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HomeMy WebLinkAboutMinutes - 04/25/2019 - Police Pension Fund BoardBOARD OF TRUSTEES OF THE POLICE PENSION FUND Minutes Page 1 of 5 April 25, 2019 VILLAGE OF OAK BROOK BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes April 25, 2019 UNOFFICIAL UNTIL APPROVED AS WRITTEN √ OR AS AMENDED BY BOARD OF TRUSTEES OF THE POLICE PENSION FUND ON July 31, 2019 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 7:02 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 ABSENT: Trustee Ben Kadolph (attended via teleconference later in the meeting) IN ATTENDANCE: Phil Kosmala and Zach Pearsall of Taiber Kosmala, Spencer Klein, Frank Fanelli and Michael Stuart of Fifth Third Bank/MB Financial, Finance Director/Treasurer Jason Paprocki, Pension Clerk Rose Kane 3. PUBLIC COMMENTS Village Trustee John Baar remarked that he was attending the meeting to learn about the current pension status. 4. APPROVAL OF MINUTES a. Approval of Regular Meeting Minutes of January 22, 2019 Motion by Secretary Caspers, seconded by Trustee Patel, to approve the Meeting Minutes of the January 22, 2019 Regular Board Meeting as presented. 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 expenditures for month ended July 31, 2019 in the amount of $230,659.51 b. Approval of expenditures for month ended August 31, 2019 in the amount of $236,672.04 c. Approval of Taiber Kosmala first, second and third quarter invoices in the total amount of $21,000.00 d. Approval of Department of Insurance Compliance Fee invoice in the amount of $6,709.21 payable to the Illinois State Treasurer e. Approval of Mesirow Insurance Services, Inc. renewal business premium in the amount of $4,126.00 f. Approval of Lauterbach & Amen, LLP invoices for professional services regarding FYE17 1099s, January, February, March, May and June 2019 Accounting Service fees in the total amount of $6,660.00 g. Approval of reimbursement to Village for share of FYE17 Audit in the total amount of $2,130.00 h. Approval of Pension Clerk Kane timesheet in the total amount of $343.75 for services rendered January through May 2019 i. Approval of Illinois Professional Firefighter Association seminar registration fee in the amount of $180.00 BOARD OF TRUSTEES OF THE POLICE PENSION FUND Minutes Page 2 of 5 April 25, 2019 j. Approval of Illinois Public Pension Fund Association conference registration fees in the amount of $750.00 k. Approval of INSPE Associates, Ltd. Invoice in the amount of $2,550.00 Motion by Secretary Caspers, seconded by Vice President Feldman, to approve the Consent Agenda. ROLL CALL: Ayes: 4 – Vice President Feldman, Secretary Caspers, Trustee Patel, President Torlo Nays: 0 – None Absent: 1 – Trustee Kadolph Motion carried. 6. ITEMS REMOVED FROM CONSENT AGENDA – None presented. 7. NEW BUSINESS a. Taiber Kosmala and Associates, LLC Report on First Quarter, 2019 Oak Brook Pension Performance On page 7 of the Taiber Kosmala Report the portfolio activity was listed as follows: Mr. Kosmala stated that over the last six months, the S&P 500 swung from its worst quarter in over seven years to its best quarter in almost ten years. He added that, in fact, December was the worst final month of the year since the Great Depression and by comparison, January and February performance was the strongest start to a year seen in 32 years. He stated that volatility, as measured by the CBOE Vo latility Index, spiked on Christmas Eve, hitting 36.07, well above its 5-year average of 14.95; the S&P was up 13.7% in the first quarter with Technology (+19.9%), Industrials (+17.2%), and Energy (+16.4%) jumping to the front of the pack after dropping the most during the fourth quarter; healthcare (+6.6%) was the laggard during the first quarter after being the best performing sector during the second half of 2018. Mr. Kosmala discussed that, like the equity markets, the risk-off trade in fixed income markets during the fourth quarter was largely erased during the first few months of 2019. He said that the Fed’s dramatic shift to a dovish tone mitigated fears that a recession is imminent, and investors piled