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MIAMI SHORES VILLAGE-GE-07-31-2018-APPROVED 10-30-20181 MIAMI SHORES VILLAGE GENERAL EMPLOYEE PENSION BOARD MEETING The Miami Shores Village General Employee Pension Board and Police Retirement Board jointly met on Tuesday, July 31, 2018, at the C. Lawton McCall Community Center. The General Employee Pension Board meeting called to order at 8:25 AM. The following individuals were present for the meeting: PRESENT: ABSENT: Mac Adam Glinn, Chairman Tom Benton, Secretary Angie Dorney, Trustee Averill Dorsett, Trustee Bob Williamson, Trustee Thomas J. Longman, Trustee Jim McCoy, Trustee Also present were Pension Plan Administrators, Doug Falcon, FHA-TPA Benefit Administrators, Inc., Melissa Moskovitz, Gabriel Roeder Smith, Dave West, AndCo Consulting, and Pension Attorney Adam Levinson, Klausner Kaufman Jensen & Levinson. ACTUARY Ms. Moskovitz presented the Miami Shores Village General Employees’ Retirement System Actuarial Valuation Report as of October 1, 2017. Annual Employer Contribution is determined by this Valuation for the Year Ending September 30, 2019. The findings in the report are based on data or other information through September 30, 2017. Future actuarial measurements may differ significantly from the current analyses presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. The scope of an actuarial valuation does not include an analysis of the potential range of such future measurements. This valuation assumed the continuing ability of the plan sponsor to contribute as necessary to fund this Plan. A determination regarding whether or not the plan sponsor can do so is outside GRS scope of expertise and was not performed. The valuation is based upon information furnished by the Plan Administrator concerning Plan benefits, financial transactions, plan provisions and active members, terminated members, retirees, and beneficiaries. Internal and year-to-year consistency was checked but did not otherwise audit the data. They are not responsible for the accuracy or completeness of the information provided by the Plan Administrator. A motion made by Trustee Williamson seconded by Trustee Dorney to approve the Miami Shores Village General Employees’ Retirement System Actuarial Valuation Report as of October 1, 2017. Annual Employer Contribution is determined by this Valuation for the Year Ending September 30, 2019 the motion passed unanimously. 2 APPROVAL OF MINUTES The Chairman asked if anyone had any questions regarding the minutes of the meeting on April 24, 2018, there being no questions, A motion made by Trustee Williamson seconded by Trustee Dorney to approve the April 24, 2018 minutes motion passed unanimously. PUBLIC COMMENT: None APPROVAL OF PAYMENT WARRANT: 2018-0007 The Chairman asked if there were any questions regarding Warrant 2018-007 for $1,200.00, there being no further questions, Trustee Williamson moved to approve the payment of Warrant number 2018-0007 for $1,200 seconded by Trustee McCoy motion passed unanimously. RATIFY PAYMENT WARRANTS: 2018-0005 through 2018-0006 The Chairman asked if anyone had any questions regarding Warrants 2018-005 for $21,364.27 & 2018-006 for $3,196.91, there being no questions, A motion made by Trustee Williamson seconded by Trustee McCoy to ratify payment Warrants 2018-0005 & 2018-0006 as stated above the motion passed unanimously. INVESTMENT Mr. West advised the board that at the last meeting he was asked to look at alternative bond managers and he is prepared to discuss his findings today after presenting the Miami Shores Village General Employees’ Pension Fund Investment Performance Review Period Ending June 30, 2018. A few of the market observations were as follows: Market returns were mixed across significant equity and fixed income indices for the 2nd quarter of 2018. Broad domestic equity indices had healthy gains as supportive economic and corporate earnings data, helped by a fiscal stimulus tailwind resulting from the Republican Party led tax reform passed in late 2017 continued to put domestic stocks higher. International indices did not fare as well during the period, posting negative returns in US dollar terms as markets were hurt by relatively soft economic data, geopolitical concerns, and a strengthening USD. Fixed income was somewhat flat for the quarter with the various sector segments producing minor gains or losses. International equity posted negative returns for the quarter with emerging markets stocks falling the most significant degree. Interest rates on the US Treasury Yield Curve rose across all maturities during the 2nd quarter. The increase in interest rates was most pronounced in short-term maturities resulting in further flattening of the yield curve. 