Minutes - 04/22/2015 - Police Pension Fund BoardVILLAGE OF OAK BROOK
BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes
April 22, 2015
UNOFFICIAL UNTIL APPROVED AS WRITTEN √
OR AS AMENDED BY BOARD OF TRUSTEES OF THE
POLICE PENSION FUND ON July 15, 2015
1. CALL TO ORDER:
The Regular Meeting of April 22, 2015 of the Board of Trustees of the Oak Brook Police Pension Fund was
called to order by President 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 Benjamin Kadolph
ABSENT: None
IN ATTENDANCE: Spencer Klein and Bob Thompson from MB Financial, Courtney Cervantes and Jeff
Kowalczyk of Lowery Asset Consulting, Finance Director/Treasurer Sharon Dangles, Pension Clerk Rose
Kane
3. PRESIDENT'S COMMENTS: (discussed after Approval of Minutes)
Pension Clerk Kane brought the Board’s attention to a text error on the Agenda, specifically that where it is
written “Second Quarter” in Agenda Items 8.a., b. and c., it should be “First Quarter”. She then discussed
the upcoming dinner meeting.
4. APPROVAL OF MINUTES:
a. Approval of Board of Trustees Regular Meeting Minutes of January 28, 2015
b. Approval of Special Actuarial Meeting Minutes of March 11, 2015
Motion by Trustee Patel, seconded by Secretary Caspers, to approve the Minutes of the January 28,
2015 Regular Board Meeting as written, and the Minutes of the March 11, 2015 Special Actuarial
Meeting as written. VOICE VOTE: Motion carried.
5 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 January 1-31, 2015 checks in the total amount of $196,818.85
b. Approval of February 1-28, 2015 checks in the total amount of $195,969.35
c. Approval of March 1-31, 2015 checks in the total amount of $206,624.35
d. Approval of Lowery Asset Consulting, LLC's invoices in the total amount of $7,000.00, dated December
22, 2014 for Fourth Quarter, 2014 services
e. Approval of Lauterbach & Amen, LLP’s invoices in the total amount of $4,350.00, for services rendered
November, 2014, January and February, 2015; and including, preparation for Municipal Compliance
Report and preparation of Payroll Tax Returns
Motion by Secretary Caspers, seconded by Vice President Feldman, to approve the Consent
Agenda.
VOICE VOTE: Motion carried.
6. ITEMS REMOVED FROM CONSENT AGENDA – None presented.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 1 of 3 April 22, 2015
7. UNFINISHED BUSINESS – None presented.
8. NEW BUSINESS:
a. Lowery Asset Consulting, LLC Report on First Quarter, 2015
Jeff Kowalczyk discussed the performance of the First Quarter, 2015, and stated that a lot of things that are
happening in the market are due to the declining price of oil. He remarked that the drop in oil prices and
the strength of the U.S. dollar have kept a lid on inflation.
The following was included in Section II Executive Summary, Page 9 of Lowery’s Report:
The Fund’s investment assets at MB Financial had a value of approximately $33,239,497 as
of March 31, 2015. The current allocation is 62.75% Equity and 37.25% Fixed Income and
Cash as defined by Illinois State Statute.
The benchmark is currently set as: The current portfolio allocation:
55% Barclays Aggregate Bond 40.4% Fixed Income (includes PIMCO Mutual Fund)
25% S&P500 25.4% S&P500
7.5% Russell 2000 6.8% Russell 2000
7.5% MSCI EAFE Growth 18.1% MSCI EAFE
2.5% S&P Nat Resources 3.5% S&P Nat Resources
2.5% Wilshire REIT 5.1% Wilshire REIT
0.7% Cash
Mr. Kowalczyk referred to Page 13 of Lowery’s Report and stated that the Portfolio did 2.11% for the
quarter, trailing one year to 4.84% and since inception of Lowery taking over is 7.7%. He then discussed
the Manager Performance by Strategy on Pages 15-16 of the Report. He remarked that Harbor
International had decent returns, PIMCO Income did very well and Mitchell Group Energy went down
significantly, but experienced a bounce-back in April to 6.8%. He stated that they changed the benchmark
for Intermediate Government Credit regarding MB Financial Fixed Income (Page 16). Regarding a previous
discussion about DF Dent’s performance, Mr. Kowalczyk stated that they are recommending that the Board
remove DF Dent, the reasons being performance-based, a lack of confidence in them to go forward and
that they are drastically underweight in the healthcare and technology sectors. He stated that as a
replacement, they are recommending PrimeCap Odyssey Stock Growth Fund. Lengthy discussion ensued
and Trustee Patel requested more information regarding making a change from DF Dent to something like
PrimeCap Odyssey and also discussion regarding Vanguard.
Mr. Klein discussed MB’s in-house large cap core stock portfolio, and asked that Lowery consider a
different asset class than Dent and provided them with an information sheet regarding same.
More discussion ensued. Mr. Kowalczyk referred to a hand-out regarding inflation.
Motion by Vice President Feldman, seconded by Trustee Patel, to instruct Lowery to sell the Dent
stock, and provide some information regarding whether to re-invest in an active or passive
alternative, after a unanimous decision polling. VOICE VOTE: Motion carried.
b. MB Financial Investment Management Performance Report on First Quarter, 2015
Mr. Klein referred to Page 3 of MB’s Report and discussed the GDP/CPI Index and economic growth and
suggested that there might be a pickup in consumer spending this summer. He then discussed the
economic outlook on Page 7. Next, he discussed the portfolio composition on Pages 11-12:
• Market Value of the Total Fund - $12,270,980
• Fixed Income - $11, 914,653
• Cash and Equivalents - $356,333
He stated that MB’s focus on high coupon bonds, taxable municipal bonds, some callables, and some good
security selection has allowed them to achieve a yield to maturity for the bond portfolio which is a modest
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 2 of 3 April 22, 2015
amount higher than the overall benchmark. He added that the current position on the portfolio is that if
interest rates are not going to get as high, then they do not need to be as defensive. Discussion ensued
regarding the risks of taxable municipal bonds and general obligation bonds. Mr. Klein stated that they stay
away from Illinois general obligation bonds and suggested bumping up the allocation in corporate bonds.
He then discussed the Risk/Return Analysis: Total Fund graph on Page 18.
c. Approval of Investment Transactions for First Quarter, 2015
Motion by Secretary Caspers, seconded by Vice President Feldman, to approve the Investment
Transactions for the First Quarter, 2015. VOICE VOTE: Motion carried.
d. Approval of Application for Membership in the Oak Brook Pension Fund of Nicholas Montgomery
Motion by Secretary Caspers, seconded by Trustee Kadolph, to approve the Application for
Membership in the Oak Brook Pension Fund of Nicholas Montgomery.
VOICE VOTE: Motion carried.
9. INFORMATION & UPDATES
a. Scheduling of third quarterly meeting in 2015
Tentative Wednesday dates in July, 2015: July 15th, 22nd and 29th
Consensus to meet on July 16th for the regular third quarterly meeting.
10. ADJOURNMENT:
Motion by Trustee Patel, seconded by Secretary Caspers, to adjourn the Board of Trustees of the
Police Pension Fund meeting at 8:22 p.m. VOICE VOTE: Motion carried.
ATTEST:
Edward Caspers /s/
Edward Caspers, Secretary
Board of Trustees of the Police Pension Fund
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
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