x US net [19.88%J. c. The market value as of fune 30,2020 was $2,887,467.94, which represented 1.40o/o of the total portfolio' Hardins Loevner a. th" totul portfolio return in the second quarter was L7.28o/o, ranking in the Bsth percentile of the IM Emerging Markets Equity. It trailed the MSCI EM Net [18.08%J. b. Their total portfolio return was -5.6!0/o since inception (1,/1/78). This trailed the MSCI EM net [-3.58%)' c. The market value as of June 30,2020 was $9,002,046.74, which represented 4.35o/o of the total portfolio' Regular Meeting Minutes - August 20,2020 Page Seven REGULARAGENDA 9, FUNDSMANAGEMENT e. Quarterly Performance Report a. The Brice Group - cont. EIP a. The total portfolio return in the second quarter was 17.35o/o, ranking in the 69th percentile of the IM US Other Equity. It trailed the Alerian MLP Index [50.18%). b Their total portfolio return was 17.350/o since inceprion (4/l/ZO). This trailed the Alerian MLP Index 50.18%). C. The market value as of fune 30, 2020 was $6,302,458.38; which represented 3.05o/o of the total portfolio. The following table details the Investment Performance Review for the second quarter ending June 30, 2020. Market value of the funds under management as of fune 30,2020 was $206,823,544.40. The total fund return for the second quarter was L8.520/o, ranking in the 4th percentile of Public Plans < $250 million, as summarized below: 3/20 6/Le 6/17 6/1.s 6/10 1/e2 To 6/20 to 6/20 to 6/20 to 6/2a b 6/20 to 6/20 Total fund* 16.20/4 4.85/57 7.77 /5 7.04/7 8.94/57 7.40/57 *Ranked against Public Plans < $250 million The following manager specific return information is detailed separately from the other long-term data: 3/20 6/Le 6/77 6/Ls 4/7s MetWest to 6/20 ro 6/20 to 6/2A fi 6/20 to 6/20 Total Fund* 4.94/29 L0.85/3 6.55/4 5.27/7 4.67/70 *Ranked against the IM U.S. Broad Market Fixed 3/20 6/te 6/1.7 6/7s 7 /17 Western to 6/20 to 6/20 to 6/20 to 6/20 to 6/20 Total Fund* 5.67 /16 7.92/86 5.67 /44 5.41/5 4.85/1'2 xRanked against the IM U.S. Broad Market Fixed 3/20 6/re 4/tB John Hanco ck to 6/20 to 6/20 to 6/20 TotalFundx ZB.B3/1. 8.53124 7.46/56 *Ranked against the IM U.S. Large Cap Core Equity 3/20 6/7e 6/77 4/1'6 Confluence to 6/20 ta 6/20 to 6/20 to 6/20 Total Fund* 1,7.81/40 -0.02/Zo B.3B/L3 9'57/19 *Ranked against the IM U.S' Large Cap Value Equity 3/20 6/ts 6/77 6/1s L0/72 Eagle to 6/20 to 6/20 to 6/20 to 6/20 ro 6/20 Tolal Fund* 1.s.olj30 -0.52/22 B.4o/1.3 9'47/1'0 1',2'75/7 *Ranked against the IM U.S. Large Cap Value Equity 3l2O 6/7e 6177 4/16 Rothschild ro 6/20 to 6/20 to 6/20 ro 6/20 Total Fundx 1.2'87 /gL -7.90/62 3'1'9 /50 6'06/64 xRanked against the IM U.S. Large Cap Value Equity  Regular Meeting Minutes - August Z0, ZOZO Page Eight REGULAR AGENDA 9, FUNDSMANAGEMENT e. Quarterly performance Report a. The Brice Group - cont. /203 /1e 6 6/t7 6/Ls 4/12 Winslow to 6/20 to 6/20 to 6/20 to 6/20 to 6/20 Total Fundx 28.78/29 23.27 /29 ZL.