Fort Walton Beach Council agenda — 04-27-2010 Regular — reading text

p U o. a v ODOM v y• N  CITY COUNCIL MEETING April 27, 2010 Approval of Agenda No Backup) Agenda Item Number: 6  CITY COUNCIL MEETING April 27, 2010 Presentations Quarterly Report on General Employees' Pension Plan Synopsis: Joe Bogdahn, Plan Advisor, will deliver the Report Agenda Item Number: 7. 1  City of Fort Walton Beach MEMORANDUM DATE: April 16, 2010 TO: Robert Mearns, City Manager FROM: Brandy Wunker, Finance Director SUBJECT: General Employees Pension Plan —Quarterly Report 1. Background 1. 1 The City currently engages The Bogdahn Group as the Financial Advisor for the General Employees Pension Plan to review the investment performance of the Investment Managers. 2. Discussion 2. 1 Joe Bogdahn, with The Bogdahn Group, will be available at the April 27, 2010 City Council meeting to discuss the quarter' s performance and make a brief presentation to Council. 3. Financial 3. 1 There is no financial impact associated with this agenda item. 4. Recommendation 4. 1 There is no action required by the City Council. 5. Signature Block 5. 1 Submitted by: Brandy Wunker, Finance Director 5. 2 Reviewed for Agenda: o 4eT. 4 YAearns, City Manager zd ZG /d  DH DAVIS HAMILTON JACKSON ASSOCIATES,L.P 5 HOUSTON CENTER April 15, 2010 1401 WKINNEY, SUITE 1600 HOUSTON, TX 77010 -4035 TEL: ( 713) 853 -2322 FAX: ( 713) 853 -2308 WWW. DHJA. COM Ms. Brandy Wunker City of Fort Walton Beach 107 Miracle Strip Parkway Fort Walton Beach, FL 32548 Dear. Ms. Wunker: We have enclosed performance for your account for the period ending March 31, 2010. Relevant indices have been included for comparison purposes. The accommodative policy of the Federal Reserve is reaping positive results as we continue to see economic growth with minimal inflation. In March, the Institute for Supply Management' s Manufacturing Index, a bellwether measurement of economic activity, posted an expansionary reading of 59. 6. This is the highest reading since 2004 and well above the cyclical low of 32. 5 in December 2008. Additionally, inflation remains subdued as core CPI was only 1. 3% in March on a year- over -year basis. Given the relatively tame inflation numbers, we expect Fed policy to remain accommodative for some time. In the Treasury market, we saw lower front end rates and a steeper curve. The yield on the 2 -year Treasury declined 12 basis points to 1. 02% and the yield on the 30 -year Treasury rose by 8 basis points to 4.71 %. Thus, the 2 -30 yield spread steepened to 369 basis points. The bond market moved higher in the first quarter as the Barclays Capital Aggregate Index returned 1. 78% and the Barclays Capital Government/ Credit Index returned 1. 55 %. Spread product remained strong as all four sectors returned positive excess returns for the quarter. Asset -backed securities led the way with 133 basis points followed by corporates with 114 basis points of excess return. Mortgage- backed securities and agencies posted 69 basis points and 32 basis points of excess return, respectively. As corporate bond spreads have tightened this year, we have selectively reduced our exposure to the sector. In addition, we believe the yield curve will flatten as rates on shorter maturities rise. In anticipation of a flatter curve, we have begun the process of "barbelling" our portfolios. Please do not hesitate to contact us if you have any questions or comments. Sincerely, Janna Hamilton Partner JH/ kp Enclosure Copies of our ADV Part II are available upon request  i I:t O\ r-- M C1 kn ,-- a O\ zt " o d• 01 M — 01 r- oo o N V 4 4 O 00 M 00 01 l- 0 00 N vn O l C1 N N M t lll MM M O N N kr o0 O mot' Nr--! to to vn — o o 00 m tn 10 dd d OOO CC C OO O UU U O 000 OO O pp p O w 00 0 a h a O UU U a OO O 2 W o M O M NN N NN N O t M O -- O•> U 0 aa a Cd H bb b a C's N Q MM M MM M c0c0 c0 O ooo UU U hh h a a a