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INVESTMENT SUBCOMMITTEE
MEETING MINUTES
| Date: September 14, 2011 | Time: 3:00 p.m. |
| X Regularly Scheduled | __ Special |
| (A follow-up session was held at 9:00a.m. on September 15, 2011 | |
| Attendees: | Was a quorum present? Yes |
| Commission: Present | Other Attendees (9/14/2011) |
| Charlie Casella | Kathleen Carey-Reid (ING) |
| Steven Greatorex | Jeff LaFave (ING) |
| Robert Baus | Sean Banai, (ING )?by telephone |
| James Dzurenda | |
| Not Present | Other Attendees (9/15/2011) |
| Sandra Fae Brown | BrianComer (ING)?by telephone |
| Sal Luciano | Anthony Camp ((ING)?by telephone |
| Tom Manente (ING)?by telephone | |
| Comptroller's Office | |
| Thomas Woodruff, Division Director | |
| Margaret Haering, Assistant Director | |
Matters Discussed:
The Committee reviewed the materials regarding recent cashflows into the Intermediate Aggregate portion of the Stable Value Fund. In recent months participants have been redirecting larger amounts of their plan assets and new contributions to the Stable Value Fund. The currently monthly volume is $47,000,000; the average monthly volume has been in the $25,000,000 range. The Intermediate Agg fund receives all new cashflows; as a result that portfolio now repesents 30.7% of the total fund. ING recommends rebalancing the fund to the target allocations of 25% in Intermediate Agg, 50% in Core Plus, 12.5% each in PIMCO and Prudential. The Committee members requested additional information on the performance of the PIMCO and Prudential accounts before making that decision.
At a follow-up meeting held 9 /15/2011 a.m. the Committee met to receive the requested information. Brian Comer, Tom Manente and Anthony Camp, all of ING, participated by telephone to provide the performance information and offer their perspective on the rebalancing decision. The Fund's market to book ratio is currently 104.5%. Brian Comer stated that the high market to book ratio showed that the Stable Value Fund was performing as expected and that rebalancing made sense.
The Committee discussed the impact of the proposed reallocation on the crediting rate recommendation of 3.5%. Tom Manente explained that rebalancing of the Intermediate Agg account to 25% of the total would likely to improve overall fund performance because that portfolio was generating lower returns than the other strategies. The Committee members also discussed the effect of the current 3% guarantee on Stable Value Fund fees.
Materials Reviewed:
Stable Value Portfolio Review
ING analysis of rebalancing
Crediting Rate recommendation (ING)
Milliman analysis of crediting rate and rebalancing issues
Decisions voted upon:
The Committee decided to leave the Stable Value Fund crediting rate at its current level of 3.5%.
The Committee voted to authorize ING to rebalance the Stable Value Fund to the following manager allocation: 25% ING Intermediate Aggregate; 50% to ING Core Plus Strategy and 12.5% each to PIMCO and Prudential.
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