City of Peoria Firemen's Pension Fund Board of Trustees met November 20.

By Lhalie Castillo

Nov 22, 2017

Here is the minutes provided by the Board:

A Rescheduled Regular Meeting of the Board of Trustees of the Firemen's Pension Fund of Peoria, Illinois, was held this date at City Hall, 419 Fulton Street, Room 404, Peoria, Illinois, at 9:30 am., with proper notice having been given, for the purpose of conducting regular Firemen's Pension Fund business.

Roll Call:

Roll Call showed the following Board Members present: Ball, Phillips, Nichting, Troglio, President Nieukirk- 5. Absent: None.

Others present: Mr. Tom McShane, First Vice President - Investments, Senior Investment Management Consultant with Graystone Consulting, a business of Morgan Stanley/Smith Barney in Chicago; Attorney Jim Dobrovolny of Reimer Dobrovolny & Karlson; Chief Deputy City Clerk Stefanie Tarr; Attorney John Dundas of Hasselberg Grebe Snodgrass Urban & Wentworth on behalf of the City of Peoria.

Invocation:

President Nieukirk requested a moment of silent prayer or silent reflection in remembrance of those Firefighters who lost their lives while serving their community.

Minutes:

Recommendation to Approve the Minutes of the Regular Board Meeting held on October 23, 2017, and the Minutes of the Special Board Meeting held on October 23, 2017, as printed.

Trustee Phillips moved to approve the Minutes of the Regular Board Meeting held on October 23, 2017, and the Minutes of the Special Board Meeting held on October 23, 2017, as printed; seconded by Trustee Troglio.

Approved by roll call vote.

Yeas: Ball, Phillips, Nichting, Troglio, President Nieukirk - 5;

Nays: None.

Regular Business:

Item No. 1 Monthly portfolio performance review by Tom McShane Graystone consulting (A business of Morgan/Stanley Smith-Barney), and Discussion Regarding Recommendations, Possible Action Regarding the Firemen's Pension Fund Portfolio Performance, Discussion and Review of the Asset Allocations, Review of the Open Orders with the S&P 500 Exchange Traded Fund (ETF),with a Request to Receive and File Reports or Take Other Action.

Mr. McShane distributed a copy of the Performance Update for the period ending October 31, 2017, to all members of the Board. The Performance Update showed the portfolio valued at $138,418,924. Since its inception, the total portfolio performance returned 6.24% versus the custom benchmark of 6.13%.

Mr. McShane said the Board had terminated SKBA at the October Board meeting and moved those funds to Segall Bryant, a fixed income manager. He distributed a handout that reflected the current fee schedule for Segall Bryant, noting they currently managed $42 million for the Fund. He reported the Fund paid a total of $65,000.00, or approximately 16 basis points in manager fees. He reviewed the fee schedule should the Firemen's Pension and the Police Pension Funds combine investments with Segall, reporting the total fee for the combined portfolio would be 13.6 basis points, or a total of $91,250.00 combined.

Mr. McShane reviewed the Capital Market Indices returns through October reporting that the year-to-date return for the DOW Jones Industrial Average was up at 20.6%, the NASDAQ Composite was up 26.1%, the DOW Jones Equity All REIT was up 3.1%, MSCI EAFE was up 22.3%, and the MSCI emerging market was up 32.6%.

Mr. McShane reviewed "Our Market View No Longer out of Consensus - Is It Time for a Pull Back?" He reviewed the 12-month S&P 500 target noting that the Base Case earnings per share (EPS) was at $142.00. He said the portfolio was at a reasonable valuation. He reviewed the S&P 500 current and historical valuation reporting that the trailing PIE ratio as of November 10,2017, was at 21.8% with a 2-year average of 19.5%. He commented that the portfolio was fairly valued. He reviewed historical corrections noting that there was only a 3.0% decline in 2017, which happened one other time in 1995.

Mr. McShane reviewed the current allocation noting an over-allocation in cash, which was done by design, and an under-allocation in fixed income. He reviewed the International investments noting an asset allocation of 26.69%. He said there were no recommendations to change the current allocations.

Mr. McShane reported that the Board terminated Harbor International at the last meeting and split the proceeds between Vanguard and Thornburg, noting that Vanguard and Thornburg managed approximately $18 million each. He said the Board terminated SKBA, which would be reflected in the next report, and those assets would be reallocated into Segal. He reported the Board previously terminated McDonnell in May 2017.

Mr. McShane reviewed the portfolio performance as follows:

Beginning Market Value $76,020 million

Net contributions-$27,245 million

Fee/Expenses-$2,480 million

Income $39,138 million

Gain/Loss $52,986 million

Ending Market Value $138,419 million

He reviewed the risk/return analysis since January 2003, noting the portfolio received a greater return with slightly less risk, which provided a positive alpha and positive sharpe ratio.

Mr. McShane reviewed the Fund's managers noting that Great Lakes provided excess return and Kayne Anderson outperformed the benchmark. He said the Board had terminated Harbor for lack of performance and reinvested those funds in the international markets. He reported that Segal's one-year return was 8 basis points greater than the benchmark and the Board had terminated SKBA. He said the cash sweep account was returning 1.5% on a one-year return, which was better than the fixed income one-year returns.

Trustee Nichting moved to receive and file the Performance Update Report for the period ending October 31,2017; seconded by Trustee Phillips.

Approved by viva voce vote.

Item No.2 Great Lakes Advisors, LLC Third Quarter Investment Review with a Request to Receive and File or Take other Action.

Trustee Ball moved to receive and file the Great Lakes Advisors, LLC Third Quarter Investment Review; seconded by Trustee Troglio.

Approved by viva voce vote.

Item No.3 Report from Fire Marshal Charles Lauss of Pension Fund Contributions, which were made by payroll deductions during the MONTHof OCTOBER 2017, from the active members of the Peoria Fire Department and which checks were turned in to the City Treasurer's Office by Director of Finance/Comptroller, with Recommendation to Concur and Receive and File.

Payroll Period September 21,2017 - October 5,2017 October 6, 2017 - October 20, 2017

When Deducted October 16, 2017 October 29, 2017

Amount $ 68,914.82 $ 68,774.54

$137,686.36

Trustee Ball moved to concur and place on file the Fire Marshal's Report for October 2017; seconded by Trustee Phillips.

Approved by viva voce vote.

Item No.4 Request to Approve the following Bills:

Pensions for November 2017 (Dated November 30, 2017) …….$1,113,524.28

Advantage Reporting Service - Allen Disability Transcript 10/23/17. 1,707.75

Foster & Foster - Community Conversation on Pensions. 300.00

City of Peoria - 3rd Quarter 2017 Postage. 24.24

Ralph Phillips - Voided Check for the IPPFA 2018 Prepay Lodging……. (170.43)

Subtotal. $1,115,385.84

*Great Lakes Advisors - 7/1/17 to 9/30/17 Management fee ……20,400.12

*Segall Bryant & Hamill - 7/1/17 to 9/30/17 Management fee ……16,054.59

*Kayne Anderson Rudnick - 10/1/17 to 12/31/17 Management fee ……15,289.50

Grand Total For November $1,167,130.05

*No check should be processed for this amount. This amount is to be automatically deducted from the account.

Trustee Phillips moved to approve the bills, in the grand total amount of $1,167.130.05; seconded by Trustee Troglio.

Approved by roll call vote.