MINUTES
REGULAR JOINT MEETING OF THE
BOARD OF TRUSTEES OF THE CITY EMPLOYEES RETIREMENT FUND & THE BOARD OF TRUSTEES OF THE POLICE & FIREMEN PENSION FUND
AUGUST 15, 2011, Adjourned from August 1, 2011
A REGULAR JOINT MEETING of the Board of Trustees of the Police & Firemen Pension Fund and the Board of Trustees of the City Employees Retirement Fund was held on Monday, August 15, 2011, in the City Hall Auditorium.
Those in attendance included Mayor Ryan J. Bingham, Treasurer Arthur Mattiello, members of the Board of Trustees of the City Employees Retirement Fund Gregg Cogswell, Paul Samele, Elinor Carbone, Gerald Zordan, Marie Soliani, Drake Waldron, and Raymond Drew, members of the Board of Trustees of the Police & Firemen Pension Fund James Potter, Police Lt. Michael Emanuel, and Fire Fighter Edward Delisle.
Anthony Tranghese of Fiduciary Investment Advisors, LLC was also present. Fire Lt. Kevin Hayes arrived at 6:14 p.m.
Members David Prahm, Mark Kugler, Nancy Michna, Delisse Locher, Gail Sartori, David Kissko, Angelo Alduini, Christopher Cook, Angelo LaMonica, Douglas Benedetto, Richard Zaharek, Darlene Battle and Police Officer Robert Shopey were absent.
Mayor Bingham called the meeting to order at 6:03 p.m.
Presentation: Second Quarter Results
Mr. Tranghese said that in times like these where values go down, FIA is looking at portfolios like Torrington's for opportunities to rebalance and adjust underperforming assets. He said they do not think we are meaningfully away from target allocations, but will monitor them closely. Equities are currently down in the teens and bonds are in positive territory in the low single digits, he said. At the end of the second quarter the City Employee plan was valued at about 28.7 million and the Police and Firemen's plan was about 40.7 million.
He said it is hard to ignore recent performance in equity markets which was driven by concerns in Europe, coupled with S & P's downgrading of the U.S. by one notch which sparked a one-day sell-off on Wall St. The magnitude of the moves is impressive, he said. After today's up market, we are net zero, he said, and w
ith all this volatility, we're basically in the same place as if we didn't do anything.
Mr. Mattiello noted that the executive summary showed a modest gain for the second quarter.
Mr. Tranghese said that corporate balance sheets are as strong as they've ever been, there's more cash on balance sheets today suggesting that they can weather storms better now. Individual balance sheets are also stronger, with a savings rate of 5%. He said those two things are positive signs that the economy is taking a step in the right direction. Another positive sign is emerging countries like China remaining very strong throughout the last three or four months, and driving global growth. The contagion effect from Europe, he said, is the thing we're most worried about. It could cause the U.S. to go into a recession due to a lack of understanding of what's happening in Europe resulting in a downturn that perpetuates itself.
Mr. Mattiello asked why the only area that stayed the same is the Fixed, while everything else dropped off.
Mr. Tranghese explained that S & P downgraded the U.S. rating on a Friday night, and by Monday the best performing assets were the U.S. Treasuries, which should have been the opposite if people respected that analysis. That speaks to the fact that the S & P downgrade wasn't as worrisome to the broader markets. He said it speaks of diversification in Torrington's portfolio, with a third in fixed income instruments to serve as a buoy in times like this.
He gave a snapshot of the June allocations for the two plans and pointed out the two additions made after the last meeting - the Eaton Vance Floating Rate fund and Templeton Global Bond fund sourced from the Vanguard Total Bond Market Index investment. Mr. Tranghese said the fixed income portion of the portfolio is more diversified now. The second allocation that was made was under Inflation protection -- TIPS, Resources and Commodities were all added after the last meeting, he said. The TIPS fund was funded from the Total Bond Market index and the other two were funded from US Equities, so the total risk profile of the portfolios remains intact. Mr. Tranghese said there is now a greater level of diversification across more asset classes.
The portfolio performance through June was reviewed. In that quarter, the two portfolios were up a little over a percent, and in the first 6 months of the calendar year, the portfolio was up 4.2%. In the following quarter the portfolio is down about 6 ½ %, and for the year, it's slightly in negative territory – 1 or 2 %.
Over the last 12 months, ending in June, the portfolio has been very robust since its inception.
In his snapshot of manager statuses, Mr. Tranghese reported on two items: the Eaton Vance Largecap Value portfolio which continues to be on 'Watch' status due to relative underperformance, and the Artisan International moved to 'Maintain' status based on their portfolio unfolding in a way that it was hoped it would.
He noted that if you stay the course, with sound organizations, you'll be rewarded over time. The allocations and diversifications put into place will make sense from a total plan perspective and will benefit the plans over the long run, he said.
Lt. Hayes asked how much has the market dropped in the past quarter and how much has our plan dropped.
Mr. Tranghese said the plans are down about 6 ½ % through last Friday, equities are down to mid-teens, bonds are up to low single digits, but he thinks we're probably ahead of the benchmark in many other similar portfolios.
Recommendations:
Mr. Tranghese made no recommendations at this time.
ADJOURNMENT
On a motion by Councilor Carbone, seconded by Councilor Zordan, the Boards voted unanimously to adjourn at 6:20 p.m.
ATTEST: Joseph L. Quartiero, CMC
City Clerk
Respectfully Submitted,
Carol L. Anderson, CCTC
Asst. City Clerk
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