The Voice Magazine Fall 2019

Florida Public Pension Trustees Association fall 2019

Investing in a

Global

Economy

INSIDE

THIS

ISSUE

35 YEARS

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Florida Public Pension Trustees Association fall 2019

Upcoming 2019-2021 FPPTA Events

4

From the Editor

5

From the CEO

6

Thanks to Our Volunteers

7

24

Chairman’s Annual Comments

2019 FPPTA Board of Directors

8

9

Thanks to Our FPPTA Event Sponsors

10

FPPTA Education Committee Report

12

FPPTA Education Committee Members

14

Educational Resources and Programs

16

33

2019-20 Legislative Dates

35th Annual Conference Highlights/Sponsors

35th Annual Conference/Exhibitors

21

24

26

2019 Raymond T. Edmondson Award

28

CPPT Highlights & Recipients

30

It’s Time to Become an Advocate

32

34

We’re Bullish on Wall Street

2019 Charitable Golf Tournament/Sponsors

FPPTA Relief Committee

33

34

36

The Dana Viewpoint: Keep on Trucking

37

The Untold Story of Trailing Returns

39

Making Every Dollar Count

42

60

International Securities Litigation

New Hedge Fund Strategies

Tulips Disguised as Toll Roads

45

48

50

60

50

How Foreign Taxes Hide

Making Sense of Negative Bond Yields

54

56

40

77%

Why Bonds Need to be Bonds

60

30

20

10

67

32%

Emerging Markets: Identifying Opportunities

Shifting Public Employees Out of Pensions

Investing in Real Estate

62

67

71

2019-2021

EVENTS

fall 2019

Publisher

Kimberlie E. Prior, CPPT

Editor

Susan Marden

Associate Consultants

Lois Edmondson

Peter Hapgood

Sean McKinstry

Tom Thompson

Stephanie Wehrly

Graphic Design

Vanessa Zein-Eldin

For more information

on advertising,

please contact:

susanmarden@fppta.org

www.fppta.org

2946 Wellington Circle East

Tallahassee, FL 32309

Ph 800-842-4064

Ph 850-668-8552

Fax 850-668-8514

FPPTA Mission Statement

The FPPTA has been

established for the purpose

of providing education and

information for the public

pension system and to protect

defined benefit pension plans.

The information in this publication

is presented in good faith.

The publisher assumes no

responsibility for errors, omissions,

or misinterpretations.

2019

2020

2021

FALL TRUSTEE SCHOOL

October 6-9, 2019

Sawgrass Marriott, Ponte Vedra Beach

WINTER TRUSTEE SCHOOL

January 26 - 29, 2020

Hyatt Regency, Orlando

20TH ANNUAL WALL STREET

March 24-28, 2020

Sheraton Times Square, New York City

36TH ANNUAL CONFERENCE

June 28 - July 1, 2020

Renaissance Orlando at SeaWorld, Orlando

FALL TRUSTEE SCHOOL

October 4 - 7, 2020

Hilton Bonnet Creek, Orlando

WINTER TRUSTEE SCHOOL

January 24 - 27, 2021

Rosen Center Hotel, Orlando

From the Editor, Susan Marden

Susan Marden,

the Voice Editor

I am privileged to be named the

new editor of the Voice not least

because it puts me in the company

of the previous editor, Ann

Thompson, a venerable and talented

writer, editor and publisher

with mad skills who also has kindly guided my

hand through this first issue. However, any mistakes or

errors are entirely mine – and I hope they are few. I also

received generous support from our CEO, Kimberlie

Prior, and the FPPTA staff who both lifted me up and

caught me when I would have fallen.

To the list of people who helped bring this year’s

edition of the Voice to print, I would like to thank the

contributors and authors who agreed to give freely of

their knowledge and insights. The FPPTA has a network

of the most excellent Associate Members in their

respective fields and their contributions come in many

shapes and sizes, all of which matter greatly to the

FPPTA’s continued success. We also are grateful to Dan

Doonan, Executive Director of the National Institute on

Retirement Security for contributing as a featured

author in this issue. He presents a study that examines

states that switched from defined benefit pension

plans to defined contribution accounts for their

employees – and what it’s costing them.

Last, but not least, are the volunteers who support

this magazine every year: photographer, Darrel Presley;

BOD Chairman Pete Prior and Director Steve Aspinall;

Columnists Tom Thompson, Fred Nesbitt, Katie Byrne,

Stephanie Wehrly, Sean McKinstry and Peter Hapgood;

and all the administrative and marketing staff of our

Associate Member contributors and advertisers who

collected and delivered to me all the bits and pieces:

the artwork, head-shots, biographies and graphics we

need to present every page. Thank you to all.

This year at the annual conference, we focused on

Investing in a Global Economy, because the world

continues to integrate its commerce, cultures and markets.

Centuries ago, the Silk Road traversed a distance

of 4,350 miles and opened the world in profound ways.

Today’s trade routes crisscross the globe’s circumference

of nearly 25,000 miles many thousands of times

every day via digital highway – our new Silk Road.

Opportunities are immense, but so are the risks.

It helps to know that a network of professional

financial services providers is advising your pension

board. We believe this professional guidance is a

strong, load-bearing support beam in the structure of

defined benefit public pension plans. So, we’ve asked

some of those professionals to share their insights

about what is currently shaping the markets, what new

financial pressures and monetary policies will affect

your pension plan’s likely performance in the year to

come. We hope you will benefit from the wide array of

articles published here in the Voice 2019. n

5

the VOICE . FALL 2019

Follow the FPPTA

on Facebook

and Twitter!

6


From the CEO, Kimberlie E. Prior

Kimberlie E. Prior,

Chief Executive Officer

2019 is a milestone year for

the FPPTA. We are celebrating

35-years of education for public

pension trustees. We’ve seen

much growth and many

changes and have experienced

growing pains, new trends and challenges within the

association which, together, we have worked to overcome.

We’ve also encountered challenges from outside

sources including, but not limited to the economy, new

legislation, not to mention the ever shifting political

landscape. One thing that remains constant, however,

is the association’s goal and passion for providing the

best educational experience to its membership.

Who knew in October of 1983, when the late Mike

Matus of Invesco called the Fort Lauderdale Police and

Fire Pension office suggesting they set up a seminar

to explain the new state-wide standards of Chapters

175 & 185, that we would end up here 35 years later.

Mike spoke with the late Ray Edmondson, and with

then pension board Secretary Renee Lipton and the

three of them organized a seminar which eight people

attended. The second meeting drew 30 attendees.

Among them were current Board of Directors’ Secretary

Ann Thompson (then with Barnett Banks Trust

Company), and Board of Directors' Chairperson, Pete

Prior (then a Trustee with Tamarac Fire).

Talk of forming an association took hold. Ray, Renee

and Ken Harrison started organizing and setting up the

Florida Association of Public Employees’ Pension

Trustees, Inc. The association’s name was later changed

to what we now know as the Florida Public Pension

Trustees Association. At the beginning we held half-day

sessions, which morphed into the two and a half-day

Trustee Schools we have now, each with 84 sessions

and over 100 speakers. We can all be proud of the

tremendous growth and success the association has

seen over these last 35-years.

Today we continue to streamline office operations

and event planning to minimize costs when possible

without diminishing our offerings to the membership.

We strive to enhance our programs and educational

experiences while incurring the least possible additional

costs whenever possible. Over the last couple of

years I have seen a trend with hotels, especially in

Orlando, to higher room rates, increased fees for food

and beverage, as well as for WiFi in the conference area.

Two years ago we introduced the FPPTA event App

to ease and help smooth the process of attendees

scanning in and out of sessions. This also streamlines

the process of tracking and uploading CEU records

electronically. With the App you can save a presentation

to your briefcase, e-mail it to yourself to share with

coworkers and peers at a later date, or to maintain an

electronic library to use as a reference. At the 35th

Annual Conference we played a trivia game with the

App which brought to light that we had some very

competitive attendees! BUT... the App can’t be used

without WiFi, so the FPPTA must provide it to all attendees.

In recent years the cost of WiFi at hotels has

become a real issue. We had two different hotels try to

charge us $25,000 for four days – yes, $25,000! Of

course we will never pay such a ridiculous fee. Typically

we can negotiate a maximum of $3,000 per event. Let’s

face it, it doesn’t cost the hotel nearly what they want

to charge.

Food and beverage costs have gone up quite a bit

too. I have been able to negotiate set food prices for

future events to help keep the cost increases at a

minimum, which brings me to the recently formalized

cancellation policy. When we plan an event we must

guarantee the expected food and beverage we will

need. Our guarantees come from the number of attendees

we have registered. For instance, if we have 600

registrations and 50 guests we guarantee food for 650

people. Our average food and beverage invoice for an

event is $200,000 to $250,000 depending on the

contracted prices, the number of attendees and the

event. If we guarantee 650 attendees and have 20-30

people cancel and request a refund from us after we

submitted our numbers to the hotel, we still pay for the

food because the hotel also has already planned for

and purchased the food in advance of our arrival. This

costs the association many thousands of dollars per

event. So, after much debate the Board of Directors

determined that a formal cancellation policy needed

to be established.

To help make our planning processes and future

fee structures much more accurate, the staff and I have

been working on updating our Five Year Plan to help

us project both our expenses and our revenues for the

next five years. This is tremendously helpful when it

comes time for budget discussions and our budget

proposals to the Board of Directors for the next few

years. We analyze the effectiveness of our programs in

relation to cost and participation. You may have

noticed that we have discontinued some programs

over the last few years, because they were a bit costly

and not as well attended as we would have liked. At the

same time, we added the certificate program in CEU at

little or no additional cost.

Adopting new technology is a huge part of growth

and, as you have experienced right along with us, it can

be a challenging growing pain. Part of the budget

process for 2019 included funds set aside for a

new website. As they say, “third time is the charm.”

We embarked on a new website project in January and

I am so pleased to say we are very happy with the

results and received some very positive feedback from

you. The new platform is very user friendly and the

financial reporting generated by the software is very

efficient. There is still work to be done on the site –

“Rome wasn’t built in a day”, but I think we have found

the software and tech company that will serve our

association very well for a long time to come.

In analyzing our expenses and programs we also

found we are paying more and more banking fees,

processing fees and credit card processing fees. We

expect to see these charges exceed $50,000 by the end

of 2019. This led us to the decision to add a 3% increase

to all fees to cover these costs that were becoming too

much for the association to absorb.

Our work with infographics, multi-media projects,

a social media presence along with op-eds continues

to be a worthwhile avenue for promoting the FPPTA

while also defending defined benefit plans and promoting

their importance for a secure retirement. We

invite you to follow us on Twitter at @investing_in_ed

and on Facebook. In fact, at the 35th Annual

Conference we had our first hashtag, #FPPTA35 and

#GlobalEcon. Remember, we can also work with you on

a local level if you need to bring awareness to your

community.

Giving back and paying it forward is something the

FPPTA has done for a long time. Our Relief Fund paid

out eleven checks totaling $5,500 in 2018, and to date

in 2019 there have been seven checks totaling $3,500.

I want to thank the FPPTA members who have made

donations to the Relief Fund and make special mention

of Battea-Class Action Services, LLC for hosting a golf

tournament and donating some of the proceeds to our

Relief Fund.

At the 35th Annual Conference we awarded our

very first Raymond T. Edmondson Scholarship to Lexi

Smith whose father is a member of the Cooper City

Police Pension Fund. This has been a two-year project

for the Board of Directors and the Scholarship Committee

conducting research, reviewing the legal implications,

creating the application forms and determining

what qualifications were needed to be eligible. This is

truly a beautiful way to honor one of the association’s

founding fathers and CEO of 30+ years.

I want to thank all who give their time to the FPPTA,

whether it be serving on a committee, a board or helping

us in other ways, Thank you!! n

7


Thank you 2018-2019 FPPTA Volunteers

Steve Aspinall (7)

WO Bell (3)

Lynn Bernstein (2)

Gustavo Bikkesbakker

Howard Bos

Katie Byrne (3)

Mary Byrom (3)

Tom Capobianco

Judy Corbet

Steve Corbet (2)

Jonathan Davidson

Tom Franzese

Greg Glatt

Chris Greco

Janna Hamilton (3)

Betsy Harris

Ken Harrison (6)

Richelle Hayes (2)

Kate Hurley

Chuck Jeroloman

Dan Kleman

Suzanne Lawrence

Ricki Levy

Renee Lipton (3)

Chad Little

Dwight Mattingly (4)

Debbie McCoy

Mark Meyer

Tracy Musser

Jerry Navarrete

Tim Olsen (6)

Melissa Olsen (2)

Susy Pita

Pete Prior (5)

David Puscher (2)

Brad Rinsem

Steve Roth

Phyllis Shaw

Chris Spencer (3)

Steve Stack

Ann Thompson (6)

Tom Thompson

Christine Turner

Dave West

Warren West (3)

Kurt Wood

The number in ( ) indicates how many different

committees/activities for that volunteer.

8


Chairman’s Annual Comments

Pete Prior,

Chairman, Board of Directors

Some of you may recognize this

saying. “It’s Déjà vu All Over

Again.” I say that because that

is what it feels like to me regarding

the Cancer Bill for Firefighters

this year. During the mideighties,

there was a similar push state wide for Cancer

for Firefighters but it fell on deaf ears in the legislature,

even after we had been told for several years they

would support it. After four years of presenting their

case, finally, a bill came before the legislature (FS

112.1816) that presumes at least 21 types of cancer are

job related for firefighters.

Senate Bill 426 provides certain benefits to

firefighters receiving a cancer diagnosis that meet a

specific condition. One must be employed as a fulltime

firefighter (meeting the definition of firefighter).

Once a firefighter receives the diagnosis of cancer, they

are eligible, as long as they have been continuously

employed as a firefighter for at least five years, have

had no use of tobacco products for five years, and have

not been employed in another position that is also

considered high risk in the previous five years.

The cancer diagnosis would then be covered under

the employer’s health insurance such as reimbursement

for out of pocket expenses, deductibles, or coinsurance

costs due to the treatment of cancer. A

one-time payout of $25,000. This does not mean that a

firefighter receives a permanent disability because

they have contracted cancer, they will still have to submit

to their pension board that they are totally and

permanently disabled due to the cancer.

Another benefit that is available and effective as of

July 1st of this year is an increase in the death benefit.

Under Senate Bill 7098, the statutory death benefit is

now $75,000 and is not part of the pension benefits.

Another benefit that I think is very important is that 10

years after retirement, a claim can be made regarding

the diagnosis of cancer and be claimed as job related.

The bill is not perfect, but it is a fantastic step in the

right direction to cover our first responders who are in

those hazardous conditions.

This does not mean that we are out of the woods,

as there are many unanswered questions regarding the

bill. What happens if a firefighter already has one of the

presumptive cancers prior to the passing of the bill, will

that be covered? What is the impact on current pension

plans? How about impact statements from the

actuary as the language is adopted in ordinance – have

there been detailed decisions made? There is very little

data to draw conclusions without using data from

other states, so let us take a wait-and-see status.

As always, I have to thank the staff of the FPPTA for

all the work and effort they put in to make the organization

as great as it is. To all our consultants and education

committee members, the programs would not

be what they are without your input and efforts and

on behalf of myself and the board of directors members,

we thank you. And I would be in remiss if I did not

mention the best audio-visual company in the state of

Florida, Vanguard, their input and design suggestions,

technical staff, and dedication to making our programs

hum without interruption, we all thank you. n

“The cancer presumption bill is not perfect,

but it is a fantastic step in

the right direction...”

FPPTA Board of Directors – 2019

9


Pete Prior, CPPT

Chairman

Hialeah Gardens

Police Officers’ Pension

Tim Olsen, CPPT

Vice Chairman

Melbourne

Firefighters’ Pension

Ann Thompson, CPPT

Secretary

Vero Beach

Police Officers’ Pension

Steve Aspinall, CPPT

Treasurer

St. Petersburg

Police Officers’ Pension Fund

Dwight Mattingly,

CPPT

Director

Amalgamated Transit

1577 Pension Fund

Christopher Spencer,

CPPT

Director

North Collier Fire Rescue

Pension Plan

Warren West,

CPPT

Director

Avon Park Firefighters

Pension Plan

Renee Lipton, CPPT

Director Emeritus

THANK YOU

for serving on the

Board of Directors!

Ken Harrison, CPPT

Director Emeritus

Raymond T.

Edmondson, Jr., CPPT

Director Emeritus

(1937-2017)

10

Conference vs. Schools – what’s the difference?


FPPTA TRUSTEE SCHOOLS are structured to provide

a classroom learning experience from 8:30 a.m. to 4:30

p.m. The schools are a staple of management training

for municipal public pension board members in

Florida. Participants in the CPPT program must complete

a set of three class syllabuses: Basic, Intermediate

and Advanced, within three years, to achieve certification.

CPPT certification participants finish the three day

school with an exit exam on Wednesday morning. A

hospitality suite and study hall are open on Monday

and Tuesday evenings. Each Trustee School also offers

a full complement of continuing education workshops

and presentations required for maintaining the CPPT

designation. FPPTA Trustee Schools are well attended,

drawing an average of more than 500 registrants per

event.

The FPPTA ANNUAL CONFERENCE provides a stateof-the-state

and national overview of issues and trends

affecting public pensions. Attendees choose from a

broad range of panel discussions, as well as economic

and political analysis presented by industry leaders.

Keynote speakers are dynamic, professional presenters

nationally recognized for their expertise and presentation

skills. The Annual Conference is our largest yearly

gathering, draws 2,000 people each year and with a

family-friendly format including activities for children.

A large vendor exhibit hall offers attendees ample

opportunity to network with various service providers.

The Annual Conference is also the occasion for hosting

the FPPTA Annual Membership Meeting and the Board

of Directors elections. n

Thank you to our FPPTA Event Sponsors!

ABS Investment Management

American Realty Advisors

AndCo Consulting, LLC

Atlanta Capital Management

BlackRock

BMO Global Asset Management

Burgess Chambers and Associates

C.S. McKee Investment Management

Constitution Capital Partners

DePrince Race & Zollo

Foster & Foster Consulting Actuaries

Garcia Hamilton & Associates

Great Lakes Advisors

Highland Capital Management

Intercontinental Real Estate

Inverness Counsel

Investment Performance Services

J.P. Morgan Asset Management

Kessler Topaz Metzler & Check, LLP

Mellon

Nareit

National Investment Services

Nuveen

Pension Technology Group

Richmond Capital Management

Sawgrass Asset Management

Saxena White

Schroders Asset Management

Scott & Scott Attorneys at Law

Thornburg Investment Management

Tocqueville Asset Management n

Fall 2018 - June Conference 2019

means EXPERIENCE acro oss cultures,

currencies and courtrooms

Kessler To opaz is Proud

to Suppor

rt the FPPTA

Kessler To opaz is one

of the world’s foremost advocates in

protecting the publ lic against corporate fraud

and other

wrongdoing. Our lawyers regularly take on th he foremost

defense attorneys— —and win—in class actions s, shareholder

derivative suits, ant titrust litigation, whistleblower lower suits

and other complex litigation around the globe. We are

proud to have recov

vered billions of dollars fo

r our clients.

