HomeMy WebLinkAbout2007 04 09 Informational 106 Pension Plan's 1st Quarter FY 2007 Investment Performance
COMMISSION AGENDA
ITEM 106
Consent
Informational
Public Hearin
Re ular
x
April 9, 2007
Regular Meeting
~"'MGR. ~ /DEPT.
Authorization
REQUEST: Providing the City Commission with information regarding the City Pension Plan's
1 st Quarter FY 2007 investment performance.
PURPOSE: This agenda item is presented to provide the City Commission with information regarding
the City Defined Benefit Pension Plan's 1 st Quarter FY 2007 investment performance.
CONSIDERATIONS:
The City Pension Plan Advisor, Bogdahn Consulting, presented its review and evaluation of the 1 st
Quarter FY 2007 performance of the Plan to the Board of Trustees at its meeting of March 29,2007.
This report evaluates the investment performance of the plan as obtained by the Plan's current
investment manager, Trusco Capital Management. Bogdahn's report provides two basic points of
analysis:
1. Comparison of the City Plan's investment performance to associated benchmark returns.
Benchmarks utilized are the S&P 500 for Domestic Stocks, the MSCI EAFE for International
Stocks and the Lehman Aggregate Bond Index for Bonds. These benchmarks are commonly
used industry comparisons for investment performance. In other words, "How are we doing
compared to the standard?"
2. Comparison of the City Plan's investment performance to a group of other investment
portfolios with similar investment profiles. This group is known as a "universe." In other
words, "how are we doing compared to other similar plans?"
BENCHMARK COMPARISONS (see page 2 of Bogdahn 's report - attached)
The City Plan's investment performance trailed (underperformed) the target benchmarks by 0.76%
for the first quarter of FY 2007. Investment performance also trailed the target benchmarks over the
past (trailing) one, three and five year periods.
The performance of the Plan relative to these benchmarks is one of the strongest indicators of the
success or failure of an investment strategy.
UNIVERSE COMPARISONS (see page 5 of Bogdahn 's report - attached)
The City Plan's investment performance relative to the universe was ranked in the 92 percentile for
the first quarter ofFY 2007. Investment performance relative to the universe over the past (trailing)
one, three and five year periods fell below the 72 percentile.
A percentile ranking of 1 is the best, 100 is the worst. For example, a ranking of 25 means that the
Plan outperformed 75% of the universe. A ranking of 72 means that the Plan outperformed only
28% of the universe. Per Bogdahn Consulting, a ranking of 50 or better is acceptable. A ranking of
25 or better is excellent.
A summary of this information is also provided in the attached memorandum from David West, CF A,
Partner and CIO/Senior Consultant with Bogdahn Consulting.
FUNDING: n/a.
RECOMMENDATION: Informational.
ATTACHMENTS:
1. Memorandum from David West, CFA, Partner and CIO/Senior Consultant with Bogdahn
Consulting.
2. Pages 2 & 5 from Bogdahn Consulting Performance Evaluation Report for the Period Ended
December 31, 2006.
COMMISSION ACTION:
ATTACHMENT 1
B.OGDAHN CONSULTING, L.LC.
simplifying your investment decisions
MEMORANDUM
DATE:
Kevin Smith
David West, CFA
Winter Springs Employee's Retirement System:
Quarterly Report Executive Summary (Period Ended 12/31/07)
April 3, 2007
TO:
FROM:
RE:
The following summary of Trusco Capital Management references
pages 2 and 5 of our quarterly report.
Market conditions were generally favorable to investors during the
quarter, largely driven by equity returns. Net of fees, plan
investments earned 4.64% adding $635,000 to program assets. While
impressive on an absolute basis, the program trailed the target
benchmark index (600/0 5 & P 500, 30% Lehman Aggregate Bond,
10% MSCI EAFE) by 0.76%. Managed results continue to trail the
index benchmark over rolling one, three, and five year periods. This
represents an opportunity cost to the plan (underperformance) of
2.75%, 0.60%, and 0.66% respectively. Peer Group measures
continue to languish both on an individual product and total program
basis. The investment return of 4.64% for the quarter resulted in
bottom 92nd percentile ranking as compared to the peer group
universe. Peer group performance over more meaningful one, three,
and five year periods indicates similar results with rankings below the
bottom 75th percentile as indicated at the top of page five. Allocations
to equity have remained high at 70% as of quarter end.
340 West Central Avenue. Suite 300. Winter Haven, Florida 33880
Telephone (863)293-8289 . Facsimile (863) 298-6762
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ATTACHMENT 2
City of Winter Springs Employees'
Defined Benefit Plan and Trust
Executive Summary
Account Reconciliation
Investment Policy
12/31/2006
Qtr
2006 10/31/2000
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Inception date is October 31, 2000
All dollar values are shown in thousands.
Returns for periods exceeding one year are annualized.
Returns are net of fees.
Returns in Down Markets
3 Yr
10/31/2000
6 Yr Incept
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ATTACHMENT 2
City of Winter Springs Employees'
Defined Benefit Plan and Trust
Universe Comparisons
. 60% Lg Cap Core, 30% Hg Quality Bd, 100/0 Int'l
Trailing Returns through December 31 , 2006
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Return rs:: 7.48 10.58 7.50 8.80 11.36 8.19 5.39
%-tile 89 82 85 91 75 85 72 30 ;
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Return 10.61 9.75 13.33 9.16 9.40 12.36 6.85 4.54
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5th %-tile 11.99 12.04 16.80 11.29 11 .49 14.30 9.22 7.56 7.571 6.95 !
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25th %-tiIe 10.79 10.05 14.13 9.97 10.13 13.01 7.68 5.60 4.79 i 5.45
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50th %-tile 10.21 9.23 13.10 9.20 9.40 12.34 6.73 4.461 3.36 4.62
75th %-tiIe 9.59 8.15 12.03 8.61 8.80 11.67 6.05 3.82 2.73 4.02
95th %-tiIe 8.09 5.42 8.41 6.77 7.02 10.32 4.16 1.791 -0.04 I 2.46
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Calendar Year Returns
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5th %-tiIe 6.60 16.80 7.96 12.39 24.57
25th %-tile 5.15 14.13 6.23 10.70 22.50
50th %-tiIe 5.44 13.10 5.49 9.70 21.45
75th %-tiIe 5.14 12.03 4.86 8.83 20.58
95th %-tiIe 4.45 8.41 4.09 6.90 18.69
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2 2.64 10.98 26.10 25.91 I
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6 -6.10 -2.81 14.88 20.67
9 -6.93 -4.05 8.96 , 14.39
7 -13.00 -8.80 I 7.76
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Relurns are In percent. "'Yo-Ille" is the percentile ranking within the universe.
Returns for periods exceedIng one year are annualized.
Incept Is October 31, 2000 to December 31, 2006
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