Board Meeting Minutes - September 13, 2012 - Money Purchase Plan for Peace Officers
September 13, 2012
The Board met to 1) review/approve the minutes from the last meeting; 2) review/discuss New Business; 3) review/discuss Old Business; and 4) discuss any Other Business.
Present: Present were Employee Board Members Micheal Deedon, Justin Petersen and Bryan Lingo, and Director of Finance Pat Soderberg and Director of Human Resources Suzanne Smith.
Others in attendance: Adam Varga and Darrell Quam from Wells Fargo. Annette Rauschenberger and Vickie Mauri from Human Resources.
Minutes/New Business Items
The meeting was called to order at 1:00 pm.
Disposition of Minutes – The minutes of the June 19, 2012 meeting were approved with a change from Mr. Varga. The change has been incorporated into the final version of the minutes.
Fees and Average Performance Returns for Advice Track Accounts and Comparison to Self-managed Accounts: Mr. Quam provided an example of the average expense ratio on the Advice track funds. He advised the board that the fees are not negotiable. Mr. Lingo stated that the Advice track funds fill a need for plan participants.
Revenue sharing is not available on Advice track funds. The board had a discussion about the potential of removing the revenue sharing component and instead consider moving towards the lowest share class available and adding a per member per month fee. More analysis needs to be done before any changes are proposed.
High Yield Bonds Funds Compared to Other Bond Funds and Inflation Protected Funds: Mr. Lingo talked to a number of participants and they were interested in high yield funds. Mr. Varga presented options for the board to consider. JP Morgan outperformed the market over the last five years and had better upside/downside results. The fees were lower on the PIMCO fund option. Mr. Deedon made a motion to add JP Morgan High Yield to the fund line-up. The motion was seconded by Mr. Petersen and unanimously approved. Mr. Quam will forward the required paperwork to Ms. Smith in order to process the fund changes.
Mr. Deedon will work with Mr. Quam to set up informational meetings for participants to explain the differences in the bond funds.
Mr. Varga will provide a review of inflation protected funds at the next meeting.
2Q Results and Funds on Watch List: Second quarter results are available here.
Oakmark Equity has a “C” rating. The manager retired and the fund is looking for a replacement. The fund has been trailing the index. The manager did not anticipate the quantitative easing by the Federal Reserve which resulted in underperformance.
Janus 20 has a “C” rating. Year-to-date results are outperforming the Russell 1000. If performance continues, the fund should move to a “B” rating.
Janus Overseas has a “D” rating. This is a volatile fund with a very concentrated portfolio. 41% has been in emerging markets. The board will take another look at this fund at the next meeting.
T Rowe Price has a “C” rating. 2Q results show it is outperforming its peers. Mr. Varga is not concerned about this fund.
Mr. Quam will include all of the collective funds in the disclosure report.
Provision to Allow Tax-free Withdrawals for Medical Expenses (Pension Protection Act):
Ms. Smith will work the plan’s attorney to draft an ordinance to add this provision to the plan.
Old Business/Other Business
Pension Plan Alternatives Update: Deferred until the next meeting.
Fees and Revenue Sharing: The board will consider additional options in 2013. The proposal will include a review of revenue sharing and the potential to move all funds to lower share classes and consider a per participant fee. The desired outcomes would be to have more transparency in the fee structure and more equitable assignment of fees.
Diversification Report: Deferred until the next meeting.
The meeting was adjourned at 3:00 p.m.
Minutes Prepared by Suzanne Smith
Approved by _______________, Chair