CLASS ACTION

LITIGATION ION

FIRM OF THE

YEAR 2012 & 2014

LEGAL INTELLIGENCER

NATIONAL NAL

LAW JOURNAL

PLAINTIFF FS’ HOT

LIST 2016

RECOGNIZED AS

LEADERS IN THE

SHAREHOLDER

LITIGATION ION FIELD

THE LEGAL 500

KTMC. COM

KTMC-WHISTLEBLOWER.

COM

12


FPPTA Education Committee

Agenda Design: How the Magic Happens

Peter C. Hapgood, CPPT

Director of Education

The FPPTA Education Committee’s

goal is to always attempt

to make the next Trustee

School or Conference better

than the last. I must admit this

is a constant challenge and

hopefully we have satisfied all of you, our membership.

With this in mind, I would like give to you an inside look

at the variables that influence program agenda design.

I hope it increases your understanding of why we

choose the programs we do.

“Our goal is to successfully

incorporate our

Associate Members’

presentation requests and

still build the program agenda

that is most appealing to our

trustee membership.”

Reserving a large enough space. Trustee Schools

and Annual Conference venues are usually determined

3-5 years out. Contracts are signed primarily to keep

hotel room costs as low as possible while reserving a

venue that can provide space for our program

demands. The strategy is correct, but honestly, at times

we have to work with less meeting room space than

we really need. If space limitations do exist (Kim has

been successful at times in re-negotiating the meeting

room space), the program agenda must be designed

to hold a comfortable number of attendees in each

room, along with providing over 150 Associate Members

an opportunity to present.

Finding the right balance means putting

trustees’ interests first. Please understand the FPPTA

is not a pay-for-play organization. Our Associate Members

are asked to complete an annual presenter survey,

or at times a firm might have completed an FPPTA

Speaker Request. These two vehicles impact the

Trustee School program agenda design considerably.

The Education Committee’s goal is to successfully

incorporate our Associate Members’ presentation

requests and still build the program agenda that is

most appealing to our trustee membership.

We’re still growing! Member demographics also

impact program agenda design. Hopefully to no one’s

surprise, the overall FPPTA membership changes annually.

Since we started our Certified Public Pension

Trustee (CPPT) Program back in 1998, the Basic

Program has averaged 50 new members per program.

We have had more than 1,500 new trustees or Associate

Members start the FPPTA certification process –

a very important statistic to share when analyzing the

FPPTA’s growth over the last 20 years.

More choices. When the FPPTA Certification Program

began back in 1998, the FPPTA provided one

Continuing Education Units (CEU) track per Trustee

School. Now we offer three concurrent CEU Sessions

along with a varying number of special program offerings

per Trustee School. We’ve grown exponentially

and the challenge for the Education Committee

remains constant – providing the membership with a

better event than the last.

We have a broad agenda. The Education Committee

usually works with a list of more than 150 speakers

annually. Topics vary within the public pension industry,

but obviously are related to each firm’s expertise.

A zebra’s stripes don’t change, so at times the CEU

Program agenda may be designed with more investment

topics than any other industry topic. The CEU Program

attempts to always blend actuarial, trustee

focused, investment consultant related, and economically

sensitive, legal-based workshops over the first two

days of the Trustee School. Wednesday morning is testing

day for the CPPT candidates. We also schedule only

one presentation for CEU members on Wednesday

morning, usually a special life-story motivational

speaker, or a professional who shares ideas about life,

or who shares a skill set addressing how we can better

face the many roles we play as individuals within the

industry.

Certificate Programs for deeper learning. Starting

in 2015, the Education Committee introduced its

“FPPTA Certificate Program”. These new programs were

developed for the more senior trustees who have

attained their CPPT designation. Going forward these

one-day programs will go to half-day sessions. The

Education Committee thought this change would

be beneficial to attendees, allowing all to attend the

variety of afternoon sessions. The “FPPTA Certificate

Program” offerings are topically designed, providing

trustees the opportunity to take a deeper dive into the

subject matter. Not only is there a concentration of

subject matter, but the program design openly invites

a more interactive approach, utilizing the skills and

experience of our participating trustee and associate

members. These are the FPPTA Certificate Program

offerings to date:

• Actuarial Program – complete new redesign was

offered in October 2018

• Fixed Income Program – last offering was January

2018

• Investment Consultant Program – was offered in

February 2019

• Administrator’s Program – next program will be

offered at the 2020 Annual Conference

Presently the committee is developing a program

curriculum concentrating on the areas of legal, equity

investing, alternative investing and trustee communications.

Hopefully we will have some of these new subject

offerings completed in 2019, increasing the

number of choices for the membership to attend.

Personal financial education begins with you.

To further complement our membership’s educational

needs and demands, the FPPTA has offered the FPPTA

Individual Retirement Program at each Trustee School

since 2013. This program featuring Dee Lee will now

be offered only at the Winter Trustee School. Unfortunately

the FPPTA Trustee Boot Camp, another special

program that has been offered since 2012 will not be

available going forward due to a lack of member interest.

We’re bullish on Wall Street. I would be remiss

if I did not mention the FPPTA’s Annual Wall Street

Program. This program is headed into its 20th year and

is offered to FPPTA trustee members who have earned

their CPPT designation. This very popular program is

held in the early spring when participating trustees

travel to the financial capital of the world, New York

City. This intense four-day program is just another example

of the depth of offerings provided by the FPPTA

each year.

Supporting cast. As the Education Committee

organizes and develops educational offerings, the

FPPTA staff is always part of the Education Committee

while also working on ways to keep the membership

aware of the current industry issues that may have

occurred between programs. The FPPTA provides a

digital monthly e-newsletter to those who have signed

up for the distribution list. The FPPTA has two websites.

The FPPTA site is for organizational information. The

other website, the Public Pension Institute, is open to

the entire public pension network across the country,

highlighting position papers, different industry-wide

studies (both pro and con), along with public pension

news impacting the overall industry. PPI also provides

a video library of past presentations conducted as part

of an FPPTA education program. Take the time to check

out both sites provided by YOUR FPPTA.

There’s an App for that. Lastly, the FPPTA has now

created its own App. Used at each educational function,

the App provides an opportunity for the entire

membership to individually control the educational

content and material made available at every FPPTA

event. The FPPTA App also offers a function for evaluation.

Coupled with the online program evaluation

sent to all attending members, we are constantly looking

for feedback. This allows each member the ability

to express their views and ideas influencing future

agendas and program offerings. I have always stated

that any organization is only as good as its membership.

Your participation, understanding and support are

vital to the overall success of the FPPTA.

Hopefully I have explained the ongoing creation of

the educational opportunities provided by the FPPTA.

None of this would be possible if we did not have our

Associate Members who are so willing to assist in the

educational process, along with their generosity in

sponsorships. Of course, it’s also true that the FPPTA

has a trustee membership willing and supportive by

attending the FPPTA programs. They show their dedication

and responsibility representing the many

beneficiaries of their public retirement plans. This is

simply a winning formula for organizational success.

Thank you for your continued support! n

13


14


2019 FPPTA Education Committee Members

Our Education Committee consists of a Committee Chair, Vice Chair, Secretary, the Dean of Faculty, the FPPTA

Board of Directors Chairman and the FPPTA CEO and COO, as well as four Directors, four Associate Members, four

Trustee members, and four advisory members as well as the FPPTA Media and Public Relations Consultants. The

Committee, which meets at each Trustee School is responsible for preparing a well rounded curriculum for the

CPPT program as well as selecting topics for the CEU sessions.

Peter C. Hapgood, CPPT

Committee Chairperson

FPPTA Education Consultant

Steve Corbet, CPPT

Committee Vice-Chairperson

St. Petersburg Police Pension Fund

(Retired)

Sean McKinstry, CPPT

FPPTA Director of Research

Education Committee Secretary

Michael Spencer, CPPT

Dean of Faculty

Peter Prior, CPPT

FPPTA Board of Directors, Chairperson

Hialeah Gardens Police Officers’ Pension Fund,

Trustee

FPPTA Associate Member Representatives

Mary Byrom

Senior Relationship Manager,


Mark Meyer

AON

Steven Roth, CFA

Chief Investment Officer, Dahab Associates

David West, CFA

Senior Consultant, AndCo Consulting

FPPTA Trustee Member Representatives

FPPTA Board of Director Representatives


FPPTA Board of Directors, Treasurer

St. Petersburg Police Pension Fund, Trustee

Ann Thompson, CPPT

FPPTA Board of Directors, Secretary

Vero Beach Police Officers Pension Fund, Trustee

Tim Olsen, CPPT

FPPTA Board of Directors,

Melbourne Firefighters’ Pension Fund, Trustee

Dwight H. Mattingly, CPPT

FPPTA Board of Directors, Vice Chairperson

Palm Tran, Inc. /ATU Local 1577 Pension Plan,

Trustee

Lynn Bernstein, CPPT

Miami Beach Employees Retirement Plan, Trustee

Debbie McCoy, CPPT

Tallahassee 175 Pension Fund, Trustee

Phyllis Shaw, CPPT

Hollywood Employees Retirement Fund, Trustee

Warren West, CPPT

Avon Park Firefighters’ Pension Fund, Trustee

FPPTA Advisory Representatives

Dan Kleman, CPPT

Port St. Lucie Police Officers Pension Fund, Trustee

William O. Bell, III

Director, Consultant Relations; Great Lakes Advisors

FPPTA Staff/Consultant Representatives

Kimberlie E. Prior, CPPT

FPPTA Chief Executive Officer

MJ Chwalik

FPPTA Chief Operating Officer

15


Ken Harrison, CPPT

FPPTA Board of Directors, Emeritus

Sugarman & Susskind

Susan Marden

FPPTA Public Relations Consultant

FPPTA Volunteer Representatives

Fred Nesbitt, PhD

FPPTA Media Consultant

Katie Byrne, CPPT

Brad Rinsem, CPPT

Salem Trust

THANK YOU

David Puscher, CPPT

for serving on the Education Committee!

Buckhead Capital Management offers equity and fixed income investment

solutions for institutional and high net worth investors.

John D. Swanson, Jr.

Walter E. DuPre, CFA

Tara A. Hart

3100 Cumberland Boulevard

Suite 1450

Atlanta, GA 30339

404-720-8800

404-720 8802 Fax

www.buckheadcapital.com

thart@buckheadcapital.com

16


FPPTA Educational Programs and Resources

FPPTA EDUCATIONAL PROGRAMS –

FPPTA New Member Orientation Program

The FPPTA has created a formal “New Member Orientation

Program” for all new members. If you’re a trustee,

administrator, or associate member, this program will

provide you with information about FPPTA educational

programs, public pension research and communications

offerings, as well as an introduction to FPPTA’s

national affiliations. This program is conducted from

3:30-5:00pm on Sunday during the two Trustee

Schools held each year.

FPPTA CPPT Program

The goal of the CPPT Program is to provide an education

that will produce well-informed trustees, so that

they will be able to actively and meaningfully participate

in the management of their retirement boards.

Attaining certification will enhance your fiduciary role

as a contributing member in your retirement system.

The CPPT Program has been designed to accommodate

both the novice just starting in the pension

trustee role, as well as the seasoned veteran who has

served many terms. There are three levels: (1) basic, (2)

intermediate, and (3) advanced. To be eligible for the

CPPT certification, you will need to pass examinations

at all three levels. After passing the advanced course,

your certification begins. After you are certified, you

must maintain your accreditation by completing the

annual post certification requirements.

FPPTA CEU Program

The CEU program's primary purpose is to provide as

many educational opportunities as possible for the

membership to attend. This agenda changes with each

and every school. On average this program provides

36-40 workshops over a two day period. All topics

focus on information and content serving for trustees,

plan administrators and professionals working in

the public pension industry. The CEU Program also

provides the topical FPPTA Certificate Program, created

for our more senior trustees.

FPPTA Wall Street Program

The FPPTA conducts this educational program each

spring in New York City. Program participants have the

opportunity to experience the excitement of the New

York Stock Exchange. This four day program consists of

a tour and presentation about how stocks are traded

through two days of participation in “Building a Pension

Portfolio” with our program sponsors. It finishes

up with a visit to the New York Stock Exchange and a

presentation of the history of Wall Street. This program

is only for trustees or administrators who have attained

their CPPT designation. Associate members must be

a sponsor to participate in the Wall Street Program.

FPPTA Individual Retirement Program

The FPPTA is pleased to offer this program at the

Winter Trustee School each and every year. With the

Baby Boomer generation retiring in rising numbers,

along with the increase in life expectancy, retirement

has become very complicated. As a trustee, this

program will better equip you to answer the many

questions asked by your members. (Separate registration

and open to ALL members of the FPPTA.)

FPPTA Certificate Program

This special administrator and staff program was

initiated at the June 2016 Annual Conference. Each

program takes a deep dive into as specific area of the

industry, so trustees may grasp relevant concepts and

issues better. These two half-day sessions (8 hours

total) are offered during both the winter and fall

Trustee Schools. (Separate Registration. Participants

must have attained their CPPT designation to attend

these programs.) Certificates are presented on

Wednesday morning to each participant.

FPPTA Administrators Certificate Program

This special administrator and staff program was initiated

at this year’s June Conference. Designed to address

pension administrator issues, this program covers

regulatory and compliance matters, as well as the duties

and responsibilities of assisting a pension board.

FPPTA EDUCATIONAL RESOURCES –

FPPTA E-Newsletter

Communication is essential to a well-run organization.

The FPPTA provides an electronic newsletter to its

members on a monthly basis. The electronic newsletter

provides members with updates about the FPPTA, its

many initiatives and events. The digital format is an

effective medium to provide members with a vast

amount of information via links. Subjects include

headlines from around the state, legislative updates

and analysis, important reports and studies from industry

think tanks, ways to effectively utilize the media and

communication tools, and even personal finance tips.

You can access an archive of past E-Newsletters

on the FPPTA website (www.fppta.org).

Public Pension Institute

The Public Pension Institute website (www.

publicpensioninstitute.org) provides outreach

and education on-line to everyone who works

with public employees, including trustees, city

commissions, mayors, finance managers and

administrators. The website offers a wide range

of resources including news and information,

video lectures and presentations, legislation

tracking, and a forum where visitors can discuss

and share ideas and opinions freely. There is

no cost to the user and no passwords or registrations

are required.

17


The FPPTA Voice Magazine

This publication is available on an annual basis.

Every edition contains updates, summaries and

new initiatives that the FPPTA has completed or

is working on. It includes descriptions of all the

FPPTA educational initiatives and industrywide

research sites, assisting our membership to

keep current with all industry issues and developments.

The Voice also provides an opportunity

to have our Associate Members share

industry specific articles along with their advertisements...

as everyone knows, without the

generous support of our Associates, the FPPTA

would not be able to provide the diverse

education presently offered on a yearly basis!

This is always a must read when published, usually

available before our Fall Trustee School.

