Minutes - 08/13/2012 - Police Pension Fund BoardVILLAGE OF OAK BROOK
BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes
August 13, 2012
UNOFFICIAL UNTIL APPROVED AS WRITTEN V�
OR AS AMENDED BY BOARD OF TRUSTEES OF THE
POLICE PENSION FUND ON October 24, 2012
1. CALL TO ORDER:
The Special Meeting of the Board of Trustees of the Oak Brook Police Pension Fund was called
to order on August 13, 2012 by President Vel Torlo at 7:03 p.m. in 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. None
IN ATTENDANCE: Bill Lowery, Jeff Kowalczyk and Courtney Cervantes of Lowery Asset
Consulting, Bob Thompson of MB Financial Bank, Finance Director Sharon Dangles, Pension
Clerk Rose Kane
3. PUBLIC COMMENTS:
None presented.
4. APPROVAL OF MINUTES:
a. Approval of Board of Trustees Regular Meeting Minutes of July 25, 2012
Secretary Feldman suggested two amendments on Page 2 under "New Business" Agenda Item
8.a.
Motion by Trustee Caspers, seconded by Trustee Kadolph, to approve the Minutes of the
July 25, 2012 Regular Board Meeting as amended. VOICE VOTE: Motion carried.
5. UNFINISHED BUSINESS:
a. Lowery Asset Consulting, LLC Performance Report for Second Quarter, 2012
Bill Lowery presented an updated Performance Report (Report) for August 13, 2012 and
discussed the allocation percentages in Section I on Page 1 of the Report, with the Fund currently
allocated at 43% stocks, 55% bonds and 2% cash -- 54.9% fixed income, 45.1% equity (Page 4).
He also discussed the European and Asian markets and then explained the discrepancy
discussed at the last meeting regarding benchmarks and how a constant 50% equity benchmark
may not be preferable in relation to the fluctuating market. He stated that Lowery takes the
Fund's allocation at the beginning of the quarter and then matches it up with the underlying
indices. He then referred to the Manager Performance contained on Page 10 in Section II of the
Report and expressed that the best comparison, "apples to apples" would be the Dynamic
Benchmark. Mr. Lowery referred to the Executive Summary on Page 5 of Section II and stated
that the Fund lost -1.2% in a quarter when the domestic and international markets declined 2.7%
and 6.8 %, respectively. He stated that all the Managers are doing fine with the exception of Ivy
Global Natural Resources and that Lowery recommends a change from Ivy; he stated that
Lowery could come back with a list of candidates if the Board wishes. He then discussed the
Large Cap and International Value Funds.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes — August 13, 2012 Page 7 of 2
In response to an inquiry from Vice President Feldman, Mr. Lowery stated that they added a
benchmark with this Report that lines up with the target of the Fund currently at 50% stocks and
50% bonds, but is not reflected as a hard target in the Fund's Investment Policy. He stated that it
is really "apples to oranges ". Trustee Patel and Vice President explained that the Fund always
compared with the State guideline if the Board chose to follow that guideline, but not comparing
with hard core benchmarks. They discussed, historically, the Board not wanting the Fund tied to
a specific benchmark or memorialized in the Investment Policy. It was suggested to 'tweak" the
equity without committing or pulling away more from the bond percentages in which the Fund is
currently allocated. Mr. Lowery suggested taking Ivy's allocation, which is about 2 -2.5% of the
Fund and splitting that allocation between the two international funds, Harbor and William Blair.
Mr. Lowery stated the original benchmark used was the one above the Dynamic Benchmark entry
(Page 10).
Vice President Feldman requested that reports from Lowery include the interim period between
the end of a quarter and the Board's quarterly meeting.
Motion by Trustee Patel, seconded by Secretary Caspers, to move out of Ivy and into of
equal (percentages] to Harbor and William Blair. VOICE VOTE: Motion carried.
All Lowery representatives exited the meeting at approximately 8:02 p.m.
6. NEW BUSINESS:
a. Discussion regarding Request for Proposal
Discussion regarding Lowery's presentation and explanation of the benchmark used at the last
meeting and their suggestions regarding the Investment Policy and "Watch List ". Consensus to
watch and see the results of the moves made and Lowery's handling of the Fund for the next
quarter before making a decision to go out for Request for Proposal, but to include it as a
discussion item on subsequent agendas, entitled "Evaluation on Investment Performance ".
7. INFORMATION & UPDATES:
a. Fourth Quarterly Meeting scheduled for October 24, 2012
8. ADJOURNMENT:
Motion by Secretary Caspers , seconded by Trustee Patel, to adjourn the Board of Trustees of
the Police Pension Fund meeting at approximately 8:17 p.m. VOICE VOTE: Motion carried.
ATTEST:
�
Edward J. Casper ecretanV
Board of Trustees of the Police Pension Fund
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes — August 13, 2012 Page 2 of 2