Minutes - 07/23/2014 - Police Pension Fund BoardVILLAGE OF OAK BROOK
BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes
July 23, 2014
UNOFFICIAL UNTIL APPROVED AS WRITTEN √
OR AS AMENDED BY BOARD OF TRUSTEES OF THE
POLICE PENSION FUND ON October 22, 2014
1. CALL TO ORDER:
The Regular Meeting of the Board of Trustees of the Oak Brook Police Pension Fund was called to order
by President Vel Torlo at 7:03 p.m. in the Upper Level Conference Room of the Samuel E. Dean Board
Room of the Butler Government Center, 1200 Oak Brook Road, Oak Brook, Illinois.
2. ROLL CALL:
The roll was called with the following persons
PRESENT: President Vel Torlo, Vice President Alan Feldman, Secretary Edward Caspers, Trustee
Hitesh Patel, Trustee Ben Kadolph
ABSENT:
IN ATTENDANCE: Courtney Cervantes, Jeff Kowalczyk and Bill Lowery of Lowery Asset Consulting,
LLC, Bob Thompson and Spencer Klein of MB Financial, Pension Clerk Rose Kane
3. ELECTION OF OFFICERS:
Pension Clerk Kane requested a motion from the floor for nominations for President.
Motion by Trustee Patel, seconded by Trustee Caspers, to nominate candidates for President.
Motion by Trustee Kadolph, seconded by Trustee Feldman, to nominate Vel Torlo to continue as
President of the Oak Brook Police Pension Fund Board of Trustees.
There were no further nominations for President and all Trustees voted in support of having Vel Torlo
continue as President.
The floor was then opened up for nominations for Vice President and Secretary.
Motion by Trustee Patel, seconded by Trustee Kadolph, to stay status quo for the offices of Vice
President (Trustee Feldman) and Secretary (Trustee Caspers) of the Oak Brook Police Pension
Fund Board of Trustees. VOICE VOTE: Motion carried.
4. PRESIDENT’S COMMENT: Deferred until the end of the meeting.
5. APPROVAL OF MINUTES:
a. Approval of Board of Trustees Special Board Meeting Minutes of May 19, 2014
Motion by Trustee Kadolph, seconded by Trustee Patel, to approve the Minutes of the May 19,
2014 Special Board Meeting as amended. VOICE VOTE: Motion carried.
6 CONSENT AGENDA:
All items on the Consent Agenda are considered to be routine in nature and will be enacted in one
motion.
a. Approval of April 1-30, 2014 checks in the total amount of $228,965.66
b. Approval of May 1-31, 2014 checks in the total amount of $195,576.81
c. Approval of June 1-30, 2014 checks in the total amount of $191,368.81
d. Approval of Lowery Asset Consulting, LLC's invoices in the total amount of $7,000.00, dated April 17,
2014, for First Quarter, 2014 services
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Minutes Page 1 of 4 July 23, 2014
e. Approval of payment to the Illinois State Treasurer for the FY15 Department of Insurance Compliance
in the amount of $5,962.93
f. Approval of Lauterbach & Amen, LLP’s invoices in the total amount of $5,100.00 for invoices dated
February 13, 2014, March 20, 2014, March 25, 2014, April 20, 2014, and May 20, 2014
g. Approval of Contravisory Investment Management, Inc. invoice for the period April 1 through June 30,
2014 in the amount of $2,470.00
h. Approval of My Chef, Inc. invoice for catering of annual dinner in the amount of $1,965 (PNC
donation)
i. Approval of Contravisory Investment Management, Inc. reimbursement for termination of contract in
the amount of $1,058.57
j. Approval of Reimbursement to Pension Clerk Kane’s timesheet and voucher for reimbursement for
election and training expenses in the total amount of $1,019.75
k. Approval of Reimer & Karlson, LLC invoice dated March 12, 2014 in the amount of $87.50
Motion by Secretary Caspers, seconded by Vice President Alan Feldman, to approve the Consent
Agenda.
ROLL CALL:
Ayes: 5 – Vice President Feldman, Secretary Caspers, Trustee Patel, Trustee Kadolph, President Torlo
Nays: 0 – None
Absent: 0 – Motion carried.
7. ITEMS REMOVED FROM CONSENT AGENDA – None presented.
8. UNFINISHED BUSINESS – None presented.
9. NEW BUSINESS
a. Lowery Asset Consulting, LLC Report for Second Quarter, 2014
Mr. Lowery discussed a personnel change in Lowery Asset Consulting. He then referred to the Market
Commentary on page 2 of the report and remarked that the economy had grown by about 3% for the
second quarter and discussed the strength of the economy and the quarterly observations. He remarked
that financials and energy stocks look good now. Mr. Lowery then referred to page 4 of the report and
stated that the consumer discretionary stocks were up 3.5% in the second quarter, energy was up
12.10%, corporate bonds were up 5.9%, treasuries were up 3.2% and the master index up 1.1% in the
first six months of 2014. On page 6 of the report, he discussed that the S&P 500 Index was up 7% for
year to date and that REITs are up 17.6% for the year. Mr. Lowery remarked that overall, there has been
an awakening to keep the economy moving.