FPPTA Town Hall Program

This program has been designed to assist a

pension board to convey the necessary information

that its members and local officials

need to understand. The Florida Legislature has

introduced a number of legislative initiatives

that would drastically impact the defined

benefit plans offered to public employees in

Florida. The FPPTA has put together a panel of

pension professionals who can provide expertise

and who will coordinate for your pension

board a town hall meeting to present facts

and figures about defined benefit plans

especially as relates to legislative actions in

Tallahassee. n

18


2019 Active Pension Board Members

AFSCME Local 1907

Amalgamated Transit 1577 Pension Fund

ATU Local 1596 Pension Fund

Auburndale Firefighters Pension Plan

Auburndale Police Pension Plan

Aventura Police Officers Pension Fund

Avon Park Police Officers Pension Fund

Bal Harbour Village Police Officers Pension Fund

Belleair Police Officers’ Pension Board

Boca Raton GE Pension Plan

Boca Raton P&F Retirement System

Bonita Springs Firefighters Pension Fund

Bonita Springs GE Retirement System

Boynton Beach Firefighters Pension Fund

Boynton Beach GE Pension Fund

Boynton Beach Police Pension Fund

Bradenton Firefighters Pension Fund

Bradenton Police Officers Pension Fund

Cape Coral Firefighters Pension Fund

Cape Coral GE Pension Fund

Cape Coral Municipal Police Officers Pension Plan

Casselberry Police Officers & Firefighters Pension

Fund

Clearwater Firefighters Pension Fund

Clearwater GE Pension Fund

Cocoa Firefighters Pension Fund

Cocoa GE Pension Fund

Cocoa Police Pension Fund

Cooper City Firefighters Pension Fund

Cooper City GE Pension Fund

Cooper City Police Officers’ Pension Fund

Coral Gables Firefighters Pension Fund

Coral Gables GE Pension Fund

Coral Gables Police Officers Pension Fund

Coral Springs Firefighters Pension Fund

Coral Springs GE Pension Fund

Coral Springs Police Pension Fund

Dade County Firefighters Insurance Trust

Dania Beach Police Officers & Firefighters Retirement

Davie Firefighters’ Pension Fund

Davie Police Officers Pension Fund

Daytona Beach P&F Pension Fund

Deerfield Beach Firefighters Pension Fund

Deerfield Beach GE Pension Fund

Deland Police Pension Fund

Delray Beach Fire Pension Fund

Delray Beach GE Pension Fund

Delray Beach Police Pension Fund

Deltona Firefighters Pension Fund

Destin Fire Control

Dunedin Fire Pension Fund

East Lake Tarpon Firefighters Pension Fund

East Point Employees Retirement Plan Pension

Board

Edgewater Firefighters Pension Fund

Edgewater GE Pension Fund

Edgewater Police Officers Pension Fund

Englewood Firefighters Pension Fund

Eustis Firefighters Pension Fund

Fernandina Beach GE Pension Fund

Fernandina Beach P&F Pension Fund

Flagler Beach Firefighters Retirement System

Fort Pierce GE Pension Fund

Fort Pierce Police Officers Pension Fund

Ft. Lauderdale Firefighters Health Trust

Ft. Lauderdale GERS

Ft. Lauderdale P&F Pension Fund

Ft. Myers Firefighters Pension Fund

Ft. Myers GE Pension Fund

Gainesville Consolidated Board of Trustee

Gainesville GE Pension Fund

Golden Beach GE Pension Fund

Greater Naples Fire Pension Plan

Greater Orlando Aviation Authority Pension Fund

Greenacres P&F Pension Fund

Gulfport Police Officers Pension Fund

Haines City Firefighters Pension Fund

Haines City Police Officers Pension Fund

Hallandale Beach P&F Pension Fund

Hialeah Gardens Police Pension Fund

Hialeah GE Pension Fund

Hialeah Police Officers Pension Fund

Holly Hill Firefighters Retirement System

Hollywood Employees Retirement Fund

Hollywood Firefighters Pension Fund

Hollywood Police Officers Retirement System

Homestead Firefighters Retirement Plan

Homestead GE Pension Fund

Homestead Municipal Police Officers Retirement

Jacksonville Beach Firefighters Retirement

Jacksonville Beach GE Retirement System

Jacksonville Beach Police Officers Retirement

Jacksonville Police and Fire Pension Fund

Jacksonville Retirement System

Jupiter Police Officers Pension Fund

Key Biscayne P&F Retirement Plan

Key West GE Pension Fund

Key West Housing Authority Pension Fund

Key West P&F Pension Board

Kissimmee Firefighters Pension Fund

Kissimmee GE Pension Fund

Kissimmee Police Officers Pension Fund

Kissimmee Utility Authority Employees’ Retirement

Lake City Firefighters Pension Fund

Lake Wales Firefighters Pension Fund

Lake Wales GE Pension Fund

Lake Wales Police Officers Pension Fund

Lake Worth Firefighters Division II Pension Fund

Lake Worth GE Pension Fund

Lake Worth Police Pension Fund

Lakeland Employees Pension Board

Lakeland Police Officers Pension Fund

Lantana Police Officers Pension Fund

Largo P&F Pension Fund

Lauderhill Confidential & Managerial

Lauderhill Firefighters Pension Fund

Lauderhill GE Pension Fund

Lauderhill Police Officers Pension Fund

Longboat Key Consolidated

Longwood F&P Pension Fund

Maitland Police Officers & Firefighters Pension Trust

Fund

Marathon Firefighters Pension Fund

Marco Island Firefighters Pension Fund

Marco Island Police Officers Pension Fund

Melbourne Firefighters Pension Fund

Melbourne GE Pension Fund

Melbourne Police Officers Pension Fund

Miami Beach Employees Retirement Plan

Miami Beach Fire & Police Pension Fund

Miami Beach Fire Relief

Miami Beach Police Relief & Pension Fund

Miami Department of Off-Street Parking

Miami Firefighters & Police Officers Pension Fund

Miami Firefighters Relief & Pension Fund

Miami GE & Sanitation Employees Retirement

Miami Shores Village Police Pension Fund

Miami Springs GE Pension Fund

Miami Springs Police Pension Fund

Milton GE Pension Fund

Miramar Firefighters Pension Fund

Miramar Firefighters VEBA Trust

Miramar GE Pension Fund

Miramar Management Pension Board

Miramar Police Officers Pension Board

Mount Dora Firefighters Pension Fund

Mount Dora GE Pension Fund

Mount Dora Police Officers Pension Fund

Naples Firefighters Pension Fund

Neptune Beach Police Officers Retirement System

New Port Richey Firefighters Pension Fund

New Port Richey Police Pension Fund

New Smyrna Beach Firefighters Pension Fund

North Collier Fire Control & Rescue District

North Miami Beach GE Pension Fund

North Miami Beach P&F Pension Fund

19

North Miami GE Singerman

Pembroke Pines P&F Pension Fund

Insurance Trust

North Miami Police Officers Pension

North Palm Beach Police & Fire Pension Fund

North Port Firefighters Pension Fund

North Port Police Officers Pension Fund

North River Firefighters Pension Fund

Oakland Park P&F Pension Fund

Ocala Firefighters' Pension Fund

Pensacola Firefighters' Pension Fund

Pensacola GE Pension Fund

Pensacola Police Officers Pension Fund

Pinellas Park Firefighters Pension Fund

Pinellas Park GE Pension Fund

Pinellas Park Police Officers’ Pension Fund

Plantation GE Pension Fund

St. Lucie County Firefighters Pension Fund

St. Lucie County GE Pension Fund

St. Petersburg Firefighters Pension Fund

St. Petersburg GE Pension Fund

St. Petersburg Police Officers Pension Fund

Starke Firefighters Pension Fund

Starke GE Pension Fund


Ocala GE Pension Fund

Plantation Police Officers Pension Fund

Starke Police Officers Pension Fund

Ocoee GE Pension Fund

Plantation Police Trust

Sunrise Firefighters Pension Fund

Ocoee P&F Pension Fund

Plantation Volunteer Fire Pension Fund

Sunrise GE Pension Fund

Okeechobee GE

Pompano Beach GE Retirement System

Sunrise Police Officers’ Pension Fund

Okeechobee Utility Authority Employees Retirement

Pompano Beach P&F Pension Fund

Surfside, Town of

System

Port Orange Fire Rescue

Tallahassee 175 Pension Fund

Oldsmar Fire Pension Fund

Port Orange GE Pension Fund

Tallahassee 185 Pension Fund

Orange Park Police Officers Pension Fund

Port Orange Police Officers’ Pension Fund

Tamarac Firefighter Pension Fund

Orlando Firefighters Pension Fund

Port St. Lucie Police Officers Pension Fund

Tamarac GE Pension Fund

Orlando Police Officers Pension Fund

Punta Gorda GE Pension Fund

Tampa F&P Pension Fund

Ormond Beach Firefighters Pension Fund

Riviera Beach Firefighters Pension Fund

Tampa GE Pension Fund

Ormond Beach GE Pension Fund

Riviera Beach GE Pension Fund

Tarpon Springs Firefighters Pension Fund

Ormond Beach Police Officers Pension Fund

Riviera Beach Police Officers Pension Fund

Tarpon Springs Police Department

Oviedo Firefighters Pension Fund

Rockledge Fire Employees Retirement Board

Tavares Firefighters Pension Fund

Palm Bay P&F Pension Fund

Rockledge General Employees Retirement Board

Temple Terrace Firefighters Pension Fund

Palm Beach County Firefighters Retirement

Rockledge Police Officers Pension Fund

Tequesta GE Pension Fund

Palm Beach County Firefighters Retirement

Sanford Firefighters Pension Fund

Tequesta Public Safety Officers Pension Fund

Insurance Trust

Sanford Police Officers Pension Fund

Titusville GE Pension Fund

Palm Beach Gardens Firefighters Pension

Sanibel General Employees Pension Plan

Titusville P&F Pension Fund

Palm Beach Retirement

Sarasota Firefighters’ Insurance Trust

Venice Firefighters Pension Fund

Palm Harbor Special Fire Control & Rescue District

Sarasota Firefighters’ Pension Fund

Venice Police Officers Pension Fund

Firefighters Pension Plan

Sarasota GE Pension Fund

Vero Beach Police Officers Pension Fund

Palm Springs GE Pension Fund

Sarasota Police Officers’ Pension Fund

West Palm Beach Firefighters Pension Fund

Palm Springs Police Pension Fund

Seminole Firefighters Pension Fund

West Palm Beach GE Pension Fund

Palmetto GE Pension Fund

South Miami Police Officers Retirement Trust Fund

West Palm Beach Police Officers Pension Fund

Palmetto Police Officers Pension Fund

St. Augustine GE Pension Fund

Winter Garden GE Pension Fund

Panama City Beach Firefighters

St. Augustine Police Officers’ Pension Fund

Winter Garden P&F Pension Fund

Panama City Beach General Employees

Panama City Beach Police Officers

Parrish Medical Center Pension Fund

St. Cloud GE Pension Fund

St. Cloud P&F Pension Fund

St. Lucie County Fire District Retiree Health

Winter Haven Firefighters Pension Fund

Winter Haven Police Officers Pension Fund

n

ACTUARIES AND CONSULTANTS

13420 Parker Commons Boulevard, Suite 104

Fort Myers, Florida 33912

(239) 433-5500

We are proud to sponsor

the Florida Public Pension

Trustees Association

thornburg.com | 800.276.3930

20


2019 Associate Members

Aberdeen Standard Investments


Acadian Asset Management LLC

Agincourt Capital Management

AllianceBernstein

Allianz Global Investors

Amalgamated Bank



Aon

Argent Capital Management

Aristotle Capital

ASB Capital Management

Asset Consulting Group

Atlanta Capital Management Co., LLC

Balentine, LLC

Baring North America, LLC

Baron Capital

Barrow, Hanley & Mewinney & Strauss

Battea-Class Action Services, LLC

Bentall Greenoak

Bernstein Litowitz Berger & Grossmann

BlackRock

Bloomfield Capital

BNY Mellon

Boyd Watterson Asset Management

Brandes Investment Partners

Brandywine Global

Bridgeway Capital Management

BTIG, LLC

Buckhead Capital Management

Buck Consultants

Burgess Chambers & Associates, Inc.

C. S. McKee, LP

Cadence Capital Management

Capital Group

Capital Institutional Services

Causeway Capital Management

CenterSquare Investment Management,

LLC

Channing Capital Management

Cheiron

Christiansen & Dehner, P.A.

Columbia Threadneedle Investments


Cornerstone Investment Partners

Crawford Investment Counsel

Cushing Asset Mgmt

Dahab Associates

Dana Investment Advisors

DePrince, Race & Zollo

Diamond Hill Capital Management

Driehaus Capital Management, LLC

DuPont Capital Management

DWS

EnTrustPermal

Epoch Investment Partners

Fiduciary Trust International of the South

Fifth Third Bank

Fisher Investments

Foster & Foster Consulting Actuaries, Inc.

Franklin Templeton Investments

Fred Alger Management

Freiman Little Actuaries, LLC

Gabriel, Roeder, Smith & Co.


GCM Grosvenor

GoldenTree

Grant & Eisenhofer P.A.

Gray Robinson , P.A.

Graystone Consulting, Tampa –

Morgan Stanley


GW&K Investment Management

Harbour Vest Partners

HGK Asset Management, Inc.

Highland Capital Management, LLC

Icon Integration and Design, Inc.

Integrity Fixed Income

Intercontinental Real Estate Corporation


Janus Henderson Investors


Kehoe Law Firm, P.C.

Kessler Topaz Meltzer & Check, LLP

Klausner & Kaufman, P.A.

Lauterbach and Amen, LLP –

Pension Services

Lazard Asset Management

Levi & Korsinsky, LLP

LMCG Investments

Logan Capital Management, Inc.

Loomis, Sayles & Company

Manulife Asset Management

Maroon Equity Partners, LLC

Meketa Investment Group

Mellon

MFS Investment Management

Mierzwa & Floyd P.A.

Milliman, Inc.

Nareit


Natixis Global Asset Management

Neuberger Berman

Nikko Asset Management Americas

Northern Trust Company

Nuveen

Nyhart Company, Inc.

Octagon Credit Investors

OppenheimerFunds

Orleans Capital Management

Palisade Capital Management

Pathway Capital Management


PFM Asset Management

PNC Bank

Polen Capital Management

Principal Global Investors

Quantativie Management Associates

RBC Global Asset Management

Resource Centers, LLC

Rice Pugatch Robinson Storfer & Cohen, PA


RNC Genter Capital Mgmt

Robbins Geller Rudman & Dowd LLP

Ryan ALM, Inc.

Salem Trust

Sawgrass Asset Management, LLC

Saxena White

Schroder

Scott + Scott, Attorneys At Law, LLP

Segal Marco Advisors

Segall Bryant & Hamill

Seizert Capital

Seminole Financial Services

Southeastern Advisory Services

State Street Global Advisors

Strategic Benefits Advisors, Inc

Sugarman & Susskind

Summit Global Investments

TA Realty

Taurus Private Markets, LLC

TerraCap Management, LLC

Thompson, Siegel & Walmsley


Tocqueville Asset Management

Todd Asset Management, LLC

TriLinc Global

TWIN Capital Management

Ullico Inc.

Vaughan Nelson Investment Management

Victory Capital Management

Vulcan Value Partners

Wellington Management Company

Wells Fargo Asset Management

Westwood Holdings Group

Wilshire Associates, Inc

Wolf Popper n

21

is proud to support the Florida Public Pension Trustees Association

Uncompromised Quality Is Our Tradition

Mary M. Byrom

Jim Skesavage

404-876-9411

mary.byrom@atlcap. com

jim.skesavage@atlcap.com

www.atlcap.com


2019-20 Legislative Session Dates:

August 1, 2019 – Deadline for filing claim bills (Rule 4.81(2)

November 22, 2019 – Deadline for submitting requests for drafts of

general bills and joint resolutions, including requests for companion bills.

January 10, 2020 – Deadline for approving final drafts of general bills and

joint resolutions, including companion bills.

January 14, 2020 – Regular Session convenes (Article III, section 3(b),

Constitution), deadline for filing bills for introduction (Rule 3.7(1))

February 29, 2020 – All bills are immediately certified (Rule 6.8).

Motion to reconsider made and considered the same day (Rule 6.4(4)).

March 3, 2020 50th day – last day for regularly

scheduled committee meetings (Rule 2.9(2))

March 13, 2020 60th day – last day of

Regular Session (Article III, section 3(d),

Constitution).

22


Associate Advisory Board

In 1992 the FPPTA underwent a structural reorganization.

The concept of an Advisory Board was

proposed by an associate member from New York. This

board would give the associate members a voice.

Using their business expertise, their function would be

to lend guidance and support to the FPPTA. The idea

seemed to have merit and the Advisory Board was

established. The current Advisory Board consists of 21

members. Each member is voted in by the FPPTA

Board of Directors for a three year term.

When the Advisory Board was established, the

FPPTA had only eight speakers. Currently the FPPTA

benefits from a speaker pool of over 150 qualified individuals

who are rotated onto the schedule throughout

our educational programs. The Advisory Board

helped to create speaker guidelines and performance

standards for our associate members. The Advisory

Board handles complaints about associate members

and basically governs themselves.

The Advisory Board conducts the Associate Golf

Tournament at the annual conference, and members

assist with coordinating of EXPO raffles. A committee

of Advisory Board members has worked with FPPTA

Board of Directors, senior staff and consultants to

establish sponsorship opportunities and procedures.

Advisory Board members and other associate

members of FPPTA are very involved in the organization.

Associate members serve on our Education Committee

and monitor our educational sessions, grade

handout materials, and supply teachers for our certification

program. They have supported and assisted

with the development of a Defined Benefit Initiative

and continually provide informative information and

articles for “the Voice.” We thank all of our associate

members – they are a vital segment of the FPPTA and

we could not remain the quality organization we are

without them. n

2019 Associate Advisory Board Members

Richelle Hayes, CPPT

Board Chairman


Tracy Musser

Board Vice Chairman

Thompson, Siegel &

Walmsley, Inc.

Jonathan Davidson, CPPT

Board Secretary

Kessler Topaz Meltzer &

Check, LLP

W.O. Bell


Gustavo Bikkesbakker, CPPT


Paul Lundmark, CPPT

Richmond Capital

Management

Mary McTague-Byrom


Tom Capobianco

Lee Munder Capital Group

23


Tom Franzese


Chris Greco


Janna Hamilton, CPPT


Kate Hurley

J.P. Morgan Chase

Chuck Jeroloman

Saxena White, LLC

Suzanne Lawrence


Chad Little

Freiman Little Actuaries

Steve Stack, CPPT

Highland Capital

Management

Jerry Navarrete

The Boston Group

Brad Rinsem

Salem Trust Company

Cristine Turner, CPPT


Dave West

AndCo Consulting

Kurt Wood


Our Associate Members are a vital segment

of the FPPTA and we could not remain the

quality organization we are without them.

24


35JUNE 30 - JULY 3, 2019 | ORLANDO WORLD CENTER MARRIOTT

TH ANNUAL CONFERENCE

JUNE 30 - JULY 3, 2019 | ORLANDO WORLD CENTER MARRIOTT

25

ANNUAL

CONFERENCE

SPONSORS:


SILVER

BMO Global Asset Management



BlackRock


Tocqueville Asset Management

GOLD




Nuveen



Scott & Scott Attorneys at Law


Saxena White


PLATINUM


Saxena White


DIAMOND


Kessler, Topaz, Meltzer & Check LLP

26

the VOICE . FALL 201935TH

CONFERENCE EXHIBITORS

JUNE 30 - JULY 3, 2019 | ORLANDO WORLD CENTER MARRIOTT


Amalgamated Bank



Aristotle Capital

Atlanta Capital

Balentine

Bernstein Litowitz Berger & Grossmann

BNY Mellon

Boston Partners


Capital Group

Cohen & Steers

Dahab Associates


Dupont Capital

Fiduciary Trust International of the South

Fifth Third Bank

Foster & Foster Actuaries and Consultants

FPPTA

Gabriel, Roeder, Smith & Co.

Great Lake Advisors

GW&K Investment Management

Highland Capital Management, LLC

Icon Integration and Design, Inc.

Intercontintental Real Estate

Janus Henderson Investors


LMCG Investments

Loomis Sayles


Mellon

Nareit


Northern Trust

Nuveen

Nyhart

Octagon Credit Investors, LLC


PFM Asset Management, LLC

Polen Capital Management

Pomerantz, LLC

Resource Centers, LLC


Robbins, Geller, Rudman and Dowd, LLP

Salem Trust


Saxena White

Schroders

Segall Bryant & Hamill


Summit Global Investments

Thompson, Siegel & Walmsley, LLC


Ullico


27


28


2019 Raymond T. Edmondson Award

By Tom Thompson

ANN THOMPSON, CPPT

In 2006, the FPPTA established the Raymond T. Edmondson

award to honor individuals who have demonstrated

exemplary support for Florida’s defined benefit pension

plans and retirement programs.

At the June, 2019 conference, the Raymond T.

Edmondson Award was presented to Director Ann

Thompson, CPPT. Ann’s involvement with the pension

field began in 1986 as an ERISA pension administrator

with Barnett Banks Trust Company in Fort Lauderdale.

Actually, her first position there was as a temp. When a

full-time job opened up in the department, they made

her an offer and she took it. It was a significant career

change as she was previously working in university

development and fund raising in Pennsylvania. Ann

often joked about the fact that she used to have to beg

for money, and now people were just giving her large

sums without being asked.

During her time at Barnett, Ann earned her Certified

Employee Benefits Specialist (CEBS) designation

from the Wharton School of the University of Pennsylvania.

In 1997, Barnett was acquired by NationsBank

which subsequently merged with Bank of America. As

often happens with mergers, some divisions are sold.

In this case, the result was the birth of Salem Trust

Company in 1998. As Vice President and Regional

Manager for Salem, Ann was an integral part of Salem’s

growth. She built the Deerfield Beach office of Salem

Trust from the ground up. Working with other

ex-Barnett executives across Florida, they made the

company one of the largest custodians in the state.

In 2003, Ann and her husband, Tom, formed

Thompson Consulting, a marketing firm. She provided

consulting services for Salem and other pension

clients, as well as being involved with Tom’s clients.

Among work in other fields, he did freelance writing for

publications in the recreational marine industry. Ann

says she was always a bit envious of how he used to

get paid to play on boats. The upside was that she got

to cruise on some of the most luxurious craft on the

waterways. Ann continued her consulting work until

her retirement in 2013.

In 2005, Ann was asked to become the fifth member

of the Vero Beach Police Pension Fund. The board

was well aware of her qualifications, as VBPD was one

of her clients at Salem. They welcomed someone of her

caliber on the board, and she welcomed the opportunity

to visit the Vero outlet malls.

