Minutes - 07/21/2020 - Police Pension Fund BoardBOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 1 of 6 July 21, 2020
VILLAGE OF OAK BROOK
BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes
July 21, 2020
UNOFFICIAL UNTIL APPROVED AS WRITTEN
OR AS AMENDED BY BOARD OF TRUSTEES OF THE
POLICE PENSION FUND ON October 22, 2020
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 7:00 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 Ed Caspers,
Trustee Hitesh Patel, (via teleconference), Trustee Reid Foltyniewicz
ABSENT: None
IN ATTENDANCE: Phil Kosmala and Zach Pearsall of Taiber Kosmala and Associates, Bob
Thompson (via teleconference), and Alex Garber (via teleconference), of Fifth Third Bank, Village
Finance Director/Treasurer Jason Paprocki (via teleconference), Pension Clerk Rose Kane
3.ELECTION OF OFFICERS
Pension Clerk Kane requested a motion from the floor for nominations for President.
Motion by Trustee Feldman, seconded by Trustee Foltyniewicz, to nominate Trustee Torlo for
President. VOICE VOTE: Motion carried.
Motion by Trustee Caspers, seconded by Trustee Feldman, to elect Trustee Torlo as President.
VOICE VOTE: Motion carried.
President Torlo then opened up nominations for Vice President and Secretary.
Motion by Trustee Caspers, seconded by Trustee Patel, to nominate Trustee Feldman for Vice
President. VOICE VOTE: Motion carried.
Motion by Trustee Caspers, seconded by Trustee Foltyniewicz, to elect Trustee Feldman as
Vice President. VOICE VOTE: Motion carried.
Motion by Trustee Patel, seconded by Trustee Feldman, to nominate Trustee Caspers for
Secretary. VOICE VOTE: Motion carried.
Motion by Trustee Foltyniewicz, seconded by Trustee Feldman, to elect Trustee Caspers as
Secretary. VOICE VOTE: Motion carried.
4.BOARD COMMENTS
None presented.
5.APPROVAL OF MINUTES
a.Approval of Regular Meeting Minutes of April 29, 2020
Motion by Secretary Caspers, seconded by Vice President Feldman, to approve the Meeting
Minutes of the April 29, 2020 Regular Board Meeting as presented.
VOICE VOTE: Motion carried with Trustee Foltyniewicz abstaining.
X
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Minutes Page 2 of 6 July 21, 2020
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 2020 expenditures in the total amount of $275,161.89
b.Approval of May 2020 expenditures in the total amount of $266,833.15
c.Approval of June 2020 expenditures in the total amount of $262,661.12
d.Approval of IDOI Compliance Fee in the amount of $7,035.23
e.Approval of Taiber Kosmala May 2020 invoice in the total amount of $7,000.00
f.Approval of Lauterbach & Amen, LLP invoices for FYE19 Actuarial and Workpapers and March
2020 services in the total amount of $4,955.00
g.Approval of Pension Clerk Kane’s January to June 2020 timesheet in the total amount of $675.00
Motion by Secretary Caspers, seconded by Vice President Feldman, to approve the Consent
Agenda as presented.
ROLL CALL:
Ayes: 5 – President Torlo, Vice President Feldman, Secretary Caspers, Trustee Patel,
Trustee Foltyniewicz
Nays: 0 – None
Absent: 0 – None
Motion carried.
7.ITEMS REMOVED FROM CONSENT AGENDA – None presented.
8.NEW BUSINESS
a.Taiber Kosmala and Associates, LLC Report on Second Quarter, 2020
Mr. Kosmala discussed the unusual market effects of the reaction to the Covid-19 virus and waiting
for Congress to pass a fiscal bill. He stated that the market has experienced a notable rally which
was the best 100-day rally through June 30th and the best 100-day rally since 1933. He
remarked that Dr. Peter Doherty, the preeminent expert in Australia on corona viruses, was asked
why there has never been a vaccine for a corona virus, and he replied that one was never
needed because it wasn’t economically viable; that those viruses have always burned
themselves out or mutated to be less virulent.
Mr. Kosmala referred to page 2 of their report and remarked that last quarter was down 20% and then
up 20%, highly unusual to have back-to-back quarters like that. He used the S&P Large Cap as an
example, 25% rally which resulted in the best quarter in 20 years. He stated that the portfolio
continued to do well in July, continued to make up ground, and is heading toward barely under
break-even for the year. He added that the names which have rallied are: Facebook, Apple, Netflix
and Google, the FANGS, as they are called, plus Microsoft; they are up 37% this year, but the
rest of the S&P 500 is still -7%. Mr. Kosmala discussed the fiscal stimulus bills and how they have
affected and will affect the GDP, and also how the markets often react in a presidential election year.