into bonds during the first quarter. He added that the yield curve has been flattening for some time and briefly inverted on March 22nd through March 29th, its first inversion since 2007 . He remarked that every recession since 1962 has been preceded by a yield curve inversion, but not every inversion has been followed by a recession; sometimes, an inversion is a signal that markets are anticipating a cut in interest rates. Mr. Kosmala discussed that internationally, more than half the debt of developed economies yields below 1%, as measured by the Bloomberg Barclays Global Developed Sovereign Index , and that in many cases, investors have to go out five years or more on the yield curve to achieve a positive yield. He said that it appears that global bond investors are betting on further central bank stimulus in the face of softening economic data. Mr. Kosmala stated that they are maintaining a cautiously constructive view looking forward and are recommending that clients remain modestly overweighton risk assets relative to their long-term strategic asset allocation targets. He said that despite the spike in volatility at the end of last year, they are reassured Summary of Cash Flows Beginning Market Value $35,059,673 Net Cash Flow -$ 336,107 Net Investment Change $ 3,085,832 Ending Market Value on 3/31/18 $37,809,398 BOARD OF TRUSTEES OF THE POLICE PENSION FUND Minutes Page 3 of 5 April 25, 2019 by strong corporate fundamentals and solid economic data, particularly in the U.S. He added that earlier concerns that a hawkish Fed may raise rates too aggressively and trigger a recession have dissipated. Mr. Kosmala stated that despite a weak fourth quarter, the Fund rebounded significantly with a return of 8.8% through the first quarter, outperforming the policy benchmark return of 8.4%. He said that factors that acted as headwinds during the December sell off reversed course early this year; US equity outperformed non-US equity, growth stocks outperformed value, and small cap outperformed large cap. He discussed that the primary drivers of the relative outperformance may be attributed to an overweight exposure in large cap and small cap stocks, and subsequent underweight to non-US equity and fixed income. He said that REITs were the best performing asset within the portfolio during the trailing three months, however relatively underweight when compared to the benchmark detracted from the outperformance. Mr. Kosmala stated that with respect to manager performance, nearly every active strategy with the exception of small cap either outperformed their benchmarks or performed in-line with the market. He said that Nationwide Bailard, a strategy placed on the watch list at the prior investment committee, slightly outperformed for the quarter however still lags significantly for the trailing year. He stated that Taiber Kosmala has recommended the termination of Nationwide Bailard International Equity, the resulting proceeds shall be re-invested with WCM Focused Growth International and Pear Tree Polaris Foreign Value. Discussion ensued regarding when to institute the recommended changes in the allocation. Mr. Kosmala stated that the Nationwide Bailard International Equity makes up about 7%, $3,000,000. Mr. Klein stated that if the Board votes for the recommendation, a letter of direction will be n ecessary. Motion by Secretary Caspers, seconded by Vice President Feldman, to approve the recommendations as outlined by Taiber Kosmala in regards to moving funds into Pear Tree and WCM. ROLL CALL: Ayes: 4 – Vice President Feldman, Secretary Caspers, Trustee Patel, President Torlo Nays: 0 – None Absent: 1 – Trustee Kadolph Motion carried. Vice President Feldman requested a report for the next meeting that reflects how the Fund did with this change over the next three months. Mr. Kosmala agreed to provide same. a. MB Financial Investment Management Performance Report on First Quarter, 2019 Mr. Klein discussed that the branding over to Fifth Third will most likely occur the latter part of May. Mr. Klein referred to page 15 of the MB report and discussed the portfolio composition. MARKET VALUE % OF TOTAL TARGET TOTAL FUND $12,516,985 100.00 100.00 FIXED INCOME $11,491,864 91.81 99.00 CASH & EQUIV. $ 1,025,121 8.19 1.00 He stated that the yield curve is flat especially in the treasury and agency space. He discussed the Fund returns on page 16 of the report and remarked about the Outlook on page 11 of the report, the economic headwinds or tailwinds. Mr. Klein remarked that Fifth Third is a lot more tactical than MB Financial and they give a lot more autonomy to the portfolio managers. BOARD OF TRUSTEES OF THE POLICE PENSION FUND Minutes Page 4 of 5 April 25, 2019 Mr. Fanelli stated that he is leaving the organization and Mr. Stuart will be the relationship manager for the Fund. Mr. Stuart confirmed that at this time there would be no change in the fees. Trustee Patel requested that if there is a change, that the Board be informed asap. Pension Clerk Kane agreed to forward a copy of the current contract with MB Financial to the Board. Mr. Klein referred to page 16 in regard to the management fees for the bond portfolio. b. Approval of Investment Transactions for First Quarter, 2019 Motion by Secretary Caspers, seconded by Vice President Feldman, to approve the Investment Transactions for First Quarter, 2019. ROLL CALL: Ayes: 4 – Vice President Feldman, Secretary Caspers, Trustee Patel, President Torlo Nays: 0 – None Absent: 1 – Trustee Kadolph Motion carried. c. Approval of refund of contributions to Genita Benson Motion by Secretary Caspers, seconded by Trustee Patel, to approve the refund of contributions to Genita Benson. ROLL CALL: Ayes: 4 – Vice President Feldman, Secretary Caspers, Trustee Patel, President Torlo Nays: 0 – None Absent: 1 – Trustee Kadolph Motion carried. d. Ratification of Application for Members Pension Benefits Retirement Pension of Norm Nemec Motion by Secretary Caspers, seconded by Trustee Patel, to ratify the Application for Members Pension Benefits Retirement Pension of Norm Nemec. ROLL CALL: Ayes: 4 – Vice President Feldman, Secretary Caspers, Trustee Patel, President Torlo Nays: 0 – None Absent: 1 – Trustee Kadolph Motion carried. Discussion ensued with Village Trustee Baar about the annual rate of returns from the Fund and Mr. Kosmala referred to page 7 of the Taiber Kosmala report. Village Trustee Baar remarked about the Village’s desire to work toward the 100% contribution to the pension funds. Representatives from MB Financial and Taiber Kosmala exited the meeting at approximately 8:21 p.m. 9. PENDING BUSINESS a. Discussion/action regarding disability matter Discussion ensued regarding getting this matter moving. Pension Clerk Kane requested any unavailable dates in May and June from the Board in the event that the attorneys can move forward on a hearing date. Trustee Kadolph joined the meeting via teleconference at approximately 8:28 p.m. BOARD OF TRUSTEES OF THE POLICE PENSION FUND Minutes Page 5 of 5 April 25, 2019 It was suggested that the Board’s attorney should be informed that because the Board is in possession of a valid application, independent medical examinations have been conducted, and the Board is ready to hear this matter, a hearing should be scheduled. It was expressed that the Board has not dragged this out and have consistently provided dates when the Board was able to conduct a hearing. Consensus to have Trustee Kadolph and/or President Torlo contact Attorney Reimer and express the Board’s concerns and desire to move forward with a date. It was also suggested that the Bylaws be modified to reflect limitations in disability hearing time periods if permitted by statute. Trustee Kadolph terminated the teleconference connection with the Board at approximately 8:44 p.m. 10. INFORMATION & UPDATES a. Scheduling of disability hearing and third quarterly meeting Consensus to meet for the third quarterly meeting on July 31, 2019 at 7:00 p.m. 11. ADJOURNMENT Motion by Trustee Patel, seconded by Secretary Caspers, to adjourn the Board of Trustees of the Police Pension Fund meeting at 8:49 p.m. VOICE VOTE: Motion carried. ATTEST: Edward J. Caspers /s/ Edward J. Caspers, Secretary Board of Trustees of the Police Pension Fund