Ann was elected to her first term as an FPPTA Board

Director in 2007. Since then she has, at various times,

served on the Audit, Executive Oversight, Relief, Education

and Raymond T. Edmondson Scholarship committees.

Shortly after she was elected to the board, Ray

said to her, “Ann, I need a favor.” He had the idea of

creating a publication that would be like an FPPTA

annual report. Ann took Ray’s thoughts and made

them into reality. The Voice – the magazine you are

holding - was born. She has been the editor since, and

only this year passed the torch.

Ann says she has seen a lot of change in the

pension industry as well as growth in the FPPTA’s

educational offerings during her 12 years as a Director.

She plans to continue her involvement with FPPTA, the

various committees, and the Basic Class, in order to

further the important work of educating public

pension trustees. But most importantly, Ann says she

enjoys working with some of the most giving people

she has ever had the opportunity to know.

On a personal note, Ann was born in Germany and

came to this country when she was five. She grew up

in the Philadelphia area and attended Penn State,

where she met Tom, her husband-to-be, on a blind

date. Two years later, they were married. They lived in

Pennsylvania until 1985 when Tom was offered a job in

Miami. They gave up the cold and snow and came to

the Sunshine State. Ann says it was the best move they

ever made, next to getting married.

(Oh, and by the way, the Tom Thompson whose

byline is on this story is also her husband. I’m so proud of

you, my love!) n

Certified Public Pension Trustee (CPPT) Update

Stephanie Wehrly,

CPPT Records Manager

At our 35th Annual Conference in Orlando we had 700 attendees and 200 of those

were CPPT certified. At the Fall Trustee School held in 2018 and Winter Trustee School 2019

eight-five (85) members completed the Advanced Course thereby earning their certification.

Over thirty (30) of those were in attendance at the Annual Conference to receive their

well-deserved plaque. For those who were not able to pick up their plaque, they will be

available at the Fall School. If you were unable to attend the conference and are unable to

attend the Fall School, please have someone from your board or firm pick up your plaque.

Please keep the Post Certification Requirements in mind as you make your plans for the Fall School. If you

were certified at the 2019 Winter School you need to begin earning CEUs right away. You have the remainder of

the year to earn your CEUs. If you complete the certification at the 2019 Fall School you must begin earning CEUs

January 1, 2020. Post certification requirements are as follows:

· Earn 10 Continuing Education Units (CEUs) annually. At the annual Education Committee meeting in the

spring of 2019 it was voted that all FPPTA events will be worth ten (10) CEUs. Five (5) CEUs will be awarded for

NPEA, NCPERS, NCTR, the Florida Division of Retirement Police & Firefighters Trustees School as well as the

International Foundation of Employee Benefit Plans

· Attend at least one FPPTA education event annually.

· Annual re-certification fee of $31.

· Complete and return the annual CEU form – only if you attended educational venues other than FPPTA.

If you need a 2019 form, please contact me at stephanie@fppta.org.

· Checking in and out must be done daily to receive credit for attending FPPTA events. This is our only

record of your attendance. Checking in and out records will be uploaded to your profile.

NEW PROGRAM! During the upcoming Fall Trustee School at the Sawgrass Marriott Golf Resort & Spa

(October 6-9), FPPTA will offer a new certificate program, The Legal Education Program for those who have

completed the CPPT certification program. This program requires pre-registration. The registration form can be

found on our website when you register for the school. You will receive ten (10) CEUs for attending this program

provided you check in and out, or sign the sign-in sheet daily. There is no additional cost associated with this

program.

2019 Re-certification notices will be e-mailed in early November. They will be sent to all certified trustees

as well as to the administrators. Please keep in mind the fees are billed in arrears and are due no later than

February 1, 2020. CEU forms will be available for completion. If you are paying by check please return the

completed CEU/Invoice form along with the check.

Once again, congratulations to all our new CPPT recipients. We look forward to seeing you at the upcoming

schools. n

29


Proud Sponsor of FPPTA

Serving Florida Clients for Over 25 years!

Grant McMurry Todd Wishnia Steven Stack

w.highlandcap.com

Proud Sponsor of FPPTA

30

CPPT Recipient Highlights!


Timothy Anderson, CPPT – Pembroke Pines

Benjamin Clark, CPPT – Oviedo Fire

George Danz, CPPT – Greater Naples Fire

Simone Davidson, CPPT – Riviera Beach General

Terry Elkins, CPPT – Key West General

Minying Ho, CPPT – Hialeah General

Paul Ortenzo, CPPT – Davie Police

CONGRATULATIONS

TO ALL NEW

CPPT RECIPIENTS!

2019 CPPT Recipients

- Timothy Anderson, CPPT; Pembroke Pines Firefighters & Police Officers

Pension Fund

- Miguel Augustin, CPPT; North Miami Police Officers Pension Fund

- Kenneth Birkhofer, CPPT; Eustis Police Officers Pension Fund

- David Black, CPPT; Lake Wales Police Officers Pension Fund

- Donald Blanchard, CPPT; North Miami Police Officers Pension Fund

- Sharon Bonnem, CPPT; East Lake Tarpon Firefighters Pension Fund

- Christopher Boyd, CPPT; Hollywood Police Officers Retirement System

- Angelo Brinson, CPPT; North Miami Police Officers Pension Fund

- Ron Brown, CPPT; Haines City Police Officers Pension Fund

- Antoinette L. Brown, CPPT; Fernandina Beach General Employees &

Police Officers & Firefighters Pension Fund

- Rusty Burke, CPPT; Fernandina Beach Police Officers & Firefighters

Pension Fund

- Harold (Hal) Burke, CPPT; Rockledge Police Officers Employees

Retirement Plan

- Rick Cade, CPPT; North Miami General Employees – Singerman

- Maria I. Carrera, CPPT; ATU Local 1596 Pension Fund

- Meralis Celetti, CPPT; Lauderhill Firefighters Retirement System

- Benjamin Clark, CPPT; Oviedo Firefighters Pension Fund

- Sheryl Claude, CPPT; Boynton Beach General Employees Pension Fund

- Gene Clubb, CPPT; Cape Coral Firefighters Pension Fund

- Ornelisa (Lisa) M. Coffy, CPPT; Coral Gables General Employees Pension

Fund

- David D. Cohill, CPPT; Jacksonville Beach Police Officers Retirement

System

- Tracy Coons; CPPT; Cape Coral Municipal Police Officers Pension Fund

- Kevin Crawford, CPPT; Kissimmee Utility Authority Employees Retirement

- Neal Cuevas, CPPT; North Miami Police Officers Pension Fund

- Jonathan Currier, CPPT; Palm Beach Gardens Firefighters Pension Fund

- George Danz, CPPT; Greater Naples Fire Rescue District Firefighters

Pension Plan

- Simone Davidson, CPPT; Riviera Beach General Employees Pension Fund

- Lori I. Day, CPPT; Oakland Park General Employees Pension Fund

- Marian O. Dollard, CPPT; Fort Lauderdale General Employees Retirement

System

- Mark C. Donley, CPPT; Hialeah Police Officers Pension Fund

- Mark Eisner, CPPT; Daytona Beach Police Officers & Firefighters Pension

Fund

- Terry Elkins, CPPT; Key West General Employees Pension Fund

- Maureen Femia, CPPT; Pompano Beach Police Officers & Firefighters Pension

Fund

- Patricia Fishel, CPPT; North Miami Police Officers Pension Fund

- Cleave S. Frink, CPPT; Melbourne General Employees Pension Fund

- Giovanni Fuente, CPPT; Hialeah Police Officers Pension Fund

- Michael (Mike) J. Fuller, CPPT; Palmetto Police Officers Pension Fund

- Carlos Garcia, CPPT; North Miami General Employees – Singerman

- Eric Garcia, CPPT; Miami Beach Firefighters & Police Officers Pension

Fund

- Jefferson (Jeff ) Geimer, CPPT; North Miami General Employees –

Singerman

- Catherine Givens, CPPT; Coral Springs Police Officers Pension Fund

- Dan Givens, Jr., CPPT; Miami Firefighters Relief & Pension Fund

- Mike Grace, CPPT; Saint Lucie County General Employees Pension Fund

- Trevor Hall, CPPT; Tampa Firefighters & Police Officers Pension Fund

- Matthew Hettler, CPPT; Casselberry Police Officers & Firefighters Pension

Plan

- Stephen Hill, CPPT; Deerfield Beach Firefighters Pension Fund

- Minying Ho, CPPT; Hialeah General Employees Pension Fund

- Anthony Hood, CPPT; Saint Lucie County Firefighters Pension Fund

- Stephen C. Hunter, CPPT; West Palm Beach General Employees Pension

Fund

- Michael Indiviglio, CPPT; Boca Raton Police Officers & Firefighters

Retirement System

- Christopher Johnson, CPPT; Lake Worth Police Officers Pension Fund

- Phillip Johnson, CPPT; Lake Worth General Employees Pension Fund

- Derek G. Joseph, CPPT; Fort Lauderdale Police Officers & Firefighters

Pension Fund

- John Kearney, CPPT; Pembroke Pines Police Officers & Firefighters

Pension Fund

- Ariel Kenon, CPPT; Winter Garden General Employees Pension Fund

- Samuel A. Kiburz, CPPT; Punta Gorda Police Officers Pension Fund

- Sandra Larsen, CPPT; Sanibel General Employees Pension Fund

- Brian McDeavitt, CPPT; Boynton Beach Police Officers Pension Fund

- Patrick Messmer, CPPT; Tampa Firefighters & Police Officers Pension Fund

- Tanya Molony, CPPT; Rockledge General Employees Retirement Board

- Evan Mory, CPPT; Saint Petersburg Firefighters Pension Fund

Matthew Newman, CPPT; Lauderhill Firefighters Pension Fund

- Dwight Nicholas, CPPT; Miami Beach Firefighters & Police Officers

Pension Fund

- Paul Ortenzo, CPPT; Davie Police Officers Pension Fund

- Juliet Pennant – Allen, CPPT; North Miami Beach General Employees

Pension Fund

- Robert J. Plummer, CPPT; Lake Wales Police Officers Pension Fund

- Matt Pruitt, CPPT; Pinellas Park Police Officers Pension Fund

- Luis O. Quevedo, CPPT; Coral Gables Police Officers Pension Fund

- Cintya Ramos, CPPT; Hollywood Employees Retirement Fund

- Luis Roura, CPPT; Homestead General Employees Pension Fund

- Karen H. Russell, CPPT; Saint Lucie County General Employees Pension

Fund

- Andrew Schmidt, CPPT; Bonita Springs Firefighters Pension Fund

- Jason Sharp, CPPT; Jacksonville Beach Police Officers Retirement System

- Michael W. Smith, CPPT; Miami Beach Fire Relief Pension Fund

- John Stanfill, CPPT; North Collier Fire Control & Rescue District

Professional Retirement Plan

- Robert Strauss, CPPT; Hollywood Employees Retirement Fund

- Kelly Rae Strickland, CPPT; Sarasota General Employees Pension Fund

- Derek Tangeman, CPPT; AndCo Consulting, LLC

- James Jason Terry, CPPT; Kissimmee Utility Authority Employees

Retirement

- Manuel Villar, CPPT; Miami Beach Employees Retirement Plan

- Andy Waitman, CPPT; Tampa General Employees Pension Fund

- Thel Whitley, CPPT; North Collier Fire Control & Rescue District

Firefighters Retirement Plan

- Jeff Wilmoth, CPPT; Pensacola Firefighters Pension Fund

- Kafele Wright, CPPT; Tallahassee 175 Pension Fund

- Bruce Young, CPPT; Deerfield Beach Firefighters Pension Fund n

31


32


You are a Trustee,

Now It’s Time to Become an Advocate

Sean McKinstry

Director of Research

As members of the FPPTA,

you know how important it is to

be a good steward for your

pension plan. You know what

qualities to look for in a money

manager. You know how to read

an actuarial report. You know how important your administrator

is to keep the pension fund running

smoothly, so beneficiaries receive their checks on time.

And if you’ve been attending the FPPTA for some time,

you know cities and states are always looking to cut

costs and pension funds are an easy target.

“When creating your message,

consider your audience...

The average American may

not know what an unfunded

liability is, but they know police

and fire personnel put their

lives on the line to keep

communities safe.”

The majority of Americans do not have access to a

pension, a truly reliable and time-tested vehicle for

workers to retire with dignity and financial security, so

it can be difficult for the ordinary citizen to sympathize

with those who receive a benefit they do not. It is no

longer enough just to go about the responsibilities of

your role as trustee – we all need to be advocates and

we all need to tell the story of those who rely on

defined benefit plans.

To be an effective advocate, there a few things you

should keep in mind. First, and maybe somewhat obviously,

know exactly what you are advocating for.

Immerse yourself in the industry. Take advantage of

trustee schools and conferences. Talk to people outside

of your own board and get to know the issues they face

in their cities. Interact with the Associate Members and

gain a better understanding of their role in your fund.

Get to know the ins and outs of the industry. There is

always more to learn.

Use the resources available to you. As an FPPTA

member you have access to some incredibly talented

and knowledgeable people in the industry. Don’t be

afraid to reach out to the FPPTA with a request – if we

don’t have an answer for you, there’s a good chance we

can find someone who does. The Public Pension Institute

is a website specifically designed by the FPPTA for

trustees to access a wealth of research and information

that can help them in their day-to-day responsibilities,

as well as containing the tools and messaging that can

help you talk to your representatives and convey the

importance of preserving and properly maintaining

your pension fund.

Craft your message and stick to it. Be concise,

specific and to-the-point in your language and you will

leave a lasting impact. Connect to your audience.

When creating your message, consider your audience

and their level of knowledge and interest in your cause.

The average American may not know what an

unfunded liability is, but they know police and fire

personnel put their lives on the line to keep communities

safe. They know bus drivers get them to work on

time, and they know when they turn on the faucet

water will come out. Tailor your message to your audience

and be clear in your language. Tell a story they can

relate to.

Use technology to your advantage. Social media

platforms can help you be the best advocate you can

be. With the click of a mouse you can potentially reach

thousands of people. Over the last couple of decades

communications technology has exploded and it has

never been easier to effectively and efficiently get your

message out. Of course, with growth comes noise, so

it’s important to identify the platforms where you audience

resides and rev up your activity in those spaces.

Lastly and maybe most importantly, show your

audience that you care. If you are passionate, sincere

and relentless, you will be noticed and your message

will be heard. Real people who care about real issues

and real solutions have the ability to captivate even the

most apathetic crowds. If you are not invested in your

cause, why would anyone else take it up? We know the

next battle is right around the corner. Stand tall, be

confident, and believe in what you are doing. n

We’re Bullish on Wall Street

In 2019 we held our 20th Annual Wall Street Program and, as always, it was a smashing success

thanks to our sponsors!




Atlanta Capital Management Co., LLC



Foster & Foster Consulting Actuaries





Inverness Counsel, LLC


Kessler Topaz Meltzer & Check, LLP

Mellon

Nareit

Nuveen


Schroders n

33


34

Thank You to Our 2019

Golf Tournament Sponsors!


AndCo Consulting, Inc.


Cohen & Steers Capital Management






LMCG Investments


Rice, Pugatch, Robinson, Storfer, & Cohen



Saxena White

Seizert Capital Partners


Associates 31 st Annual Charitable Golf Tournament

Katie Byrne, FPPTA Golf Committee

We want to thank the sponsors of the Associate’s

Charitable Golf Classic for supporting this annual

event. Their generous donations help offset the cost

of the tournament, allowing us to keep the registration

fee low and provide breakfast, golf shirts, and goodie

bags. The proceeds from this year’s tournament will go

to the FPPTA Raymond T. Edmondson Scholarship

Fund.

The Hawk’s Landing Golf Club was another perfect

venue for our tournament. The committee and course

staff were there at 6:00 a.m. getting ready for the early

birds. Chris Jones and his crew helped coordinate the

tournament for us. They assisted with the set-up, made

sure things were running smoothly and guaranteed we

had two drink carts making the rounds, so our players

would not get dehydrated.

We couldn’t have done it without our volunteers:

Ricki Levy, Betsy Harris, and Brian Casey. They were

there early checking players in and handing out the

golf shirts. With a nice breakfast and coffee available

upstairs, some players mingled, while others headed to

the range to warm up.

The typical June morning was warm and humid.

The course, originally designed by Joe Lee, provided

plenty of water and strategically placed bunkers to

challenge our golfers. Meandering through the native

Florida wildlife and tropical vegetation for a scenic

view that some of our golfers saw more of than others!

We had 100 players tackling the tough greens and a

few even managed to make some putts. With Bloody

Mary’s flowing on the 1st tee, a good time was had by

all!

A special thank you to James Kelley for securing

the donation of the golf sponsor signs from his dad at

Dusobox.

Thank you to everyone who participated in the

tournament. It was a great turnout and a lot of fun!

Winners of the Tournament:

1st Place score of 57 – Erik Conway,

Frank DeFalco, and Thomas Mendoza

2nd Place score of 60 – Bryan Stephens,

Clayton Johnson, Donna Wise and Gary Wise

3rd Place Score of 60 – Amanda Leong,

Chris McDonough, Dann Smith, and Matt Malone

Longest Drive Ladies – Kristin Phalen

Longest Drive Gentlemen – Jon Breth

Closest to the Pin Ladies – Kristin Phalen

Closest to the Pin Gentlemen – Paul Kamus

If you have any comments, please contact Steve

Aspinall at chave@aspinall.us. He will bring the information

to our associate committee members.

Golf Committee: Steve Aspinall, Katie Byrne,

Howard Bos, Paul Lundmark, and Janna Hamilton. n

35


36


FPPTA Relief Committee


Relief Committee

Co-Chairman,

FPPTA Board of Directors,

Treasurer

The FPPTA Relief Fund was

established in 2010 with the

proceeds of the Annual Associate

Members Charitable Golf Classic, along with donations

from Associate Members and others. Each year,

any excess funds raised by the golf tournament are deposited

into a Relief Fund account. It has a governing

committee of seven members representing the Associate

Members, the Board of Directors and Trustee

Members. The committee is comprised of Katie Byrne

and Steve Aspinall Co- Chairs, Howard Bos, Janna

Hamilton, Tim Olsen, Ann Thompson, and Ken Harrison.

To be eligible to apply, your Board must be a member

in good standing with the FPPTA. An electronic application

is available on the FPPTA website. Once the

application is received, a number will be assigned to

the case and the member/recipient will be anonymous.

The Committee meets three times a year in conjunction

with the two Trustee Schools and the Annual

Conference to select fund recipients. In emergency

cases, the process is handled via e-mail. As stated, recipients

will be anonymous, except to the committee,

to encourage members to apply.

If you, a member of your family, your board or a

plan beneficiary fall upon hard times, whether it is a

medical need, or some other need, or you are the

widow/widower of a fallen comrade, please reach out

to the Relief Fund! Established by our members, for our

members.

Since its inception the Relief Fund has assisted

many families. Please contact one of the Committee

members to get it started. n

Your Public

Sector

Leader

YOUR

BENEFIT PLANS.