In reply to a question from Trustee Patel, Mr. Kosmala referred to page 11 of their report. Discussion
ensued.
Mr. Pearsall remarked that Amazon today is a bigger weight in the S&P than four other economic
sectors, including real estate, utilities, and energy. He then discussed page 7 of the report, and
remarked that the portfolio returned 12.5% during the second quarter, out-performing the benchmark
by over 1%, with the year-to-date total at -3.7%, under-performing the benchmark slightly. He added
that with the close of July 20th, the portfolio was up an additional 3.2%, out-performing the benchmark
again, so making up more ground; as of this date the portfolio is sitting about .5% under par, with the
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
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benchmark flat. Mr. Kosmala remarked that all things considered, as rough as the first quarter was,
that in the second quarter a lot of it was gained back, and now the portfolio is really close to break-
even for the year and close to benchmark. Mr. Pearsall explained that out-performance for the
quarter was mainly due to two things - one that the allocation was right where it needed to be, U.S.
Equities was pretty much the best game in town and the entire over-weight position to U.S. Equities
was in the Large Cap. However, he added that it is noticeable that the non-U.S. portion of the
portfolio returned 27% last quarter.
Oak Brook Pension Performance
On page 7 of the Taiber Kosmala Report, the portfolio activity was listed as follows:
Mr. Pearsall then discussed the managers’ performance on page 9 of their report, and remarked that
Oberweis was an outstanding outlier for this quarter. Mr. Kosmala stated that the international small
cap managers were up over 50% in the quarter. He said overall they are pleased with the
recovery, getting close to break-even for the year, playing catchup relative to the benchmark; he
added that they have no action to recommend at this time. Both he and Mr. Pearsall discussed
the Asset Allocation vs. Target table on page 7 of the year. Mr. Kosmala stated that they have no
concerns with the managers, no reason to make any changes.
Trustee Patel discussed concerns with REIT managers and 5G. Mr. Kosmala agreed to provide some
information to Trustee Patel when it becomes available.
Mr. Pearsall stated that Nuveen is positioned very defensively, slightly over-weight to cell towers, data
centers, and that the sub-sectors of the technology real estate are performing very, very well, so all-in-
all the portfolio is positioned defensively; he stated that he will get information to Trustee Patel
regarding the exposures to the portfolio.
b. Fifth Third Performance Report on Second Quarter 2020
Mr. Garber explained that the Fed is buying bonds outside of normal mandates on particular investment
grade corporates and the benefit is capital depreciation. He said it is not a great environment to be a
fixed income investor unless you already were. He referred to page 11 regarding how the portfolio looks
like now and discussed the table below. He remarked about considering selling a Bolero Bond, a
refiner, but that it is not hit as hard as in the way of exploration companies; not much else in the way
of selling, not much maturing until December. He stated that a lot of the cash in the fixed income
portfolio has been spent down to about $200,000, so unless cash needs exceed income, they
probably will not do much. Mr. Thompson remarked that they are continuing to watch the credit quality
concerns. In relation to this, Mr. Garber added that there are a couple BBB+ bonds to watch.
Discussion ensued regarding excess cash and income. Mr. Thompson stated that they are all
watching for the uncertainty in the market, because that is going to be a driver.