|Z/ZZ 16.2e/2s 7s.4s/37 xRanked against the IM U.S. Large Cap Growth Equity 3/20 6/19 6/77 6/7s 6/10 1/10 fanus b 6/20 to 6/20 to 6/20 to 6/20 ro 6/20 to 6/20 Total Fund* 26.64/50 22.89/3I Ig.t7/37 16.63/22 17.02/30 *Ranked against 15.s8/30 the IM U.S, Large Cap Growth Equity /203 6/1.e /77 6 6/ls 6/70 1,0/06 /20 Earnest Part. To 6 to 6/20 to 6/20 to 6/20 to 6/20 to 6/20 Total Fund* 21.26/70 -0.55/48 8.2I/46 B.es/40 1,3.38/42 e.45/41 xRanked against the IM U.S. SMID Cap Core Equity 3/20 6/7e 6/t7 7 /77 WCM ro6/20 to 6/20 to 6/20 to 6/20 Total fund* z5.eg/1.3 14.49 /7 14.28/3 74.28/3 xRanked against the IM International Equity 3/20 70/7e Aristotle to 6120 to 6/20 Total Fund* 17.08/55 -676/77 *Ranked against the IM International Equity 4/20 Fidelity to 6/20 Total Fund* 17.84/80 xRanked against the IM International Equity 4/20 Victory to 6/20 Total Fund* 26.24/24 xRanked against the IM International Equity 3/20 6/1e 7/LB Harding to 6/20 to 6/20 to 6/L9 Total Fund* 17.28185 -8.54/78 -5.67/69 xRanked against the IM Emerging Markets Equity 4/20 EIP to 6/20 Total Fund* 1.7 .35 /69 *Ranked against the IM International Equity Mr. Brice discussed the second quarter performance of the total portfolio. Mr. Lamerato requested to have the end of fiscal year [fune 30, 2OZO) numbers included in the lnd quarter performance report. tvti. grice discussed the asset allocation and suggested that we have an educational session on Private Credit, Private Equity, and Private Real Estate. He said that GERS is going to do the same and suggested a combined meeting with the two Boards. The Pension Technician will coordinate the meeting. Regular Meeting Minutes - August 20,2020 Page Nine REGULARAGENDA 10. BENEFITS & PLAN ADMINISTRATION a. New Business 1. Timothy Ferguson - EROp termination - discussion Capt. Timothy Ferguson of the Fire Department terminated his EROp retirement effective August 20, 2020. He is requesting his annuity withdrawal and EROp distribution (B5o/o). All required paperwork is on file in the pension office. Motion by Burgan, supported by Schwarb, to approve the EROP regular straight life pension benefit in the gross monthly amount of $7,181.33, annuity withdrawal disbursement and ER0P disbursement as presented. Ayes: All. The motion carried. 2. Account transfer for Septemb er 7,2020 benefit payments - discussion As of August L2, 2020. the Clearing Account had a balance of $1,314,217.39. An additional $1,000,000.00 is needed for the September 1, ZOZO pension benefit payments and bills from the clearing Account. The Brice Group has forwarded an e-mail that the additional amount needed should be taken from the following accounts on or before August 27,2020, based on the asset allocation targets: Winslow - $250,000 iShares Vanguard Growth - $250,000 fohn Hancock - $250,000 iShares S&P Core - $250,000 Motion by Burgan, supported by Schwarb, to approve the transfer of $1,00,000.00 from the Winslow, iShares Vanguard Growth, John Hancock, and iShares S&P Core accounts based on the asset allocation targets, to provide for pension benefit payments and other disbursements on September l, 2020. Ayes: All. The motion carried. LL TRUSTEE COMMENTS MAPERS Fall Conference has been cancelled due to COVID-L9. They will be conducting webinars in the next coming months. The Board will continue to conduct the Board meetings viaZoom video conference calls for at least the next couple of months. 12 ADJOURNMENT Motion by Schwarb, supported by Burgan, to adjourn 4:18 pm. Ayes: All. The motion carried; the meeting is herebY adjourned. Kelly Burgan SecretarY KB/kd