OUR

CONSULTANTS.

EVERYONE’S SUCCESS.

You can trus st GRS to provide

the best out tcomes for your

benefit plans.

www.grsconsulng. com

Actuarial & Benefits Consulng

Pension

Health & Welfare

OPEB

DB Plan Administraon

The Dana Viewpoint: Keep on Trucking

J. Joseph Veranth,

Chief Investment Officer,


Behind the Curve. This phrase is

used to describe a Federal

Reserve and Federal Open Market

Committee that is out of

sync with the markets. They are

always using many measures of rates, economic activity,

employment, and inflation in an attempt to set an

interest rate that neither encourages irresponsible risktaking

nor hinders growth. As part of our investment

management process, we do the same thing in an attempt

to better gauge where the economy and the

markets are going, and use that information to position

portfolios properly to benefit under the most likely

outcome. In life, business, and sports, preparedness and

anticipation usually lead to greater success. By being

“behind the curve,” the Fed is being reactive, and since

monetary policy operates with somewhat of a lag, this

approach can compound errors and swings in the

economy.

So what economic indicators should the Fed be

heeding? There are a number of them that we would

suggest and that we also use to try and gauge which

way the economic winds are blowing. Oil and other

commodity prices give a simple price signal. Oil spiked

and then fell last year, but now is back to its longer term

average of between $50 and $60 per barrel. A broader

index of commodities has stayed near its fifteen year

low for the last few years, signifying a troubling lack of

inflation. The dollar has been strong versus other global

currencies, and it would be weaker if market participants

thought there was a danger of inflation. Wage

growth has been moderate, and wage growth would

certainly be higher if individuals thought there was any

danger of higher future inflation. The Fed seems totally

confused by the combination of low inflation and low

unemployment. Housing price growth has also slowed

nationwide to the low single digits, so no inflation

concern there.

There has been much talk and consternation about

the inverted yield curve. We believe an inverted curve,

where long rates are lower than short rates, is a market

indicator that the Fed should respect. The shape of the

yield curve, and longer rates, comprise the sum total

of the market’s collective knowledge about where

rates are headed. It also gives information on whether

market participants think the Fed is ahead or behind

the curve. When the Fed increases short rates and long

rates do not move up along with them, it is a sign that

the Fed is too tight and is hindering potential

economic growth. Low inflation can actually discourage

investment and risk taking, as businesses are

discouraged from investing due to a feared lack of

demand. Japan is the most extreme example, but low

growth plagues most areas of the world right now. The

market now expects three rate cuts this year, and one

more in the first half of 2020. The Fed should listen to

the market.

As we have said before, our investment approach

in our different strategies must reflect the risks and

realities in the market. In our equity strategies, we hold

companies that have meaningful advantages in their

business areas, with proven management. We also look

to hold companies that can grow revenues, although

these become rarer and more expensive in this

environment. In our fixed income strategies, we also

maintain a balance of credit exposure, duration, and

yield. We try to diversify risks as much as possible in our

bond holdings, but inevitably all bonds are slightly

riskier as yields move lower. Our goal is to anticipate

market conditions, and avoid being surprised by

unseen events. Our goal is to remain ‘ahead of the

curve’ in the markets. n

37


“The only thing that is

constant is change.”

Heraclitus

38


The Untold Story of Trailing Returns

By AndCo Consulting, LLC

Whether you’re reviewing

investments as a trustee

or tasked with picking your

own options as a defined

contribution participant,

the start of your evaluation process is likely the same:

“What do the trailing returns look like?” In other words,

are the 1, 3, 5 & 10-year trailing performance numbers

better, worse or largely similar relative to other options

being considered? This tendency to rely on trailing

performance does not apply exclusively to comparisons

between competing investment options, we also

commonly use trailing return periods to evaluate if a

portfolio’s objectives are being met over time and/or

if an asset class (represented by an index) is worthy of

new or ongoing inclusion in a portfolio. Unfortunately,

trailing performance simply doesn’t tell the whole

story.

Every trailing !

return reviewed for an investment,

portfolio or index has an “untold story” each time it is

updated for a new time period (e.g., September 30th

vs. December 31st trailing performance). This is

because there is a basic “rolling-return” factor associated

with updating trailing performance each period

(e.g., quarter), and while we all know the factor exists,

it rarely gets a second thought when evaluating

returns. What factor are we referring to? Each quarter

when an investment’s trailing returns are updated, not

only is the newest quarter’s performance added to the

trailing calculation(s), the oldest quarter associated

with each individual trailing return period is being

dropped. As a result, when a positive quarterly return

is added to a trailing return calculation, it creates an

upward bias on the new period’s trailing return(s).

Conversely, when a positive return for the oldest quarterly

period is dropped off the same calculation, the

effect is the opposite and vice versa. This “out with old,

in with the new” methodology is commonly referred

to as “endpoint sensitivity.” In simpler terms, when the

evaluation period starts and when it ends has a

dramatic impact on the results being reviewed.

It’s easy to visualize how endpoint sensitivity can

have a large impact on results for shorter trailing return

calculations. For example, for a 1-year trailing period

(rolled quarterly), 25% of the return data in the 1-year

calculation changes quarter-over-quarter as the oldest

quarter is dropped and the most recent quarter is

added. While that logic is straightforward, the actual

mathematical impact on the 1-year trailing return

calculation is a function of the delta between the two

quarterly returns that change. As a result, the greater

the difference in the quarter “added to,” relative to the

quarter “dropped from,” the calculation, the larger the

impact on the new 1-year trailing return calculation.

Despite this short-term recognition, we ! typically

don’t consider the impact of endpoint sensitivity when

reviewing longer-term results. This is understandable

since dropping and adding a single quarter from a

long-term trailing return calculation (e.g., 10-years)

does not typically result in large changes in performance.

For example, when a 10-year trailing return rolls

to the next quarter, each new quarter-over-quarter

calculation retains 39 quarters (9.75 years) of legacy

return data (97.5%) and for each year-over-year roll, 36

Source: AndCo Consulting, based on data derived from Investment Metrics PARis. For illustrative purposes only.

39


Source: AndCo Consulting, based on data derived from Investment Metrics PARis. For illustrative purposes only.

quarters of legacy return data (90%) remain part of the

new 10-year calculation. However, when an extreme

period of performance like the 2008 data is dropped

from the calculation, even the 10-year trailing performance

numbers can show surprisingly large shifts.

The table on the previous page illustrates the

upward trending impact on the S&P 500 index’s 10-

year trailing return over the course of 2018 as each new

quarter was added and each quarter of 2008’s index

performance sequentially dropped out of the trailing

10-year performance calculations.

As you can see, despite two negative return quarters

for the S&P 500 index during 2018, the index’s 10-

year trailing return actually increased as each of 2008’s

negative quarters dropped out of the calculation. Most

interestingly, even with 2018’s disappointing 4th quarter

index return of -13.52%, the 10-year trailing

performance of the S&P 500 from the 3rd to the 4th

quarter still increased since that calculation was also

dropping a -21.94% return from the 4th quarter of

2008 (+8.42% delta to the 10-year trailing return calculation).

To understand just how extreme this swing is

relative to history, the 2017-2018 year-over-year return

change of +4.62% for the index was the 3rd largest

positive shift over the 83 rolling 10-year trailing calendar

year periods back to 1926 and well above the

+0.03% average year-over-year variation.

Unfortunately, while the impact of 2008’s negative

quarters rolling off the 10-year return calculation had

a large positive influence on 2018’s 10-year trailing

index results, the story doesn’t end there. The table

above displays the actual and potential downward

impact on the S&P 500 index’s future 10-year trailing

performance for the remainder of 2019.

As you can see, after the 1st quarter of 2009’s negative

return drops out the calculation, endpoint sensitivity

begins to cut the other way. Despite a solid return

in the 2nd quarter of 2019 of +4.30%, the 10-year trailing

return rolls lower as the significantly higher 15.93%

quarter is dropped. As the 3rd and 4th quarter returns

of 2009 roll off, this trend of lower trailing 10-year performance

may continue.

What’s the takeaway? First, this is a fascinating

piece of mathematical market trivia. Second, if your

portfolio is built around a meaningful allocation to

domestic equity, your portfolio’s 10-year trailing total

return has the potential to peak with your March 31st

results (at least for some time). Finally, while they are

certainly a valuable starting point, there is much more

to consider when evaluating an investment, portfolio

or asset class (index) than simply comparing its trailing

performance results, even if those trailing returns are

for long periods of time.

AndCo Consulting is an independent, SEC registered

institutional investment consulting firm. We serve

as a fiduciary to each of our clients, without exception

or caveat, while assisting and guiding them in making

important investment and plan design decisions.

AndCo is honored to serve several public plans in the

state of Florida.

Important Disclosure Information

The views and opinions expressed are solely those of

AndCo Consulting. These statements are not guarantees,

predictions or projections of future performance or of any

outcome. This should not be regarded as investment

Attorney Advertising

The Voice of Investors s and Consumerss

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plaintiffs in securities fraud, antitrust, corporate mergers and acquisitions, consumer and insurance fraud,

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The Untold Story... CONTINUED FROM PAGE 39

41

advice or as a recommendation regarding any particular

course of action.

This document has been prepared for informational

purposes only, and is not intended to provide, and should

not be relied upon, for legal or tax advice. The material

provided herein is valid as of the date of posting and not

as of any future date and will not be updated or otherwise

revised to reflect information that subsequently becomes

available, or circumstances existing or changes occurring

after such date.

This contains forward-looking statements, estimates

and projections which are inherently speculative and subject

to various uncertainties whereby the actual outcomes

or results could differ materially from those indicated.

All data and figures for the S&P 500 Index are sourced

from Investment Metrics PARis. Certain information is

based on sources and data believed to be reliable, but

AndCo cannot guarantee the accuracy, adequacy or completeness

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AndCo Consulting is an investment adviser registered

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AndCo is a full service registered investment advisory

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42


Making Every Dollar Count:

Optimizing Pension Plan Funding

Pete Strong, FSA, EA,

Gabriel, Roeder, Smith and

Company

Does it feel like your pension

plan is on a treadmill? Do

required contributions continue

rising each year but the funded

status barely moves? Do you

wish there was a better way – a more optimal way – to

fund the pension plan? You may have been unintentionally

“kicking the can down the road” for some time

now.

The Great Recession of 2008-09 had a profound impact

on pension plans. Unfunded pension liabilities in

some plans doubled or tripled, but the full impact was

not felt all at once – it crept up over a 5-year period

(due to asset smoothing). Since then, it’s been a slow

climb out of the hole. The unfunded liabilities of most

plans are currently much higher than they were before

the Great Recession due to funding policies that are

very long term in nature and often back-loaded (less is

paid now and more in the future).

When plans experience large losses, as in 2008-09,

the losses are amortized and paid for over many years

(30 years is often used – the maximum period allowed

in Florida). A number of plans also use a “level percentage

of payroll” approach to amortize unfunded liabilities.

Under this approach, the amortization pattern is

structured such that each year’s amortization payment

increases by X% over the previous year’s payment (X%

is the expected annual payroll growth rate). The intent

of this method is for amortization payments to remain

a level percentage of payroll (increasing at the same

rate of payroll). The main problem with this method is

that payments in the first few years can be less than

the interest on the amount being amortized, leading

to “negative amortization” (wherein the unfunded liability

actually increases during the first few years of the

amortization pattern rather than decreasing). Even

when negative amortization is not present, the initial

years’ payments may barely cover interest and the principal

is not significantly reduced until several years

down the road.

If a long amortization method and/or one that uses

a “level percentage of pay” approach is combined with

the use of aggressive actuarial assumptions that are

not realistic, then experience losses (unplanned increases

in the unfunded liability) will likely occur regularly,

each with a new long amortization period. This

will make the plan seem as though it’s stuck at the

same funded level for many years while the required

contribution continues to increase (due to annual increases

in the amortization payments plus new amortizations

for emerging losses). This stagnation is caused

by employing a funding policy that minimizes shortterm

costs at the expense of higher costs down the

road, and it will result in suboptimal long-term pension

funding, meaning the total contributions over the lifetime

of the plan will be higher than they otherwise

could have been.

Throughout the entire lifetime of a pension plan

(which could be infinite), the total cost of the plan is

the sum of all benefit payments plus expenses paid to

operate the plan. This total cost is paid for by a combination

of contributions to the plan and investment

earnings thereon. The higher the investment earnings,

the lower the total contributions will be, and vice versa.

An optimal pension funding arrangement is one

that minimizes total contributions over the lifetime

of the pension plan, while at the same time balances

the competing objectives of benefit security,

intergenerational equity and contribution stability.

The more money that is deposited into a pension

trust fund sooner rather than later, the lower will be the

total contributions needed over the lifetime of the pension

fund because there will be more money in the

trust fund that is “working” to generate investment

earnings.

There are some steps Boards can take to help optimize

pension funding. There are also actions the plan

Throughout the entire lifetime of a pension plan,

the total cost of the plan is the sum of all

benefit payments plus expenses paid

to operate the plan.

43


sponsor can take that are beyond the Board’s control,

but the Board can engage and educate the plan sponsor

about these options. The following chart shows four

areas that Boards of Trustees can utilize to optimize

plan funding:

All pension plans should have an experience study

conducted regularly (at least once every 5 to 7 years)

and update the assumptions to reflect actual experience.

All assumptions need to be reasonable and

realistic. Forward-looking expectations should also

be taken into account, particularly with economic

assumptions, including the plan’s investment return

assumption.

One area within the Board’s authority is reducing

the amortization period used to pay down the

unfunded liability. For example, a change from 25 or 30

years to 20 years may only increase the required

contribution by 2% to 3%, but could reduce total

contributions over the next 25 to 30 years by millions.

The Board could also elect to shift from a “level percentage

of pay” approach for amortizing the unfunded

liability to a level dollar approach or reduce the annual

percentage increase used in the “level percentage of

pay” approach.

The Board can also engage and educate the plan

sponsor regarding the benefits of pension funding

optimization. If not already done, a formal written funding

policy should be adopted. This gives the Board a

basis from which to begin engaging the plan sponsor.

A joint workshop can be held with the Board, plan

sponsor and municipal decision makers (commissioners/council

members) to discuss ways to optimize

funding. Invite your actuary and investment consultant

to make presentations and educate the decision makers.

The presentations should emphasize why optimizing

pension funding can lead to long-term reductions

in contributions (savings) for the plan sponsor. Once

decision makers understand the benefits of paying

more now to save money over the long run (and as

long as the budget allows for it), they may be willing to

contribute more money into the pension fund (above

the minimum required contribution). Alternatively, a

target contribution amount could be established (with

future indexation) that starts off higher than the

current required amount. Some cities have already

started doing this, and the projected long-term savings

are substantial.

ABOUT THE AUTHOR: Pete Strong is senior consultant

and actuary in the Fort Lauderdale office of Gabriel,

Roeder, Smith and Company. He serves as the consulting

actuary to several municipal pension plans throughout

Florida.

Thank you to Jim Rizzo and Dina Lerner for peer-reviewing

this article. n

SAXENA

WHITE IS PROUD

TO SUPPORT THE

F

LORIDA

PUBLIC

PENSION

T

RUSTEES

ASSOCIATION

150 Palmetto Park Road, Suite 600, Boca Raton, FL 33432

ph 561.394.3399 fax 561.394.3382 www.saxenawhite.com

The Brave New World of

International Securities Litigation

Despite challenges, investors are increasingly recouping

fraud-related losses on foreign stock exchanges

David Kaplan and

Brandon Marsh,

Saxena White

For nearly four decades,

investors relied on powerful

remedies provided by the U.S.

securities laws to protect their

investments on both domestic

and foreign stock exchanges.

The federal securities laws are

among the most developed in

the world and our “opt-out” class

action structure has provided

an effective and efficient mechanism

for investors to band

together to address fraud and

other forms of corporate misconduct.

In the last 23 years,

U.S. securities class actions have recovered over $100

billion for defrauded investors, without the need for

disparate shareholders to worry about the risks, burdens,

and costs of active participation in litigation.

However, in its 2010 decision Morrison vs. National

Australia Bank, the U.S. Supreme Court overturned

decades of precedent in ruling that investors can no

longer avail themselves of the U.S. securities laws to

recover losses incurred on foreign exchanges. Since

then, investors – including Florida pension funds –

have been searching for suitable foreign legal systems

to recover assets lost to corporate fraud.

As pension funds increase international asset

allocations, their fiduciary obligation to protect and

successfully manage international securities claims

grows in importance. According to a 2018 study by

State Street Global Advisors, there is now a “universal”

trend among public pension funds of “greater geographical

diversification.” From 2008 to 2016, public

pension funds’ investments in U.S. securities dropped

by 10%, with investments in foreign equity and debt

securities growing to comprise over one-third of pension

allocations. What’s more, the trend towards international

diversification is expected to continue, if not

accelerate.

Looking abroad, investors confront a panoply of

diverse laws and legal procedures. Many foreign jurisdictions

present significant obstacles to recovery –

such as limited or no discovery, high standards of

liability, and nearly impossible burdens of proof. A

handful of foreign jurisdictions – such as England,

Germany and Spain – even present significant downside

risk for investors, including “loser pays” rules that

can leave an unsuccessful plaintiff saddled with

millions of dollars in attorneys’ fees and litigation

expenses incurred by its adversary. For example, in

November 2018, an Italian court ordered plaintiffs to

pay €100,000 ($113,00 USD) in legal expenses to oil

and gas contractor Saipem after the court dismissed a

securities action brought by 64 investors because the

investors had failed to demonstrate ownership of

Saipem shares during the relevant time period.

Of the dozens of international jurisdictions

relevant to Florida pension funds, only a couple of

countries – namely, Canada and Australia – provide

U.S.-style class actions, strong securities laws, and a

track record of significant recoveries in shareholder

litigation. While class actions are gradually being

adopted across the developed world, the pace is slow

45


“...there is now a “universal” trend among public pension funds of

‘greater geographical diversification.’”

continues on page 46

46


The Brave New World... CONTINUED FROM PAGE 45

and implementation is uncertain as countries struggle

to find ways to accommodate unfamiliar shareholder

litigation in their legal systems. For example, in the

United Kingdom, Germany, Japan, China, and Hong

Kong, investors must affirmatively join shareholder

plaintiff “groups” that are cobbled together by litigation

“aggregators” and “funders.” The costs of this structure

can be significant and heavily tax any eventual recovery

for investors. For example, according to the

Australian Law Reform Commission, from 2013-2018,

a staggering 49% of settlements in shareholder suits

went to funder and legal fees.

The costs of foreign litigation are not just monetary.