3 Us equity index returns were positive across the style and capitalization spectrum during the 2nd quarter of 2018. During the quarter, small-cap stocks outperformed mid and large-cap equities for style and core indices. Style index performance was mixed during the quarter with growth companies outperforming in large and mid-cap, but value stocks exceeding expectations in the small-cap space. The Russell 2000 Value Index was the best performing style index for the period returning a notable 8.3% for the quarter. Sector performance was mixed across large-cap sectors for the 2nd quarter of 2018. Seven of eleven areas had positive returns for the quarter, and six of eleven economic sectors outpaced the Russell 1000 Index return. Quarterly results for small-cap sectors were higher relative to their large capitalization counterparts. All segments had positive returns during the period with seven of eleven economic areas outpacing the Russell 2000 Index return for the quarter. Using S&P 500 sector valuations as a proxy for the market, forward P/E ratios for six of the eleven GICS sectors were higher than their long-term averages at quarter-end. Mr. West advised the Board that the objective for the fixed income manager replacement is to look for a replacement for the current manager Insight Core Fixed Income due to lack of performance. Mr. West advised the Board that after hearing the results of the three manager's comparison, the Board optionally could request to have any of the managers personally present. AndCo has customers who have investment allocations in these three managers and that AndCo does not earn any commission from any of these proposed candidates. The three managers are as follows: Agincourt Capital Management Garcia Hamilton & Associates Integrity Fixed Income Mr. West discussed each managers fees, investment minimum, performance, and quantitative review. Agincourt Capital Management’s goal is to outperform the benchmark by 50 basis points annually over the long term while limiting the strategy's standard deviation to between 2.5% - 3.5% with tracking error less than 1.0. Some of AndCo's observations on this manager is that their investment process is sound and rigorous, having been tested over a variety of market environments. The 11 member investment team is seasoned with many of the members have worked together since the inception of the firm. The firms approach portfolio customization, fee levels, and client service are key differentiators. Garcia Hamilton & Associates fundamental tenets of the strategy are the preservation of capital, maintaining liquidity, and providing high current income. GH& A aims to outperform its benchmark net of all fees over a full market cycle. AndCo recommends GH&A as a top-down option in the Core Fixed Income Category. The strategy's main strength is Gilbert Garcia, who developed the qualitative and quantitative methodologies driving this strategy. 4 Integrity Fixed Income attempts to outperform relevant benchmark indices over time by emphasizing capital preservation, liquidity, and excess yield. Integrity is a client-focused, independent & employee owned boutique with a long history of adding value. The portfolio is constructed in such a way as to provide clients with a sense of confidence. A motion made by Trustee Williamson seconded by Trustee Dorney to invest in Integrity Fixed Income motion passed unanimously. A motion made by Trustee McCoy seconded by Trustee Dorney to terminate Insight Core Fixed Income motion passed unanimously. A motion made by Trustee Dorney seconded by Trustee Williamson to authorize the Chairman to sign the Integrity Fixed Income agreement once reviewed and approved by the legal counsel motion passed unanimously. This concluded the investment report. ATTORNEY Attorney Levinson reminded the Board to complete Form 1 and asked the administrator to circulate the form to all the Trustees to ensure they are sent into the state by the deadline date of June 30th. This concluded the attorney’s report. ADMINISTRATOR Mr. Falcon had no items to report to the Board. The next pension meeting will be October 30, 2018 This concluded the administrator report. There being no further business a motion made by Trustee Dorney seconded by Trustee McCoy to adjourn the meeting at 10:25 a.m. Approved: October 30, 2018 Board meeting.