MINUTES OF THE INVESTMENT COMMITTEE MEETING
GENERAL EMPLOYEES RETIREMENT BOARD
TUESDAY, MAY 19, 2009
Members of the Board of Trustees of the General Employees Retirement Board convened for an Investment Committee Meeting at 10:00 a.m. on this the 19th day of May 2009 in the 5th Floor Conference Room, Tampa Police Department Building, 411 North Franklin Street, Tampa, Florida 33602. Members present were John Tapley, Ernest Carrera, Alan Weiner, and Steve Kenny.
City staff in attendance were Lee Huffstutler, Chief Accountant; Maria Rivera, Recording Secretary; Marlene Herrera, Payroll and Pension Supervisor; Debbie Hodo, Pension Investment Coordinator.
Others in attendance were Jay Love and Keith Reynolds, Mercer Investment Consulting; and Thomas Sanchez, City of Tampa Internal Audit Department.
Mr. Tapley introduced and welcomed Mr. Weiner as the new Board Trustee and asked him to give a brief description of his background.
PRESENTATION
Understanding Performance Evaluation, Jay Love and Keith Reynolds, Mercer Investment Consulting:
Mr. Love gave a presentation of the Investment Manager Evaluation Process. He discussed the difference between active and passive managers and indicated that active managers’ fees for services are based on their over or underperformance of the benchmark. The process was presented as:
• Investment Manager Evaluation Process
o Understand Investment Philosophy
o If effectively implemented, will it achieve objectives?
• Investment Strategy Implementation
o Can the strategy be effectively implemented by the manager?
o Team, Tools, Techniques
• Results
o Consider whether the strategy should be outperforming or underperforming.
o Evaluate whether the manager is implementing effectively.
o Have there been any changes to make the strategy more or less effective?
o Have there been any changes to make the implementation more or less effective?
Mr. Love used Dodge & Cox to present his Evaluation Case Study. The evaluation process included:
• Investment Strategy: Long Term Value Manager
• Keys to Implementation
o Research to determine Intrinsic Value
o Selection of portfolio of securities with deep discount to intrinsinc value
o Conviction
o Avoidance of Value Trap
• Performance Expectations
• Market Cycles
Understanding Performance Evaluation Methods and Chart’s:
• Regular Performance monitoring activities should aim to:
o Determine whether investment objectives are being achieved
o Determine if managers are meeting established performance standards
o Identify changes in investment managers’ organizations or investment styles
o Analyze if a manager’s investment activities conform to investment policy
o Assess risks taken by managers
• Performance results evaluation methods include:
o Trailing periods (quarter, year-to-date, one, three-, five- and ten- years
o Calendar Years
o Rising and Falling Markets
o Rolling Periods
Watch List:
• Purpose
o Identify managers failing to meet stated performance objectives
o Initiate more intensive and frequent evaluations
o Provide a process for moving toward manager termination
• Mercer’s recommends watch list when:
o Failure to meet established performance objectives for the 3 year period in four consecutive quarterly evaluations
o Managers on the watch list should be evaluated for the cause of underperformance
o Significant changes to the firm, strategy or team
o Termination without a watch list period:
Violation of SEC rules or regulations, as well as any other important and appropriate statutory regulatory requirements
Substantial and consistent deviation from the characteristics of investment strategy
Significant personnel departures
o A manager who is downgraded below B+ should be placed on the watch list for a full review and evaluation
A copy of Mercer’s presentation is available in the Pension Office for review.
ADJOURNMENT
There being no further business to come before the General Employees Pension Investment Committee at this time, Chairman Tapley adjourned said meeting at 12:05 p.m. on this 19th day of May 2009.
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CHAIRMAN
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RECORDING SECRETARY
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PLAN COORDINATOR
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