Given the structure of foreign litigation, investors

and their attorneys interested in participating in a

single action for recovery must oftentimes spend

substantial amounts of time monitoring developments

in various cases in various jurisdictions. For example,

in Germany, upwards of 3,600 institutional and individual

investors are participating in collective shareholder

action against Volkswagen arising out of the company’s

diesel-gate emissions scandal. Germany does

not have formal class action procedures. Instead, the

shareholder litigation against Volkswagen is facilitated

by the “KapMuG,” a legal mechanism that allows courts

to manage collective actions through model case

proceedings. In order to participate in any recovery,

shareholders were obligated to affirmatively opt-in to

the proceedings. At least seven different groups of law

firms and litigation funders solicited investors to

participate in collective action against Volkswagen.

Simply choosing between the different claimant

groups proved to be a burden as the groups differed

significantly in the terms of retention, types of securities

included, and the relevant time period. Still other

groups eschewed the German legal morass entirely,

opting to bring actions in the Netherlands.

Despite the challenges of foreign suits, investors

have succeeded in achieving several substantial recoveries

in high-profile litigation outside the United States.

In 2016 and 2017, investors secured a £1.1 billion ($1.4

billion USD) aggregate recovery from The Royal Bank

of Scotland in a financial-crisis era suit brought in the

London High Court. Investors’ claims stemmed from

RBS’s sale of £12 billion (nearly $24 billion USD at the

time) of securities just six months before requiring a

bail-out from the British government. To take another

example, in July 2018, the Amsterdam Court of Appeal

approved a €1.3 billion ($1.5 billion USD) settlement

between shareholders and Ageas, f/k/a Fortis, a Dutch-

Belgian financial services business that was heavily

invested in U.S. mortgage-backed securities before the

subprime crash. The settlement was achieved through

use of a “Dutch foundation,” a legal mechanism under

Dutch law that does not litigate claims on behalf of

shareholders but facilitates a global settlement for

shareholder claims where there is a willing defendant.

The €1.3 billion Ageas settlement represents the

largest court-approved securities settlement outside

the United States.

As indicated above, Canada and Australia have

long provided savvy investors with an effective recovery

option. Canada trails only the United States in total

securities class action filings, and shareholder litigation

in Canada has recovered over $5 billion for investors

over the past two decades. Australia has become one

of the most pro-investor foreign jurisdictions, and has

notched securities litigation recoveries for investors

totaling nearly $2 billion, with over $1 billion recovered

in the last ten years. That said, Canada and Australia

may be of limited practical value for many Florida

pension funds, as the sizes of their stock exchanges

pale in comparison to major non-U.S. exchanges based

in China, Hong Kong, Japan, London, and the Eurozone

that attract greater pension assets.

In short, while there are substantial complexities

and limitations to international securities litigation,

recent victories demonstrate that such cases can be an

effective tool for recovering fraud-related losses. Given

the diversity of foreign law and the many traps for the

unwary, investors should always thoroughly scrutinize

whether the potential risks of foreign securities litigation

outweigh any potential recovery, and consult with

experienced and able counsel. As public pension funds

continue to invest more heavily in securities purchased

outside the U.S., effectively managing international

shareholder litigation has become a critical aspect of

asset protection.

About the Authors:

David R. Kaplan is a Director at Saxena White and

oversees the Firm’s California office. Mr. Kaplan has over

fifteen years of experience in the field of securities and

shareholder litigation.

Brandon Marsh is an Attorney in the Firm’s California office.

Mr. Marsh’s practice is focused on complex litigation,

including matters involving securities fraud, corporate

governance, and shareholder rights litigation. n

47

WE ARE PROUD TO SUPPORT THE

FLORIDA PUBLIC PENSION TRUSTEES ASSOCIATION


Proudly Supports FPPTA

P

Peter Melanson

pmelanson@concp.com

FREE STOCK

FRAUD

MONITORING

FOR FPPTA

MEMBERS

+ New York

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For more information please contact DONALD+BROGGI at

dbroggi@scott-scott.com www.scott-scott.com

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Great Lakes Advisors is a premier investment manager with a

Proud to have served Florida Public Pensions for over four decades.

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ors

in fo@invernesscounsel.com | (212) 207-2133

48


Setting the Stage for New Hedge Fund

Strategies

Yazann Romahi, Ph.D., CFA,


Quantitative Beta Strategies,

J.P. Morgan

Paul Zummo, CFA,


J.P. Morgan Alternative Asset

Management

Mark Vanacore,


Highbridge Capital

Management

advantageous in the coming year, as fundamentals will

likely do more to set valuations and as price dispersion

likely grows. Our investors expect complacency to start

unraveling and market participants to become more

discriminating. Late in the cycle, given the significant

growth in corporate indebtedness, when liquidity is

withdrawn from the system the weaker among the

highly leveraged companies should struggle to roll

over their maturing debt. 1 As the inability to refinance

creates winners and losers in equities and credit,

opportunities should emerge, and some of our

investors will lean into hedge fund strategies that can

survive or prosper under asset class volatility, both

sustained and intermittent bouts rolling through.

After the lowest equity market

volatility in 100 years, our

hedge fund investors believe

financial markets are undergoing

a regime change, entering a new, higher volatility norm.

All else being equal, an increase in market volatility

helps generate trading opportunities – and several

hedge fund strategies stand to benefit as volatility

prompts the relationship among stocks, rates and credit

spreads to evolve, affecting prices and correlations.

One indicative metric: Realized volatility hit 21%

in early 2018 vs. a 7% average in 2017 (EXHIBIT 1). From

these early stirrings, the pickup is expected to continue,

propelled by the tapering of quantitative easing, the

rate hikes expected ahead and generally tighter financial

conditions. The potential for inflation, ongoing

trade wars, a fully valued market and geopolitical

uncertainty around the world also feed the volatile

backdrop.

In more volatile markets, certain hedge fund

characteristics stand out – including an ability to take

long and short positioning, and a focus on uncovering

short-term inefficiencies. Those qualities may prove

The View Through A Factor Lens

The outlook is similar for our team that views markets

through a factor lens. Value stocks have significantly

underperformed since early 2017 – the equity

value factor is suffering its second-worst drawdown

since 1990. However, value stocks have a quality bias

vs. more expensive stocks. Further, we have seen the

pricing of value vs. expensive growth stocks detach

from fundamentals, leaving value stocks more than

two standard deviations cheap relative to history.

Should borrowing costs rise or earnings expectations

for growth stocks fall, we would expect value stocks to

rebound – benefiting hedge fund strategies that offer

exposure to the equity value factor, particularly those

that are market neutral.

Another market-neutral strategy we highlight,

merger arbitrage, may experience short-term volatility

shocks, yet we also expect opportunities. Given that a

high percentage of outstanding merger deals are

friendly in nature, and with merger spreads above 10%

annualized, our investors see potential in strategies

that can capture this premium.

“All else being equal, an increase in market volatility helps generate

trading opportunities – and several hedge fund strategies stand

to benefit as volatility prompts the relationship among stocks,

rates and credit spreads to evolve, affecting prices and correlations.”

49


Source: J.P. Morgan Markets; data as of November 23, 2018. Forecasts, projections and other forward-looking statements are based upon current

beliefs and expectations. They serve as an indication of what may occur. Actual results or performance may differ materially from those reflected

or contemplated.

Volatile World Creates Tailwinds For Tactical

Trading, Idiosyncratic Exposures

Volatility shines a spotlight on relative value (RV)

strategies, which can reduce market-directional risk in

a less benign environment. Cross-asset RV strategies,

which trade the relationship between companies’

credit and equity, can continue to benefit from an

equity volatility pickup and widening credit spreads.

So, too, can market-neutral strategies, which do not

time the market, trade the relationship between securities

and asset classes.

Short-term statistical arbitrage, with its days-toweeks

investment horizon, should also benefit when

elevated volatility creates panicked, sloppy and forced

trading across markets. Small market imbalances may

offer robust opportunities in stocks whose prices are

unduly depressed. The risk to these strategies would

be a continued, synchronized expansion with lower

levels of volatility (e.g., VIX below 12%).

Statistical arbitrage and other data-based hedge

fund strategies also stand out because of developments

in data technologies. The sheer volume of existing

data has grown dramatically and its nature and

sources have deepened while processing power has

exploded at lower costs. Sophisticated techniques such

as machine learning, neural networks and natural

language processing can help ferret out investment

signals. The risk is potentially one of crowding.

Concentrated, not diversified, factor exposure has

rewarded investors since 2017. But under bear market

conditions, we believe opportunities should arise

across a range of factors and hedge fund approaches,

underlining the importance of a diversified range of

systematic market-neutral strategies. n

EXPLORE OUR

GUIDE TO ALTERNATIVES

WWW.JPMORGAN.COM/GTA

J.P. Morgan Asset Management is the brand for the asset

management business of JPMorgan Chase & Co. and its affiliates

worldwide. This communication is issued by JPMorgan Distribution

Services Inc. member of FINRA © JPMorgan Chase & Co. 2019

50


Tulips Disguised as Toll Roads

James A. Lydotes, CFA,

Managing Director,

Senior Portfolio Manager,

Mellon

William J. Adams,

Managing Director,

Global Investment Strategist

Brock A. Campbell, CFA,

Director,

Senior Research Analyst

Publicly listed and direct

infrastructure funds have each

garnered a great deal of focus

over the last decade for very

sound reasons. The asset class

offers investors the ability to buy

into businesses that offer:

• Stable underlying cash flows

• Regulatory predictability

• Asset ownership or rent collection

features

Especially in periods of

market volatility, investors take

solace in the defensive nature of

these businesses. The infrastructure

business model invests

cash upfront to build out a physical asset, and then

harvests stable cash flows over the life of the asset,

much of which is returned to investors in the form of

dividends. Income is a core feature of the types of

assets found within infrastructure. While the underlying

asset types backing up either direct or publicly

listed infrastructure are very similar, technical issues

have created what we believe to be a bubble in direct

infrastructure funds.

There is very little business variability with infrastructure

assets, which is, predictably, a large part of

their allure.

It is much easier to predict how much water the UK

will use over the next 12 months than it is to estimate

how many iPhones will sell over that same period.

Given the predictability of these businesses, they are

often valued by the present value of future cash flows.

The discount rate is a critical input in valuing a business

using a discounted cash flow (DCF) methodology, and

thus the valuations of these assets are very sensitive to

changes in the discount rate.

Fully regulated US utilities are a good example of

this. These assets are often referred to as “bond proxies,”

and rightly so – US bond yields serve as the

discount rate in valuing these companies, and as yields

rise, the present value of cash flows declines. This relationship

has historically been very tight, and fundamentally

makes sense.

Whether these assets are publicly listed on an

exchange or held within a direct infrastructure fund,

their fundamental value should adjust (in either direction)

as the discount rate changes. Over the last ten

years, we have experienced considerable interest rate

volatility. As an example, during the taper tantrum of

2013, the US 10-year Treasury yield went from a low of

1.62% to a peak of 3.0% over a short six-month period.

Unsurprisingly, as the discount rate rose, the present

value of listed utility cash flows declined, and these

equities went down in value to reflect this.

In a DCF framework, as the discount rate goes up,

the present value of future cash flows should decline.

This is a logical relationship and has been the case

historically in public equity markets. Perplexingly, over

this same period, when global interest rates continued

to move higher, the value of direct infrastructure funds

did not go down as we would expect, but instead went

up. If we agree on the DCF basis for valuing these

assets – how could this be?

Why the Differential?

In two words, fund flows. Investors’ appetite for

direct infrastructure has shown no signs of slowing,

and with values continuing to move higher every quarter,

why would it?

One good measurement of investor enthusiasm for

direct infrastructure is how much intended capital

direct managers actually raised. As recently as 2015,

direct infrastructure managers took in roughly 90% of

their intended capital raise, a strong showing. Last year,

they were able to raise 101% of their goal. On a yearto-date

basis through August 2018, these same managers

took in 122% of their intended capital raise.

Simply, for every $100 these managers looked to

secure, investors gave them $122. These managers held

22% in excess cash in August 2018 with only a finite list

of areas in which to invest. 1 Too much money chasing

too few assets pushes prices higher, which can lead to

asset price bubbles.

1 Source: Preqin. As of August 2018.

What are Managers Worried About?

Direct managers recognize the root issue and appear

to be worried. Preqin recently surveyed managers

on the key challenges facing the sector in 2018 and valuation

is by far the single greatest concern for direct

managers tasked with putting these dollars to work.

They realize these assets are richly valued, but they’ve

just been given over 20% more money than they intended

to raise. With too much money and elevated

valuations, one would think it prudent for direct managers

to suspend putting this capital to work; however,

this does not appear to be the case.

According to Preqin, when asked their intent to deploy

capital over the next 12 months, over 40% of the

managers surveyed indicated they would put “significantly

more” capital to work over the next 12 months

than the previous 12 months. Only 2% of managers indicated

they would be putting less to work over that

same period. With investors continuing to pour ever

more capital into the asset class, it seems that managers

have no alternative but to continue deploying

capital.

The risk of more deals cemented at elevated levels

has increased substantially due to the capital raise

activities noted above. With the same finite set of

brownfield assets trading hands numerous times

across many managers, the exit multiples on these

assets continue to rise. This process can continue over

the near term, and we expect that it will until flows into

the asset class start to slow.

Two notable examples of this phenomenon are the

407 Express Toll Route in Canada and Thames Water in

the UK. In the case of 407 Express Toll Route, portions

of the asset have changed hands eight times since

being privatized nearly twenty years ago. Similarly,

Thames Water, the UK’s largest water and wastewater

services company, has seen portions of their group

transacted seventeen times since September of 2001.


51


52


Tulips Disguised as Toll Roads... CONTINUED FROM PAGE 51

Will there be Contagion into Publicly Listed

Infrastructure?

Predictability defines infrastructure assets. If you

can effectively forecast the underlying fundamentals,

the only remaining argument for a manager is the price

you pay for the cash flows generated by the business.

With listed infrastructure equities, these prices are

struck every second of every trading day. This “markto-market”

mechanism occurs in equity markets, and

there is nothing opaque around the value of these

businesses. If you want to know how expensive your

listed infrastructure fund is today, look at its price/cash

flow valuation. All the information is at your fingertips.

We believe we are undeniably in the early stages

of an infrastructure boom. The regulatory landscape is

evolving quickly, as are the relative value opportunities.

We continue to believe in the structural opportunities

across a wide cross section of infrastructure assets in

the coming decades due to the cross currents of

investor appetite for defensive, cash- generative businesses,

and the societal need for continued investment

in infrastructure. If you pick the right manager, the

quality of these assets are the same across both direct

and publicly listed infrastructure. What is not the same

is the price you are paying for what you are buying.

In the end, the price you pay is the single most important

consideration.

About the Authors:

William J. Adams is Managing Director, Global Investment

Strategist for the firm’s active equity, Small Cap

Value, Non-US and Emerging Markets investment disciplines,

responsible for communicating the teams’ strategies

to clients, prospective clients and consultants.

Brock A. Campbell, CFA is Director and Senior Research

Analyst on the Global Research team as well as a portfolio

manager for the Global Infrastructure Dividend Focus

Equity strategy. He is responsible for covering Utilities and

Industrials.

Disclosure

Mellon Investments Corporation (“Mellon”) is a registered

investment advisor and subsidiary of The Bank of

New York Mellon Corporation (“BNY Mellon”). Any statements

of opinion constitute only current opinions of

Mellon, which are subject to change and which Mellon

does not undertake to update. This publication or any

portion thereof may not be copied or distributed without

prior written approval from the firm. Statements are

correct as of the date of the material only. This document

may not be used for the purpose of an offer or solicitation

in any jurisdiction or in any circumstances in which such

offer or solicitation is unlawful or not authorized. The

information in this publication is for general information

only and is not intended to provide specific investment

advice or recommendations for any purchase or sale of

any specific security. Some information contained herein

has been obtained from third party sources that are

believed to be reliable, but the information has not been

independently verified by Mellon. Mellon makes no

representations as to the accuracy or the completeness of

such information. No investment strategy or risk management

technique can guarantee returns or eliminate

risk in any market environment and past performance is

no indication of future performance. The indices referred

to herein are used for comparative and informational

purposes only and have been selected because they are

generally considered to be representative of certain

markets. Comparisons to indices as benchmarks have

limitations because indices have volatility and other

material characteristics that may differ from the portfolio,

investment or hedge to which they are compared. The

providers of the indices referred to herein are not affiliated

with Mellon, do not endorse, sponsor, sell or promote the

investment strategies or products mentioned herein and

they make no representation regarding the advisability

of investing in the products and strategies described

herein. Please see mellon.com for important index licensing

information. CFA® and Chartered Financial Analyst®

are registered trademarks owned by CFA Institute. n

James A. Lydotes, CFA is Managing Director and Senior

Portfolio Manager for the Global Infrastructure Dividend

Focus Equity and Global Healthcare REIT strategies. In

addition to his role as lead portfolio manager, he is also

senior research analyst on the Global Equity team.

120 $

1T

YEARS OF

INNOVATION

IN AUM*

1

TRUSTED

PARTNER

GAD-919976CR-E0819X 8639 _ 0819

nuveen.com

54


How Foreign Taxes Hide from

Pension Plan Fiduciaries

Karen M. Russo,

RPA, CPPT,

Salem Trust

Investing in the Global

Economy

If you attended the FPPTA’s

35th Annual conference this

summer, you know that the theme was “Investing in a

Global Economy. ” The theme did not surprise me. In

my role as asset custodian for pension plans, I have

seen my clients increase their percentage of global

investing (all worldwide securities, including those

from the U.S.) and international, or foreign investing

(purely non-U.S. securities). I realize that retirement

plan consultants and investment managers have long

recommended a mix of U.S. and non-U.S. investments

for the purposes of safety and diversity. But I also note

the astounding vibrancy of wealth in today’s world

economy. If we consider just the issue of stock dividends

paid out this past spring, only $122 billion of a

total of $263 billion were paid by companies from the

U.S. Although we are by far the biggest single economy,

figure 1 shows that we are not the only economy.

Pension plans are, more and more, attracted to finding

their piece of the global market.

Foreign countries typically withhold taxes on the

investment income of securities traded on their exchanges,

but, as a pension fund, you may qualify as a

tax-exempt entity. At the very least, you may be eligible

to reclaim the difference between the statutory rate

and the treaty rate. There are tax treaty agreements between

the U.S. and many of the nations where pension

plans invest, but every nation has a different agreement,

process and timeline for reclaiming taxes paid. If

the claims are made properly, your plan might receive

the taxes that were withheld from non-U.S. nations.

During the last few years especially, as global investment

in public pension plans has increased, I have seen

the gains received in pension plans that give proper

attention to the task of reclaiming plan assets overpaid

to a foreign government. It is important for every plan

trustee and advisor to not miss any plan entitlement.

ADRs May Also be Taxed

When you think of global investing, keep in mind

American Depository Receipts (ADRs) are in this category.

ADRs provide U.S. investors with the opportunity

The chart calculates

“dividend yield”

from various

countries, which is

defined as the total

dividends paid by

all the companies

represented in that

nation’s leading

index, divided by

the total market

capitalization of

those companies.

to trade in shares of a foreign company. Like a security

bought on foreign exchanges, the income derived from

an ADR may have had taxes withheld by its country of

origin.

