Fort Walton Beach Council agenda — 05-26-09 regular — reading text

CITY COUNCIL MEETING May 26, 2009 Recognition Student ACE Levi Wiegand, Choctaw Agenda Item Number: 1. 3  tT O O CII O C4 0 Y C O t N b 3 m . a ` O a d o0 N • a00 few 0 0 000 O Xx U Cp p too tip t m 4t G + N i s o 0 0. 0 a 03 000 Soo 0 a s a o d• 3 w V v m 160 d 0000 * X: V Vs '` L3 ad t d V j a s low a a 3 s O aC loop um low a a ' Goo  CITY COUNCIL MEETING Mav 26, 2009 Approval of Agenda No Backup) Agenda Item Number: 2  CITY COUNCIL MEETING May 26, 2009 Special Presentation Award of investment management services for the General Employees' Pension Plan Synopsis: Action recommended by Investment Manager and approved by Council on 1212108 3. 1. 1 Agenda Item Number:  CITY OF FORT WALTON BEACH MEMORANDUM TO: Robert Mearns, City Manager FROM: Brandy Wunker, Finance Director SUBJECT: Investment Manager DATE: April 17, 2009 Background Alliance Bernstein has acted in the role of investment manager for the Value Portfolio of the General Employees' Pension Plan since March 2001. Staff has expressed concerns about the performance of Alliance Bernstein and their ability to adequately manage our General Employees Pension portfolio. As of March 31, 2009, the market value of the portfolio managed by Alliance Bernstein is $ 9. 7 million. The rate of return for the quarter is < 6. 97 %> and the inception to date rate of return is 2. 45 %. Discussion At the December 2, 2008 Special Meeting, City Council authorized staff to waive the internal bidding process to coordinate with The Bogdahn Group for selection of an investment management service for the General Employees' Pension Plan to replace Alliance Bernstein. In addition, City Council endorsed having the General Employees' Pension Advisory Committee review the short list of the candidates and bring the final recommendation to City Council for approval. On February 4, 2009, the General Employees' Pension Advisory Committee held a meeting related to the search for the Investment Manager. Joe Bogdahn, from the Bogdahn Group, the Financial Advisor for the Plan, was present at the meeting. Mr. Bogdahn provided the Committee with four firms that he identified as Opportunistic or All Cap Value firms: Heartland • Anchor Capital Moody Aldrich • Westwood Management The Committee considered the performance of the four firms, the volatility of each of the firms, and how each of the firms' investment strategies would blend with Aletheia, the Plan' s Large Cap Growth manager. Upon review of these characteristics, the Committee moved to interview Anchor Capital and Westwood Management at the February 24, 2009 Advisory Committee meeting. At the February 24, 2009 General Employees' Pension Advisory Committee meeting, Mr. Bogdahn advised the Committee that Westwood Management withdrew their proposal. Anchor Capital presented the information about their firm to the Committee. It was discussed that Anchor Capital had better performance, less volatility, and blended better with Aletheia than any of the other four firms, including Westwood Management. The Committee voted to recommend to City Council, as advised by Mr. Bogdahn, to retain Anchor Capital to replace Alliance Bernstein as the Value Manager for the General Employees' Pension Plan. Management fees are based upon the Plan' s market value and for Anchor Capital the fee is 50 basis points, or 0. 50°/x. Based upon the Plan' s current market value with Alliance Bernstein of $ 9. 7 million, and knowing that Anchor Capital would manage about that amount, the estimated fees would be $ 48, 500 annually. The fees would be deducted quarterly from the Plan' s assets. The Bogdahn Group Investment Manager Evaluation and the proposal from Anchor Capital are attached. Joe Bogdahn from the Bogdahn Group will be present at the Council Meeting to briefly recap the selection process and answer any questions Council may have regarding this matter. Conclusion Staff respectfully requests that the City Council award the Investment Management Services for the General Employees' Pension Plan to Anchor Capital of Boston, Massachusets, as approved by the General Financial Advisor of the Plan. Employees' Pension Advisory Committee ( 4 -0) and recommended by the Submitted by: 7f Brandy Wunker, Finance Director 2 Date Reviewed for Agenda: O City Manager Date Attachments: 1. Investment Manager Evaluation, The Bogdahn Group 2. Investment Presentation, Anchor Capital 3. City Council Minutes 12. 2. 08 4. General Pension Plan Advisory Committee Minutes 2. 4. 09 5. General Pension Plan Advisory Committee Minutes 2. 24. 09 Page 2 Docid: UAFinance\Agenda \Pension Agenda\2009\Alliance Switch 5. 26. 09.doc Last Revised: 5/ 20/ 09 4: 28 PM  Fort Walton Beach General Employees' Pension Fund Investment Manap-er Evaluation Value Equity Updated through 3/ 31/ 09 Aw Tti"E, HN GROUP I z A H N (, RO L: P, C (.) M Fort Walton Beach Genera[ Employees' Pension Fund Zephyr StyleADVISOR: The Bogdahn Group Trailing Performance: Return through March 2009 I V7o rr 1 quarter 1 year 2 years 3 years 4 years 5 years 6 years Anchor Capital: All Cap Value Westwood: AIICap Value AllianceBernstein: Bernstein DV (S &P) Russell 3000 Value Trailing Performance: Return through March 2009