FIXED INCOME: INDIVIDUAL HOLDINGS
Category
% Total
Fixed
Income
Market Value
Estimated
Annual
Income
Current
Yield
Domestic Fixed Income
Government Bonds 42.55% $4,790,694.00 $203,023.53 4.24%
Domestic Fixed Income
Corporate Bonds 39.32% $4,426,929.85 $143,480.13 3.24%
Summary of Cash Flows
Second Quarter Year-To-Date
Beginning Market Value $34,872,265 $41,072,623
Net Cash Flow -$246,676 -$542,641
Net Investment Change $4,358,894 -$1,545,498
Ending Market Value on 3/31/18
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Minutes Page 4 of 6 July 21, 2020
Intl Developed Mkt Bonds 11.67% $1,313,706.50 $43,075.00 3.28%
Domestic Fixed Income
Savings Instruments 5.58% $628,206.25 $14,062.50 2.24%
Domestic Fixed Income
Mortgage Backed 0.00% $133.31 $9.96 7.47%
Total Indiv Fixed Income
Holdings
Total Pooled Fixed
Income Holdings
99.11%
0.89%
$11,159,669.91
$99,889.51
$403,651.12
$2,300.09
3.62%
2.30%
Total Fixed Income
Holdings
100% $11,259,559.42 $405,951.21 3.61%
Page 5 of the Fifth Third report:
FIXED INCOME MARKET OVERVIEW
Index 1-Month 3-Months YTD 1-Year 3-Years*5-Years*
BC U.S Intm Gov/Credit 0.62 2.81 5.28 7.12 4.42 3.46
BC Global Agg excl. USD 1.01 3.38 0.61 0.71 2.52 2.89
BC U.S. TIPS 1.12 4.24 6.01 8.28 5.04 3.74
BC U.S. Municipal Bonds 0.82 2.72 2.08 4.45 4.21 3.93
BC U.S. High Yield Bonds 0.98 10.18 -3.80 0.03 3.33 4.78
*Annualized Return
Page 8 of the Fifth Third report:
ALLOCATION SUMMARY: ASSET CATEGORY
%
Holdings Market Value Estimated
Annual Income
Current
Yield
Marketable Holdings
Traditional Asset Classes 100.00% $11,942,090.21 $406,428.97 3.40%
Cash and Equivalents 5.72% $ 682,530.79 $ 477.77 0.07%
Fixed Income 94.28% $11,259,559.42 $405,951.20 3.61%
Total Marketable Holdings 100.00% $11,942,090.21 $406,428.97 3.40%
Total Holdings $11,942,090.21 $406,428.97 3.40%
Page 9 of the Fifth Third report:
RECONCILLIATION SUMMARY
Total Holdings on 04/01/2020 $11,961,221.86
Beginning Marketable Holdings on 01/01/2020 $11,847,366.90
Beginning Accrued Income $ 113,854.96
Beginning Value $11,961,221.86
Contributions
Cash Contributions $562,366.83
Asset Receipts $ 0.00
Other Contributions $ 0.00
Total Contributions $562,366.83
Withdrawals
Cash Withdrawals ($803,314.91)
Asset Delivery $0.00
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Minutes Page 5 of 6 July 21, 2020
Fees ($5,220.86)
Total Withdrawals ($808,535.77)
Income Earned
Interest Collected $ 123,370.01
Dividends Collected $0.00
Other Income $0.00
Net Accrued Income ($ 20,521.38)
Total Income Earned $102,848.63
Net Change $ 217,522.24
Ending Marketable Holdings on 03/31/2020 $11,942,090.21
Ending Accrued Income $ 93,333.58
Ending Value $12,035,423.79
Total Holdings on 03/31/2020 $12,035,423.79
Total Earnings $320,370.87
Bob Thompson and Alex Garber exited the teleconference at approximately 7:44 p.m.
c.Approval of Investment Transactions for Second Quarter 2020
Motion by Secretary Caspers, seconded by Vice President Feldman, to approve the Investment
Transactions for Second Quarter 2020.
ROLL CALL:
Ayes: 5 – Vice President Feldman, Secretary Caspers, Trustee Patel, Trustee
Foltyniewicz, President Torlo
Nays: 0 – None
Absent: 0 – None
Motion carried.
d.Discussion/Action regarding memorandum from Illinois Police Officers’ Pension Investment Fund
Brief discussion regarding this memorandum and direction to take no action at this time was given.
e. Approval of Renewal of Fiduciary Insurance
Motion by Secretary Caspers, seconded by Trustee Foltyniewicz, to approve the renewal of
Fiduciary Insurance Policy. VOICE VOTE: Motion carried.
Pension Clerk Kane informed the Board and others present that she anticipated retiring in a few
months. Discussion ensued regarding retaining Pension Clerk Kane as the Clerk to the Board,
having Lauterbach & Amen serve as Clerk, or having an employee serve as Clerk, and the logistics of
having an off-site Clerk. Discussion to be continued at the next meeting.
9.PENDING BUSINESS
a.Discussion regarding disability matter
Phil Kosmala and Zach Pearsall exited the meeting at approximately 8:03 p.m.
President Torlo summarized the pending disability matter. Discussion ensued.
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Minutes Page 6 of 6 July 21, 2020
10.INFORMATION & UPDATES
a.Scheduling of fourth quarterly meeting 2020
Consensus to meet for the fourth quarterly meeting on October 22, 2020 at 6:15 p.m.
11.ADJOURNMENT
Motion by Trustee Foltyniewicz, seconded by Secretary Caspers, to adjourn the Board of
Trustees of the Police Pension Fund meeting at 8:10 p.m. VOICE VOTE: Motion carried.
ATTEST:
Edward J. Caspers, Secretary
Board of Trustees of the Police Pension Fund
Edward J. Caspers /s/