I have noted recently that the foreign tax implication

of ADRs has surprised many of my clients. Maybe

it is because “foreign investment” might seem exotic or

unusual, but ADRs, as we know, are issued for some of

the biggest companies who trade on U.S. markets:

household names such as Nokia, Unilever and Royal

Dutch Petroleum (better known as “Shell Oil”). In many

cases, clients were unaware that foreign taxes had

been withheld on dividends of these commonly traded

securities.

Reclaiming Foreign Taxes is Complex:

If your plan now holds or has held a foreign investment

– either directly via a stock or bond, or indirectly

through a domestically-traded ADR – it is possible that

the plan has an unrecognized and unreported asset

that should be reclaimed. You could ask your plan’s

administrator, attorney, CPA or other service provider

to perform the reclamation. In most cases, however, this

is not the best solution. There are many technical steps

unique to the global asset reclamation process. The

process and paperwork will also differ for each country.

Additionally, the IRS’ annual Certification of Tax

Residency Documentation Tax-exempt Status must be

filed annually.

The reclamation process is complex because your

plan’s portfolio should be analyzed to identify all

aspects of any foreign tax collected, including the

amount collected, when it was collected, in which

country; if there is a tax treaty and, if so, what are the

current terms; and, as well, a record must be made of

all forms to be filed. Of course, language barriers

abound during this process. Some jurisdictions will

reject the claim for a simple error, with no opportunity

to amend or refile. Every nation also has a different time

frame within which to reclaim taxes.

Finding the Best Solution:

Based on all these challenges, I recommend that a

pension plan board discuss global/foreign tax reclamation

with their investment consultant and their custodial

services provider. It is likely that your best bet will

be to hire a specialist with the necessary technology

and topical knowledge of all global markets, one who

manages the process from beginning to end. Global

tax recovery firms are compensated on the actual

amount recovered, at least in my experience. In my

mind it is far better to pay a specialist a percentage of

a reclaimed tax than to never have reclaimed it at all.

Furthermore, by engaging a firm to handle global

tax reclamation, you are being proactive. Your active

attention to global tax reclamation helps meet your

responsibilities as a plan fiduciary. You want to know

that you are not leaving any funds behind.

If I can be of any help to you and your plan, please

feel free to contact me. I am always happy to be of

service to our great organization and its members.

About the Author:

Karen Russo is an honors graduate of Florida Bankers

Association Trust and Graduate School, and a graduate

of the Cannon Financial Institute Employee Benefit

School. She has been awarded the Retirement Plans

Associate (RPA) designation, and is a Certified Public

Pension Trustee (CPPT). Beginning her career in 1986, Ms.

Russo joined Salem Trust Company in 2000, where she

currently serves as Senior Vice President. She can be

reached Karen.Russo@SalemTrust.com. n

55


56


Making Sense of Negative Bond Yields

Paul Lundmark, CFA,

Managing Director &

Portfolio Manager

Richmond Capital

Management

What are negative bond

yields?

It is hard to understand how any investor can hold

a bond to maturity and actually get less money back

than what they paid for it. This is what happens when

investors purchase bonds with negative yields. The

premium paid for the bond is larger than the total

amount of interest the bond pays over its remaining

lifetime. The result is that the investor loses money. It

has always been the assumption that borrowers pay

interest to lenders. This “logic” has been turned on its

head in the global bond market. Currently, there is over

$15 trillion of negative yielding bonds in the

Bloomberg Barclays Global Aggregate Bond Index

(Exhibit 1). This represents over 25% of the index.

How did the market get to negative yields?

The central banks of Europe (ECB) and Japan (BOJ)

brought down yields by keeping overnight interest

rates exceptionally low after the 2008-2009 financial

crisis. The purpose was to facilitate borrowing that

would lead to economic growth. In 2014, the ECB first

cut its deposit rates below zero which means banks

were actually charged to hold money at the ECB. The

BOJ soon followed. In addition, central banks (including

the U.S. Federal Reserve) also helped force rates

down by purchasing longer-term debt, in what

became known as quantitative easing.

The reason why central bankers are forcing rates

down is that they are reacting to broader economic

forces. In the past, their primary goal has been to keep

inflation in check, but currently, prices and wages have

been rising at very low levels and growth appears to

be weakening. This has central banks concerned

because they are eager to safeguard the long economic

expansion and prevent a recession.

Have negative yields delivered positive results?

While central bankers have been trying to stimulate

growth, the effect has been less than expected.

In Europe, central banks have little influence over other

economic factors limiting growth. Europe’s economy

has become very dependent on exports. Thus, trade

tensions between the U.S. and China have weighed

heavily on European countries recently as international

trade has slowed down. Customers are reluctant

to place big new orders. As a result, many European

companies are issuing downward revisions to revenue

and earnings. Current estimates expect the 19-country

Eurozone growth to be less than 1% in the second

quarter. This is about half of what has been experienced

over the past three years.

In addition, even with negative rates, European

57


consumers and businesses have actually increased

savings. There are many possible reasons why this is

happening. One is that low inflation has left consumers

with more money to sock away. Another is that demographic

forces will keep inflation and rates permanently

low as saving replaces consumption. Europe is

thought to be going through a process that is already

played out in Japan - as populations get older and the

share of working-age people falls, there may be too

little consumer demand pushing prices up.

A third possibility is that negative rates may be the

part of the problem. There are some bankers and economists

who feel that negative rates communicate fear

over the growth outlook and the central bank’s ability

to manage it. In fact, many Germans worry that negative

rates pose a threat to their rainy-day funds and are

saving more.

What are the global ramifications of negative

yielding debt?

Negative yields have spread to all kinds of debt.

Over $1 trillion of investment-grade corporate debt is

trading at negative yields. There are actually 14 eurodenominated

corporate junk bonds that have negative

yields. Currently, Greek ten-year debt is only yielding

2.10% which is barely above U.S. ten-year Treasury

yields. Investors are building up the prices of all kinds

of higher risk assets - from equities and real estate to

emerging-market bonds. It is all about the quest for

better returns. The issue arises that looser monetary

policy could create asset bubbles. Concerns are

already being expressed in the leveraged loan market

and the private credit market. Issuance of BBB-rated

corporate debt has exploded world-wide since the

financial crisis. Regulators are concerned that any

weakness in the economy could cause these BBB-rated

bonds to be downgraded to speculative grade forcing

investors who cannot hold high yield bonds to become

sellers at distressed prices. In addition, real estate in

certain parts of the world such as Canada and New

Zealand are already at prices that are believed unsustainable

and subject to a correction.

Another concern is that easy money is helping

keep some businesses alive that should be shut down.

These “zombie companies” are defined as having weak

growth prospects and being unable to cover the cost


58


Making Sense... CONTINUED FROM PAGE 57

of servicing their debt from operating profits and need

continued access to the debt markets in order to

survive. The Bank for International Settlements estimates

that zombie companies account for around 6%

of non-financial listed shares in advanced economies.

Another startling statistic is that data from Leuthold

Weeden Capital shows 32% of small-cap U.S. firms had

no earnings at the end of May, 2019.

Negative rates have also hampered European

banks. Commercial banks hold money in the form of

deposits and other short-term holdings. Money in

excess of what they need for operations or lending to

other banks is held at a central bank. Normally, a

central bank would pay these banks interest on the

deposits or hold them free of charge. With negative

rates in Europe, the central bank instead charges banks

to park cash. The problem is that banks have not been

able to pass negative rates onto their depositors. As a

result, the net interest margin, a measure of the difference

between what a bank earns and what they pay

out is compressed. Even though central banks will

argue that negative rates benefit banks by boosting

demand for credit, bank officials are saying that loan

growth has been tepid. Big insurance companies and

pension funds are limited in how much risk they can

take. No matter what the level of rates are, these

investors cannot invest heavily in infrastructure and

other type loans that would spur capital spending,

create jobs, and help economic growth without setting

aside more money for regulatory requirements.

Why would investors buy negative yielding debt?

yield. Some investors are willing to lose a little money

in return for the security of government debt. Other

investors are willing to buy negative yielding debt in

the belief that rates could go more negative and thus

profit by selling at a higher price.

Could the U.S. experience negative yields?

Exhibit 2 shows current two- and ten-year government

yields for several countries. Editor’s Note: The

chart below will come as a separate jpg “Richmond

Capital_Bond Yield Exhibit 2”

The U.S. has never had negative rates on conventional

Treasuries, but it has come close. Back in 2011,

two-year yields fell as low as 0.14% and stayed at very

low levels until the Federal Reserve started hiking rates.

The prospect of negative yields seem remote at the

current time with the ten-year Treasury yielding

around 1.75%, U.S. unemployment near a 50-year low,

and stocks close to record highs. However, if the U.S.

were to experience a recession, the Federal Reserve

could cut rates to zero and increase quantitative easing.

The result could be much lower rates which could

potentially become negative.

About the Author:

Paul Lundmark, CFA, is Managing Director, Portfolio Manager

at Richmond Capital Management. As a generalist

in fixed income, Paul focuses on a broad spectrum of the

market, in particular, credit and mortgage-backed securities.

n

Some funds track government bond indexes,

meaning they must buy the bonds regardless of the

Florida Public Pension Trustee Association

59


Thanks for all you contribute to our community!

Stanley Iezman

Richelle Hayes

Real Estate Investment Management

For more information, please contact:

Richelle Hayes | rhayes@aracapital.com

www.aracapital.com

60


Why Bonds Need to be Bonds

Chris Greco, Partner,


As the famous investor Peter

Lynch has said, “Know what

you own and why you own it.”

This quote was the basis to his

wildly successful investment

book, “One Up On Wall Street”

in 1989, and it still holds true to this very day for

trustees and investors of all sizes. Over the past ten

years, we have seen the S&P 500 average a 14% return

per year, while bond yields have reached near all-time

lows. This has changed the way many pension boards

across the country have treated their asset allocation

in a dramatic fashion.

For decades, pension funds had an asset allocation

of 60% stocks and 40% bonds. Over the past 15 years,

many funds have reduced their bond allocations and

increased their equity allocations to the point where

the new mix has only 20% allocated to bonds. The shift

away from bonds has been a return seeking move,

however, it has brought unwanted risks. This plan shift

toward equities should make us take a close look at the

role of bond allocations and its impact on plan risk,

because bond allocations have also changed in their

risk profile due to the use of below-investment-grade

bonds, junk bonds, etc.

The bond allocation has been thought of as the

safe portion of a fund that will always provide return

of capital with a yield component. Bonds are supposed

to provide capital protection and stability to

a pension fund. Traditional core bond allocations have

consisted of investment-grade bonds, which are

defined as Government, Agency, Mortgage-Backed

and Corporate bonds rated BBB or above. As a pension

plan invests less and less in traditional bonds, it

becomes more and more important that those bonds

truly act like bonds. Unfortunately, that has not been

the case as pension funds also adjust their bond portfolios

to invest in “bond-like” portfolios that are either

invested in junk bonds or perhaps even instruments

that aren’t even bonds at all (e.g. timber, direct real

estate, bank loans).

An allocation toward “bond-like” investments

opens a pension plan up to an entirely different risk

profile that no longer focuses on protection of capital.

Unbeknownst to many investors, some “bond-like”

holdings can act far more like equities than traditional

bonds. The modern 20% allocation to bonds may only

contain 5% of bonds that can truly provide stability

and capital protection. The past 10 years have not

stress tested most pension funds, and the need for

capital protection has not been discussed in board

rooms for quite some time. This is the equivalent of a

town getting rid of its fire trucks and hydrants if they

go more than a few weeks without a fire.

Pension plans need to be prepared for the different

phases of market cycles that have occurred over the

past 100 years. The bond portion of an asset allocation

plan has a very important role to play. That role has

been diminished and shifted while the markets have

61


had very little volatility and stress over the past decade.

This style drift is dangerous and has built up risks that

have not been made evident within the current market.

The stretch for higher yields has led investors into

“bond-like” portfolios that add more risk to the total

plan, and the power of diversification is lost since these

investments tend to act more like equities than bonds.

This can be illustrated by reviewing the correlation

between “bond-like” portfolios and other investment

products. For example, the High Yield index has a very

strong relationship to the S&P 500 equity index (correlation

of .72) and has almost no relationship to the US

Treasury index (correlation of -.22). That means this

High Yield portfolio adds risk to the overall fund

allocation and will act like a stock portfolio if the market

has a correction. Historically, investment-grade

bonds gain in value when the stock market loses value.

When “bond-like” portfolios perform like equities, an

entire pension fund’s asset allocation plan and risk

profile may be different than what most investors

would expect.

Investment product names such as High Yield,

Core Plus, Bank Loans, and Emerging Market Debt all

fall in to this “bond-like” category and require further

examination of their true risk and ability to return

capital versus the high-quality bond index to which

they are compared. These asset classes can serve a

purpose to an investment program as long as the

investors know what to expect from them when the

stock market has a negative return or a recession hits

the economy. These allocations are usually very sensitive

to negative events, and they may not provide the

steady return stream that was expected of them when

they were initially funded.

Over the past few years, pension boards have

looked at what to expect from their bond portfolios

and pondered how a return of positive 3% could

possibly help them attain a target return of 7% or 8%

for their fund. It is important to note that a true bond

portfolio return of +3% looks a lot better than a

risky portfolio return of -20%. The role that capital

protection can provide is extremely important to an

asset allocation, and that is what we need to keep in

mind when choosing what type of bond portfolio is

utilized within a pension fund.

Plan trustees should work with their consultants

and investment managers to fully understand what

type of bond portfolio they are invested in and how it

could react relative to the equity allocation of their

fund. Bonds should be bonds and behave the way you

expect them to behave, otherwise an allocation to a

pure investment-grade bond manager may be in order

to complement the rest of your plan asset allocation.

About the Author:

Chris Greco is a Partner at Sawgrass Asset Management.

n

62


Emerging Markets: Identifying Opportunities

amid the Headlines

John P. Mariano

Senior Vice President,

Research Analyst


LLC (New York)

Trade wars, sanctions, and

geopolitical unrest dominate the

headlines. Despite these headwinds,

emerging market (EM) equities still offer investors

opportunities to access growth driven by attractive

demographics, innovation, and growing prosperity.

Further, they could offer a compelling risk/return profile

that could help pensions exceed their actuarial assumptions

and allow for increased benefits. Emerging

economies are constantly changing and to understand

where the markets could go, we take a look at the evolution

of the asset class.

The Recent Evolution of EM

We believe that the evolution of emerging markets

can be disaggregated into five distinct stages of development.

A brief chronology of their returns versus

their earnings (Exhibit 1) offers a useful guide to where

we believe investors find themselves today.

• Stage 1, “Heyday” (2003-2007): Global trade

accelerated and commodity prices rose in what was

deemed a super-cycle. EM saw strong gains in productivity

and returns on invested capital.

• Stage 2, “Global Financial Crisis” (2007-2009):

Global demand collapsed following the Global Financial

Crisis. EM asset prices and currencies collapsed as

the contagion effects of the financial meltdown

impacted these economies.

• Stage 3, “China Head Fake” (2009-2011): China’s

massive economic stimulus via fixed asset investment

boosted demand for commodities. EM Asset prices

subsequently rebounded. This proved to be short-lived

as Global growth stalled and China began to change

its growth model towards more domestic consumption.

• Stage 4, “Rebalancing” (2011-2016): Lower global

growth highlighted excess capacity built during

China’s reflation. This period saw a significant slowdown

in capital spending from the double-digit levels

seen in 2010 and 2013 down to low-single-digit

growth between 2014 and 2017.

• Stage 5, “Self-help” (2017-present): Mixed global

growth outlook with the US Federal Reserve initially

tightening and reducing its balance sheet. In EM a

period of significant elections is followed by more

Exhibit 1

As of 30 June 2019 – Source: FactSet

!

<)/(GaTh(e(!O4*'-&5'K(

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63


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prudent macro ( economic ( policies ( ( ( and ( the ( start of( Global ( ( trade ( ( ( ( (

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current Self-help stage in comparison to prior cycles. global trade. Global trade has historically been an important

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( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( (

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United ( States ( ( and ( China ( surfaced ( in 2018. We are

seeing this uncertainty reflected in weak global

accounts. ( In a period of lower global economic growth, Purchasing Managers Index (PMI) surveys (Exhibit 2),

we believe more countries will make the hard choices and soft corporate and consumer confidence.

on reforms. Examples include Brazil, where lawmakers

are making progress to enact pension reform this year, Earnings growth still key

as well as India and Indonesia, where both governments

have recently secured new mandates and

remain committed to implementing policies to increase

efficiency and ease the cost of doing business.

While there are typically no winners in a trade war,

we believe EM in the Self-help stage can still achieve

attractive earnings growth. In fact, we see potential for


64


Emerging Markets... CONTINUED FROM PAGE 63

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EM earnings to outpace more developed markets. After

recovering in 2016 and 2017, earnings per share (EPS)

growth regressed in 2018 due to the combination of

the escalating trade tensions, a strong US dollar, and localized

macroeconomic and political headwinds. Expectations

were rebased, especially in the information

technology sector, which has seen the most drastic cut

to its earnings growth due to its direct links to the trade

war and global demand (Exhibit 3). We have, however,

noticed a bottoming out in negative EPS revisions and

a positive inflection in EPS growth expectations going

forward. Despite the decline in the International Monetary

Fund’s global economic forecast, we see the developing

world increasingly driving the majority of

global growth and that the economic growth premium

over developed markets is projected to re-widen in

EM’s favor this year. Emerging markets EPS growth is

expected to be in line with US EPS growth in 2019, between

1-2%, and exceed US earnings growth in 2020

(Exhibit 4).

Conclusion

Emerging markets continue to face a variety of

risks, particularly related to trade. We believe that these

risks have increased over the past several months and

could undermine investor sentiment in the asset class.

Yet we also believe it can be easy in this environment

to overlook the positives for the asset class. Fundamentals

across EM remain relatively sound. EM country balance

sheets have improved, and fiscal deficits generally

remain in good shape and real interest rates are relatively

high compared to developed markets. Furthermore

we are encouraged by the number of countries

pursuing Self-help structural reforms that if successful

should lead to more sustainable growth models going

forward.

We believe that a flexible and style-unconstrained

approach is well suited to navigate through these risks

and take advantage of opportunities that are created.

Active managers applying such an approach to this undervalued

asset class have the potential to produce returns

that could exceed actuarial assumptions and

allow pensions to meet growing benefit obligations.

About the Author:

John P. Mariano is Senior Vice President, Research

Analyst at Lazard Asset Management LLC (New York)

specializing in the Asia ex-Japan Equity and Emerging

Markets Core Equity teams. He focuses primarily on

emerging market investments within EMEA (Europe,

Middle East and Africa).

1 Information on analyst coverage is as of 31 December 2017

v As of 31 December 2018

Information and opinions presented have been obtained

or derived from sources believed by Lazard to be reliable.

Lazard makes no representation as to their accuracy or completeness.

