Lincoln Board of Trust Fund Commissioners
Minutes of October 22, 2003 Meeting
Carol Caswell, Commissioner
Donald Collins, Commissioner
John Murray, Chair
Roy M. Raja, Town Treasurer
Paul F. Sagarino, Jr., 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 9/30/03. Mr. Murray asked for the report which the Commissioners had previously requested which noted the changes in the portfolio. Mr. Paul provided this report and promised to include it in the Commissioner’s packages in the future. Mr. Paul reported the portfolio’s return for the quarter as 1.5% (Net of Fees). Mr. Collins noted that it is customary within the industry to report returns gross of fees. Mr. Collins reiterated that there is room for improvement in Bartholomew and Co.’s reporting and that he would like to see the information summarized neatly on one page. Mr. Paul indicated that he was working with Advent to create a report that is more suitable to the Commissioners.
Mr. Murray questioned the maturity of the Town’s bond portfolio. He said that Bartholomew had lengthened the duration of the Town’s bonds during a period of potentially higher rates. Mr. Paul responded that the swing in interest rates has hurt more than anticipated. Mr. Murray asked what he would do if he was not comfortable with the duration of the bond portfolio. Mr. Paul replied that he would look for an opportunity to take the loss and get out which would allow him to readjust the maturity of the bonds. Mr. Collins asked what the duration of the Town’s bond portfolio is currently and Mr. Paul responded that is was within the range of 4 ½ to 5 years. Mr. Collins stated that he would be more comfortable with a duration in the 2 to 3 ½ year range and Mr. Paul replied that his goal is to bring
it back in that range. Mr. Collins went on to say that he felt we were entering an inflationary period and that the duration of the portfolio should be corrected quickly.
Mr. Paul stated that the allocation of the portfolio as of 9/30/03 was as follows: 53.55% equities, 41.60% bonds, and 4.85% cash. Mr. Paul noted that there had been no equity changes in the last quarter. There were some positions that they were looking to add but the market conditions gave them no reason to. Year to date there are five equity positions performing poorly ranging from Dupont @ -.90% to SBC @ -14.14%. Positions which performed well ranged from Lilly @+.04% to AllAmerica @ +156%. Some positions that they might look to add in the coming months would be GE, Verizon, and SBC. Mr. Paul said that he would look to pare back the following holdings, Lear, P&G, 3M, Southern, & Apache. He would use the proceeds to purchase shorter
duration bonds and some of the other equities previously noted.
Mr. Murray stated that the Commissioners should meet to discuss the investment policy. Mr. Collins requested that Mr. Paul send out corrected numbers for the performance reports. Mrs. Caswell asked that the pages in the performance report be numbered in the future. Mr. Paul left the meeting and the Commissioners continued on to other business.
Mr. Collins stated that it was difficult to assess the advisor’s performance from the numbers, which had been presented. This prompted a brief discussion regarding a formal review of the money manager. The Board would need to determine due to the relatively small size of the portfolio whether the account should be managed, pooled, or strictly invested in mutual funds. The Commissioners agreed that although Bartholomew and Co was not particularly sophisticated or brilliant that they had done a reasonable job at a reasonable cost in managing the Town’s portfolio.
The meeting was adjourned at 8:55 AM
Carol Caswell _____________________
Donald Collins _____________________
John Murray, Chair _____________________
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