Lowery’s report on page 8 stated that the Fund investment assets at MB Financial had a value of
approximately $32,955,673 as of June 30, 2014 and that the current allocation is 61.7% Equity and
38.3% Fixed Income and Cash as defined by the Illinois State statute. On page 10 of the report, it was
stated that the Fund increased in value by 2.59% for the quarter, with the Fund’s fixed income and the
large cap positions representing a majority of the gain and a year to date gain of 3.44%.
Mr. Kowalczyk discussed the MLP Strategy Agreement and stated that he had written a letter to Kevin Fry
of the Illinois Department of Insurance requesting an opinion after the Board’s attorney stated that the
MLPs did not fit within the legislation. Discussion ensued regarding MLPs, expense ratios and there was
a further report from Mr. Lowery on the quarter’s performance. Mr. Lowery discussed the benchmark on
page 8 and suggested the Mitchell Group, with separate accounts and low turnover, for an energy
investment manager because the Fund does not have anything in natural resources.
b. MB Financial Investment Management Performance Report on Second Quarter, 2014
Mr. Klein discussed the bond portfolio referring to the first two pages of the MB report, and discussed the
decline in health care spending. He remarked that the unemployment rate is 6.1% while U.S employers
added 288,000 non-farm jobs in June and discussed the economic outlook on page 2. Mr. Klein next
discussed pages 9 and 10 on the composition of the portfolio and also talked about pages 16 and 11, the
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 2 of 4 July 23, 2014
blended index. He then referred to page 10, the fixed income outlook, and suggested some non-
traditional higher risk, high yield bonds, emerging market bonds and foreign country bonds. He stated
that if the Board should so choose, he would like to have up to 10% of the bond portfolio in the high yield
fixed income and do it in two or three phases over the next six months. Mr. Klein added that doing this
would result in a much more robust portfolio. Discussion ensued regarding the best time to do something
like this and policy versus dynamic benchmarks.
In response to an inquiry about keeping the balance with the mandated investment numbers regarding
falling over what is allowed, Mr. Kowalczyk affirmed that the Fund does not have to re-balance until a
purchase or a sale is made, allowing the win to run. Agreement between Lowery and MB Financial to
discuss MB’s high yield suggestion.
Mr. Lowery discussed that 5% of the equity could be placed into energy stocks, natural resources, with a
separate account manager, The Mitchell Group. It was affirmed that the $1,000,000 that was earmarked
for the MLP could be re-directed to The Mitchell Group.
c. Approval of Investment Transactions for Second Quarter, 2014
Motion by Vice President Feldman, seconded by Secretary Caspers, to approve the Investment
Transactions for the Second Quarter, 2014.
ROLL CALL:
Ayes: 5 – Secretary Caspers, Trustee Patel, Trustee Kadolph, President Torlo, Vice President Feldman
Nays: 0 – None
Absent: 0 – Motion carried.
d. Discussion regarding Master Limited Partnership interests
Motion by Vice President Feldman, seconded by Trustee Kadolph, to table any MLP investments
until an opinion is received from the Illinois Department of Insurance. VOICE VOTE: Motion
carried.
Motion by Vice President Feldman, seconded by Secretary Caspers, that in lieu of an opinion from
the Illinois Department of Insurance regarding MLPs, the $1,000,000 currently in Vanguard should
be re-directed into energy with The Mitchell Group.
ROLL CALL:
Ayes: 5 – Trustee Kadolph, President Torlo, Vice President Feldman, Secretary Caspers, Trustee Patel
Nays: 0 – None
Absent: 0 – Motion carried.
Direction given to MB Financial to keep the bond portfolio as it is at this time.
e. Approval of Application for Membership in the Oak Brook Police Pension Fund of Mark Bellich
Lowery and MB Financial representatives exited the meeting at approximately 8:39 p.m.
Motion by Secretary Caspers, seconded by Trustee Kadolph, to approve the Application for
Membership of Mark Bellich.
ROLL CALL:
Ayes: 5 – President Torlo, Vice President Feldman, Secretary Caspers, Trustee Patel, Trustee Kadolph
Nays: 0 – None
Absent: 0 – Motion carried.
General remarks were made regarding community misconceptions about pension benefits.
10. INFORMATION & UPDATES
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a. Fourth quarterly meeting in 2014: October 22, 2014
11. ADJOURNMENT:
Motion by Secretary Caspers, seconded by Trustee Kadolph, to adjourn the Board of Trustees of
the Police Pension Fund meeting at 8:52 p.m. VOICE VOTE: Motion carried.
ATTEST:
Edward J. Caspers /s/
Edward J. Caspers, Secretary
Board of Trustees of the Police Pension Fund
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
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