All opinions expressed herein are as of the published

date and are subject to change.

Certain information included herein is derived by Lazard

in part from an MSCI index or indices (the “Index Data”).

However, MSCI has not reviewed this product or report, and

does not endorse or express any opinion regarding this product

or report or any analysis or other information contained herein

or the author or source of any such information or analysis.

MSCI makes no express or implied warranties or representations

and shall have no liability whatsoever with respect to any

Index Data or data derived therefrom.

The MSCI Emerging Markets Index is a free-float-adjusted

market capitalization index that is designed to measure equity

market performance in the global emerging markets. The MSCI

Emerging Markets Index consists of 26 emerging markets country

indices: Argentina, Brazil, Chile, China, Colombia, Czech

Republic, Egypt, Greece, Hungary, India, Indonesia, Korea,

Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar,

Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey,

and United Arab Emirates. The index is unmanaged and has no

fees. One cannot invest directly in an index.

The S&P 500 Index is a market capitalization-weighted

index of 500 companies in leading industries of the US

economy. The index is unmanaged and has no fees. One cannot

invest directly in an index.

Equity securities will fluctuate in price; the value of your

investment will thus fluctuate, and this may result in a loss.

Securities in certain non-domestic countries may be less liquid,

more volatile, and less subject to governmental supervision

than in one’s home market. The values of these securities may

be affected by changes in currency rates, application of a country’s

specific tax laws, changes in government administration,

and economic and monetary policy. Emerging markets securities

carry special risks, such as less developed or less efficient

trading markets, a lack of company information, and differing

auditing and legal standards. The securities markets of emerging

markets countries can be extremely volatile; performance

can also be influenced by political, social, and economic factors

affecting companies in these countries. n

65


66


Bridgeway proudly

supports our

Florida-based clients

and the FPPTA

Devin Benton

Director of Institutional Relations

dbenton@bridgeway.com

Bridgeway Capital Management

713.661.3500 | bridgeway.com

Cristine Turner

Director of

Eastern Regional Markets

92 State Street, Suite 600 | Boston, MA 02109

w 617-977-8408 X32 | cristine@ptg-usa.com

FREIMAN LITTLE ACTUARIES,LLC

Chad Little, A.S.A., E.A.

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OFFICE (321) 453-6542 • FAX (321) 453-6998 • MOBILE (321) 591-8265

chad@flactuaries.com • www.flactuaries.com

Proud to Monitor and

Protect the Portfolios of

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Bernstein Litowitz Berger & Grossmann LLP, one

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over 225 of the largest and most influential

public pension funds worldwide.

We advise institutional investors on issues related

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For more information about our services, please

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www.blbglaw.com | Truste ed Advocacy. Proven Results.

We are honored to manage assets for

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Florida Public Pension Funds:

Bay Harbor

Islands ERS

Cape Coral Firefighters

Cape Coral Police

Clair T. Singerman ERS

Cooper City Police

Davie Fire

Delray Beach Firefighters

Delray Beach General ERS

Delray Beach Police

Ft.

Lauderdale d

Police & Fire

Hialeah

ERS

Hialeah

Firefighters

Hollywood Police

Miami Beach ERS

M iami Beac

h Police & Fire

Miramar General

Miramar

Management

North Miami Police

Orlando ERS,

Police & Fire

Palm Beach

Gardens Police

Pompano Beach General ERS

Riviera Beach General ERS

Sunrise Fire

efi

ighters

Sunrise General

ERS

Sunrise Police Officers

West Palm Beach Police

T HANK YOU f or your contin

u ed support!

To learn

more

about RhumbLine’s index

pro

ducts, please contact:

Wayne T. Owen

Chief Executive Officer

wto@ @indexmngr.com

Denise A. D’Entremont

Director, Marketing & Client Services

dad@indexmngr.com

Phone: 617/345-0434

Fax:

617/345-0675

265 Franklin Street, 21 st Floor, Boston, MA 02110

www.RhumbLineAdvisers.com

The

above clients

are the

Fl lorida Public Pension Funds

manag ed by

RhumbLine

as of

06/

/30/2019.

It

is not known whether these c

lients

approve

or disapprove

of

RhumbL

Line or its services.

New Report: Shifting Public Employees

Out of Pensions Raises Taxpayer Costs,

Harms Workers, Undermines Public Workforce

Dan Doonan

Executive Director,

National Institute on

Retirement Security

The vast majority of states

and localities continue to offer

defined benefit (DB) pension

plans to their workers. According

to the Bureau of Labor Statistics, 94 percent of

full-time public sector workers had access to a pension

in 2018.

However, a few states have moved to shift new

employees from pensions to 401(k)-style defined

contribution (DC) or cash balance plans. A new report

from the National Institute on Retirement Security

analyzes the impacts of the retirement plan shifts in

Alaska, Kentucky, Michigan and West Virginia.

states experienced significantly higher costs for taxpayers

without major improvements in funding. The research

also reveals that the move away from pensions

harms the retirement security of public employees and

that public employers are facing increasing challenges

hiring and retaining staff to deliver public services.

In three of the case studies – Alaska, Kentucky, and

West Virginia – the pension switch was sold as a way

to address a substantial funding gap. But as the data

show, closing a pension plan doesn’t erase the liabilities.

There still are retirees in the system who will

receive pension benefits for decades into the future.

Instead, closing the plan to new entrants starves a plan

of a substantial amount of employee contributions,

thereby passing those costs to taxpayers. In the case of

Michigan, the plan actually was over-funded when the

switch was implemented. The state now faces a steep

unfunded liability, and taxpayers are left with the bill.

67


Four States Close the Pension Plan

Enduring Challenges: Examining the Experiences

of States that Closed Pension Plans finds that these

A few more details on each case study:

In Alaska, closing the pension plans did not help

the state manage the existing unfunded liability.

70

60

50

40

77%

76%

30

20

32%

10

3%

0

DB

DC

DC Net

Health

th Coststs

PERS continues on page 68

DB

68

Shifting Public Employees... CONTINUED FROM PAGE 67


Amount in millions of dollars

$6,0000

$5,000

$4,000

$3,000

$2,000

$1,0000

$0

$-1,000

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Despite a $3 billion infusion of the state’s financial

resources, the combined unfunded liability for pension

benefits was higher in 2017 than it was in 2005. Alaska

has managed to improve the funded status of both its

plans modestly after increasing its commitment to

funding, yet the unfunded actuarial accrued liability for

pension benefits has increased in the pension plans

since 2005. And, many workers face a bleak retirement

with no Social Security or pension (Figure 1).

In Kentucky, the legislature enacted a new tier of

benefits for plans in the Kentucky Retirement Systems

(KRS). Public employees hired since January 1, 2014,

participate in a cash balance hybrid plan instead of the

pension plan. This move was positioned as a way to

improve KRS funding. One of the KRS plans (KERS Non-

Hazardous) was funded in fiscal year 2004 at 85.1

percent. By fiscal year 2018, the funded status was

down to 12.9 percent.

In Michigan, the State Employees’ Retirement

System (SERS) pension plan has been closed for more

than 22 years with all new-hires participating in a

defined contribution plan. When the SERS pension plan

closed in 1997, the plan was actually overfunded with

109 percent of assets. As of September 30, 2017, the

plan was only 66.5 percent funded and had an unfunded

liability of $6 billion. (Figure 2). And, the system

now must be managed with 6 retirees per worker.

In West Virginia, the Teachers’ Retirement System

(TRS) pension plan was closed in 1991, placing new

teachers in a defined contribution plan. With teachers

facing low retirement account balances, the state

re-opened the pension after calculating that it could

provide equivalent benefits at half the cost of the

defined contribution plan. When West Virginia reopened

the pension plan in 2005, the funded status of

the plan was at 25 percent. The state has made steady

progress toward improving the funded status with

disciplined contributions. By 2008, the plan improved

its funded status to 50 percent. In 2018, the plan was

70 percent funded.

When proposals emerge that would exclude future

workers from participation in a pension fund, there

often is a debate as to whether that changes the nature

of the plan – and how that change might impact costs.

Questions like, ‘Will a closed plan rebound differently

after a turbulent period in the markets?’ or ‘How will

shortening investment horizons impact costs over

time?’ are not simple to answer or explain. But, the data

is clear that closing a pension plan does not solve challenges

associated with legacy costs. Instead it seems

to exacerbate those challenges for many decades, and

taxpayers do not experience the workforce benefits

that the plans provide.

DC Switch Proves a Failed Experiment in Palm Beach

In 2018, the National Institute on Retirement Security

issued a case study that examined a dramatic

change in retirement plan benefits, this one in the

Town of Palm Beach. Retirement Reform Lessons: The

Experience of Palm Beach Public Safety Pensions looks

at the impacts of the 2012 actions by the town to close

its existing pension systems for its employees, including

police officers and firefighters.

The new “combined” retirement plans offered

dramatically lower pension benefits and new individual

401(k)-style defined contribution retirement

accounts. Shortly thereafter, the town experienced a

high rate of retirements and unprecedented early

departures of experienced police officers and firefighters

to neighboring towns that offered better pensions.

Now understaffed, the town faced increased costs to

pay overtime hours and train replacements for more

than 100 public safety workers who departed during a

four-year period after the pension changes.

Following this large and swift exodus of public

safety employees, the town reconsidered the changes.

In 2016, the Town Council voted to abandon the DC

plans and to improve the pension plan for police

officers and firefighters. The town learned the hard way

that pension plans – provided to nearly all police

officers and firefighters across the country – help keep

experienced public safety workers on the job protecting

communities. The Palm Beach saga was a painful

and costly lesson that pensions are a critical workforce

management tool to recruit, retain and retire public

employees.

Perhaps the most compelling data point in the

Palm Beach case study is that a total of 53 mid-career

police officers and firefighters left their jobs before

retirement after the Town Council voted to change the

pension plan. Previously, just two mid-career public

safety workers left their jobs before reaching retirement.

Together, the new four state case studies and the

Town of Palm Beach experience serve as cautionary

tales to policymakers and public employers considering

changes to their employee retirement plans. The

lessons are clear: closing a pension doesn’t reduce

costs, but instead raises taxpayer costs. And, eliminating

pensions can have long-term consequences on

public employees’ financial security while harming

public employers’ ability to recruit and retain workers.

About the Author:

Dan Doonan is the Executive Director, National Institute

on Retirement Security. n

69


www.publicpensioninstitute.org – your source for news!

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has managed client assets since 1975. We started as an equity research

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What Pension Fund Trustees Should Know

About Investing in Real Estate

Is your plan effectively managing its real estate portfolio?

Meredith Despins,

Senior Vice President,

Investment Affairs & Investor

Education,

Nareit

As a pension trustee you

have a lot on your plate. You

have your “day job” and you

have a weighty set of fiduciary responsibilities that you

need to understand and fulfill on behalf of your pension

plan. Ensuring that your systems’ assets are diversified,

in order to minimize risk of loss, is a core

responsibility.

Diversification is among the most powerful risk

management tools available to investors and it is

primarily achieved by investing the plan’s assets in

different types of investments or “asset classes.”

Commercial real estate is a substantial component of

the $97 trillion investment opportunity set in the

United States; in fact, it is the third largest asset

class. As the third largest asset class, real estate houses

the U.S. economy and is a fundamental component of

a diversified investment portfolio.

So How Much Real Estate Should Be in the Pension

Portfolio?

Models that include a broad mix of asset classes

demonstrate that an allocation to real estate in the

15-20% range is appropriate.

There are many factors that go into determining

the appropriate allocation to any asset class, including

real estate within an investment portfolio, and these

factors are unique and specific to each pension fund.

One very simple approach is the “market portfolio,”

which invests in each asset weighted in proportion to

its total presence in the market. This would suggest

that pension funds should be allocating about 17% of

their investments to real estate.

More detailed asset allocation methods that

include a broad mix of asset classes and consider

returns, correlations, and volatilities consistently,

demonstrate that a meaningful allocation to real estate,

somewhere in the 15 to 20% range, is appropriate.

Even though pension fund allocations to real

estate have increased over the past several years, on

average the target weight to real estate at 7 to 10% is

less than market weight, and lower that of what other

models would suggest as being optimal.

How Pension Funds Invest in Real Estate

Real estate is a mature asset class, and like equity

and fixed income investments, exposure to real estate

can be achieved through public market investments as

well as through private market investment. In real

estate, when we say “public market” investment,

generally we mean investment in real estate through

REITs (real estate investment trusts). “Private market”

71


See footnote 1


72


Investing in Real Estate... CONTINUED FROM PAGE 71

investments are investments in real estate through

private transactions and vehicles. This would include,

for example, direct property investment; private comingled

funds (some familiar terms for these private

market investments include, core funds, value-added

funds, and opportunistic funds); and separately managed

accounts.

For investors who are considering adding a real

estate allocation or are beginning to build their real

estate portfolio, REITs generally provide the most costeffective

and efficient way to gain exposure to the

asset class.

For investors who have only private real estate

investments in their portfolio, there are specific benefits

of adding a meaningful allocation to REITs. REITs

and private real estate are complementary investments

within a portfolio. As the graph below shows, downside

or drawdown risk, as measured by negative investment

returns, is mitigated by combining REITs and

private real estate investments. Upside opportunity, or

the ability to achieve higher returns from your real

estate portfolio, comes from the addition of REITs

to the portfolio due to their comparatively stronger

historical performance.

To see how this might work in your portfolio, visit

www.pensionsandrealestate.com.

The 21st Century Real Estate Portfolio

REIT strategies can help address priorities that have

become critically important over the last decade.

Today, most pension funds, on an asset weighted

basis, invest in both REITs and private real estate.

Including REIT strategies in combination with private

market real estate investments helps pension funds to

address several issues that have become critically

important over the last decade, and which are difficult

to achieve by investing solely through private real

estate investment.

What Are the Challenges with Investing in

Real Estate?

Access. The ability to efficiently invest fully in the

real estate asset class, including “new economy” real

estate. Real estate houses the U.S. economy, and, like

the economy, the real estate asset class is dynamic and

ever evolving, offering investors a broad menu to

choose from both in terms of property types and

locations. A 21st century real estate portfolio includes

a wide array of traditional real estate properties (office,

retail, industrial, and apartment), new economy real

estate properties (data centers and infrastructure like

telecommunications towers, fiber cables, and energy

pipelines) and natural resources (timberland and

agricultural land). Investing in REITs gives your

pension fund exposure to all the real estate asset

class offers.

Historically, retail centers, apartments, office buildings,

and industrial warehouses were the dominant

property sectors. Today, the industry has expanded to

include property types that reflect the changing U.S.

See footnote 2

See footnote 3

73


See footnote 4


74


Investing in Real Estate... CONTINUED FROM PAGE 73

economy, including data centers, cell towers, and logistics

facilities, it now provides access to both traditional

and new economy properties.

Governance. Commercial real estate is a physical

“bricks and mortar” asset and traditionally has been

relatively illiquid. Because REITs are real estate companies

traded on stock exchanges, they provide real

estate investors with real estate returns in a vehicle that

also provides effective governance and market liquidity.

Market liquidity allows investors to be nimble in

controlling risks that are otherwise difficult to control

when managing a portfolio of physical assets like real

estate. Market liquidity makes it easier to strategically

and tactically manage your real estate allocation, as

you would other assets within your portfolio.

Performance and Cost Management. For longterm

investors like pension funds, investing in real

estate through REITs has provided not only asset class

diversification, but also enhanced investment performance.

REITs' track record of delivering reliable and growing

dividends, combined with long-term capital

appreciation, has historically provided investors with

total returns that outpace private real estate returns by

2.5 to 3% per year.

Cost management is a critical component of a

pension system’s long-term investment performance.

REITs provide investors with access to real estate, and

because they are public market investments and listed

on the stock exchange, are highly transparent. Real

estate investment through REITs is often the most costeffective

and highest total return way for pension

funds to invest in the asset class.

Risk Management. Diversification of your plan’s

assets is among the most powerful risk management

tools available to investors; and having real estate in

the pension’s portfolio is one arrow in the risk management

quiver. Diversification within the pension’s real

estate portfolio is another important risk management

tool. In general, it is desirable to have a real estate

portfolio that includes a mix of different property types

and geographies to avoid undue concentration in any

specific type or location.

Nareit hopes this information has provided “food

for thought” as you consider your pension fund’s

real estate investments. We invite you to visit www.

pensionsandrealestate.com, a new website that has

been designed especially with pension trustees in

mind, and is intended to provide information to help

trustees and pension fund investors think critically

about their plan’s real estate investments.

Sources:

1. The Role of REITs and Listed Real Estate Equities

in Target Date Fund Allocations, Wilshire Funds

Management, 2019 https://www.reit.com/data-research/

research/nareit-research/reits-critical-retirement-portfolios;

Global Listed Real Estate Investment: Asset Allocation

in a Non-Normal World, Morningstar December 2010;

Commercial Real Estate Investment Through Global Public

Markets, Morningstar, November 2011; The Role of

REITs and Listed Real Estate Equities in Target Date Fund

Asset Allocations, Wilshire Funds Management, January

2013; Real Estate Investment In Liability-Driven Portfolios,

Morningstar Inc., July 2011; Real Estate Investment

Through REITs, Morningstar Inc., September 2008.

2. Nareit analysis of quarterly net total returns for

NCREIF Fund Index – Open-End Diversified Core Equity

(ODCE) and FTSE Nareit All Equity REITs Index, 1978Q1-

2018Q4, after subtracting assumed fees of 12.5 bps/qtr

for REITs.

3. Source: CEM Benchmarking, 2018 available,

at https://www.reit.com/sites/default/files/media/PDFs/

Research/NAREITCEMESupdate2018Oct24.pdf

4. Source: Nareit analysis of property data from S&P

Global Market Intelligence.

National

Investment Services

Client Focused Flexible Solutions Consistent Results

PROUD SUPPORTER OF THE FPPTA

About the Author:

Meredith Despins is senior vice president, Investment

Affairs & Investor Education for the Nareit, the national,

not-for-profit trade association of the real estate investment

trust (REIT) and publicly traded real estate industry.

Ms. Despins leads Nareit's institutional investor education

and outreach for the pension, endowment, foundation,

and sovereign fund investor mark. n

Intercontinental Proudly Supports

Florida Public

Pension Trustees

Association

Intercontinental Real Estate Corporation is an SEC Registered Investment Adviser with decades long experience in

real estate investment, finance, development, construction management and asset management. Since 1959,

Intercontinental has managed, developed, or owned over $10 billion in real estate property. Today, Intercontinental

manages a portfolio in excess of $8.5 billion for its clients. The Intercontinental portfolio is diversified both by

robust property mix and by geography. Fund strategies actively seek opportunities to invest in both Core and

Core-Plus properties, as well as in Value-Add operating properties and development projects.

PETER HAPGOOD | PETERH@INTERCONTINENTAL.NET

1270 SOLDIERS FIELD ROAD, BOSTON, MA 02135-1003 | WWW.INTERCONTINENTAL.NET

The Voice Magazine Fall 2019

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