Lincoln Board of Trust Fund Commissioners
Minutes of February 11, 2004 Meeting
Carol Caswell, Commissioner
Donald Collins, Commissioner
John Murray, Chair
Roy M. Raja, Town Treasurer
Mary C. Day, Assistant Town Treasurer
Joshua Paul, Bartholomew & Co.
Mr. Murray called the meeting to order at 7:40 AM and reviewed the morning’s agenda.
Joshua Paul reviewed the portfolio’s performance for the quarter ended December 31, 2003. Mr. Paul noted that this would be the last quarter the reports will be presented in the current format. The new reports will be double the pages and more in depth, per The Commonwealth.
Mr. Paul stated that that the allocation of the portfolio as of December 31, 2003 was as follows: 53.5% equities, 41.6% fixed income and 4.9% cash. It was noted that the portfolio under performed the index. Mr. Murray suggested that we invest in Government Bonds instead of Corporate Bonds. Mr. Collins stated that he wants to see the time-weighted return on equities since inception. Mr. Murray said that he would look into this. He stated that the performance of the domestics was –3.50% vs. S & P –5.18%. Bonds yielded 6.34% vs. Lehman Govt/Corp yield of 8.51% since inception.
Mr. Murray commented that he is looking for a bond portfolio duration in the 2.5 – 3.5 year range. He also would like to have step-up callables kept at a minimum as they could create a liquidity problem. Mr. Paul responded that there were three purchases of $50k bonds and that three long-term agencies and one long-term bond were sold during the quarter. He is looking to sell off three more long-term bonds in order to decrease the duration of the portfolio and to sell out of positions that have not returned as much as they should have. He would like to add stock that is more consistent, like Verizon.
Mr. Raja stated that the portfolio is only $1 million and that having it spread over thirty investments seems rather excessive. Mr. Collins responded that he thinks that thirty investments are necessary for diversification. Mr. Murray agreed and stated that this was the statistical, normal distribution for this size portfolio.
Mr. Paul left the meeting and the Commissioners continued on to other business.
Mr. Collins stated that a13.8% return is incredibly low and that he feels that it is time to explore working with a new manager. He feels that it is difficult to assess Bartholomew’s performance based on their reporting. He is unable to do his job adequately because the reporting isn’t there. Mr. Murray responded that he felt that they had obtained an adequate yield based on the mission that we had given them. He agrees that they are not very sophisticated and the reporting is poor. It was agreed that after four years of having Bartholomew manage our account, it is appropriate to assess their performance and look at other managers.
A brief discussion ensued regarding how to begin the search process. It was agreed that Ms. Day would begin researching the process and report the findings to the Commissioners via e-mail. .
Ms. Caswell reiterated that this should be her last meeting and questioned whether a replacement had been found.
It was decided that another meeting would be scheduled for March 3, 2004 to discuss a replacement for Ms. Caswell and to review the process for searching for a new Trust Fund Manager.
The meeting was adjourned at 9:00 AM
Carol Caswell _____________________
Donald Collins _____________________
John Murray, Chair _____________________
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