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Police and Fire Pension Board Meeting
Pension Board 10/22/10

 

Minutes
Maitland Police & Fire Pension Trust Fund
Special Sub-Committee Meeting – Global Tactical Asset Allocation (GTAA)
October 22nd, 2010 @ 12:00 noon (City Council Chambers)
 
Attendees: David O’Connor, Phillip Senderowitz, Ken Neuhard, Grant Kalson (by phone)
Meeting called to order at 12:00 noon.
Grant Kalson was contacted by phone and started the conversation by first reviewing the present history leading to Global Tactical Asset Allocation (GTAA) discussions. He pointed out that the Board originally discussed pursuing emerging market investments as an additional asset class for the fund with that leading to GTAA discussions. He noted that David was the first to bring up the idea of GTAA as a possible alternative.
Grant pointed out that GTAAs typically help in “down” markets and often keep pace in “up” markets.
Grant stated that there are lots of limitations to GTAAs. He didn’t see them as a full substitute to our present investing. He said he thought they do have a place in our portfolio in a limited capacity. He compared them to our present involvement with REITs as a relative commitment equivalency. He suggested that we consider an initial one (1) million dollar allocation. He could see the portfolio commitment as high as 25% max over time if the Board desired.
Discussion turned to GTAA firms that Grant had reviewed. He pointed out his summary/recommendation email sent to the sub-committee on 10-21-10 (see attached). David asked Grant if the summary document was his own creation/thoughts or that of his employer Dehab. Grant stated that it was 90% his thoughts with the remainder coming from his peers at Dehab. David stated that he welcomed any and all negative input to GTAAs so that they can be fully evaluated prior to recommending them to the Board.
Discussion turned to PIMCO and its performance over time. It was pointed out that PIMCO has an All Asset /All Authority Fund that compares to a 60/40 investment and also a “higher octane” tool that has slightly more risk but better returns. It was discussed that Rob Arnot is the key decision maker for PIMCO investment decisions but is not a direct employee of PIMCO. David stated that “basically with PIMCO you are hiring Arnot.
Grant was asked to point out the other firms that stood out from a performance perspective. He identified Leuthold Weeden, Eaton Vance and First Eagle (see attached Comparative Performance Information). Grant pointed out a “technical” complication with First Eagle in that their current investment fund is now closed but they are opening up a new one. David stated that the new one would have no performance record to consider and that has a potential down side.
Grant also said that he liked New Path. They are a smaller firm with fewer assets. David pointed out that while that was true they did well in equities during up and down markets.
Grant talked about funding possibilities relative to present investments. He suggested that if the Board decided to proceed with a GTAA that they start with a minimum of one (1) million dollars and that he recommends taking 100k from cash (if available), 200k from Smith, 200k from Brandywine and 500k from Sawgrass. He stated that if Cash is not available that 250k come from Smith, 250k from Brandywine and 500k from Sawgrass.
At this point Grant recommended that the full Board interviews a minimum of two (2) firms
Phillip stated that if GTAA was decided upon as an investment tool that he recommended  a $1m investment.
It was agreed that the top three (3) GTAA firms that the Board should hear from in December are:
1.       PIMCO
2.       First Eagle
3.       New Path
Grant recommended that with PIMCO we go with the “high octane” option offered. Discussion ensued relative to whether or not Grant could get all these firms to present in person. It was agreed that Grant would try to get personal appearances but if not that conference calls from the firms would be acceptable.
Ken asked what the best/worst case scenarios are relative to the Board deciding to take on a GTAA firm. Grant stated that the best was that GTAAs have a history of doing better in down markets and holding their own in level or up markets and with the economy being down that the best scenario is that returns will continue to outperfom “traditional” investments. He said if investment returns were predicted to excel in an upward direction that he wouldn’t be recommending a GTAA. He indicated that timing was right to invest conservatively in a GTAA at this time.
Grant asked if he could submit an invoice for the analysis he had done so far on the GTAAs.  Ken stated that Board decision was necessary for authorization. It was recommended that he address that with the full Board at the next meeting in December. Grant stated that he would be good either way with the Board’s decision.
The meeting ended at approximately 1:00 P.M.  
 
 



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