HomeMy WebLinkAbout05. Risk Analysis Questionnaire related to IRS 115 Pension Trust 5.
-4,00�141
Central Contra Costa Sanitary District
December 27, 2016
TO: FINANCE COMMITTEE
VIA: ROGER BAILEY, GENERAL MANAGER
ANN SASAKI, DEPUTY GENERAL MANAGER F'
PHILIP LEIBER, DIRECTOR OF ADMINISTRATION & FINANCE
FROM: THEA VASSALLO, FINANCE MANAGER
SUBJECT: PORTFOLIO PLANNING SURVEY FROM PFM ASSET
MANAGEMENT LLC
At the November 10, 2016 Special Board Meeting staff, was given direction to
present the Board with an action item to establish a new Internal Revenue Code
(IRC) Section 115 Pension Trust via adoption of a Post-Employment Benefits Trust
Agreement, Finance Manager, Thea Vassallo has been working with PFM Asset
Management LLC (PFM) to initially fund this trust with the $3.359 million extra
reserve fund balance at the end of Fiscal Year 2015-16.
In anticipation of this item, Central San has been given the attached Portfolio
Planning Survey to complete. This risk analysis questionnaire will lead to the
development of a written policy, or Investment Policy Statement (IPS), which will
detail Central San's investment goals and the long-range plan to achieve these
objectives, as well as analyze Central San's present investment allocation and design
an appropriate investment policy. It will also serve as a directive to PFM for use in
implementing Central San's portfolio strategy and will establish a rationale for
investment decisions, judgments and evaluation.
Please review the questionnaire Sections II and III in advance for discussion at the
Committee meeting. Staff has completed the survey and plans to review the
recommended allowable asset classes, investment objectives, risk and timing of the
trust set up with PFM.
Staff and Lauren Brant, Managing Director of PFM, will be available at the Committee
meeting to answer questions.
Attachment
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C:\Users\CGranzella\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.0utlook\IFG8EC11\12-27-16 PFM
Portfolio Planning Survey.docx
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Portfolio Planning Survey
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Introduction
The critical first phase of our investment service involves a portfolio planning process that leads
to the development of a written policy. This Investment Policy Statement (IPS) details your
investment goals and objectives and your long-range plan for achieving them. In essence, it
becomes the linkage between your needs and the realities of the investment markets. In addition,
it serves as a directive for implementing your portfolio strategy and establishes a rationale for
making subsequent investment decisions,judgments and evaluation. We believe that the creation
and execution of a reasonable and logical investment policy is absolutely critical to the long-term
success of your investment program. Therefore, it must be crafted with skill, a common
perspective of the realities of the financial world and a clear understanding of the financial and
psychological factors that influence the needs of the portfolio. This questionnaire is designed to
assist us in assessing your goals, analyzing your present investment allocation and designing an
appropriate investment policy for your portfolio. With your help, we trust that you will find its
completion to be an enlightening first step in the development of your long-term investment
program.
Contents of the Portfolio Planning Survey are found on the following pages:
I. Fund Background Information............................................................................................ 1
Il. Allowable Asset Classes..................................................................................................... 1
III. Investment Objectives, Time Horizon and Risk................................................................. 1
I. Fund Background Information
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undsCentral Contra Costa Sanitary District Section 115 Pension Trust
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II. Permissible asset classes
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Allowa=ble in New
Asset Classes l'PS
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Large Cap Domestic Equity
........................... ........ . .......................................... ..... ................. ................................................. ...........................
Mid/Small Cap Domestic Equity
................................................................._..................................................................._................_.........._.................._.........................................__........._..................................................__..................................
....................._........._<
International Equity—Developed&Emerging
..................._........................................................_....._......._....................................................................._............................................................................._...........__........................e..............................................................................................................._<
Real Estate(REITS,LP's,Open Ended Funds)
....................................................................................................................................................................................................................................................................................................._........._............................_...........................................................................i
Domestic Government&High Quality Corporate
......................................_.............................._..............................................................................._.:..........._...................................................._........................................................................._.................................
s Domestic Below Investment Grade Fixed Income
..........................._.................._............................................................._............................... ................._................_..._..................... .........................................i....................................................................................................................
i International Fixed Income—Developed&Emerging
................._............__........................._.............._......................................................_........._..._......._.._..........._........_.........................................................._...._........_..
...................................................................................................................
Commodities
Hedge Funds
.........................................................................................................................._..............................................................................................................................._...._..................._.................................. ...........
.
...._...................................................................................................................................................................................__....................................................................................._.............................................................................._........_....................
Private Equity
.........................._....._....._.............................................................................................................................................._........._..._...._................................................
Other: Specify
................................................._......._....._..............................................................................._..............._.................................................._...................................................................................................................._............................................_........;
III. Investment Objectives/Risk
1. The desired investment rate of return assumption for this portfolio is %. Also the current
actuarial rate of return assumption for CCCERA is %.
2. What is the primary objective for this pool of assets?
a. Preservation of capital
b. Maximize current income
c. Growth of principal, moderate current income
d. Maximum growth of principal, income not a consideration
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3. What is the portfolio's investment time horizon? (Investment time horizon refers to the
minimum length of time the portfolio is reasonably expected to be invested before being
liquidated or alternatively, the period of time during which the investment objective for this
portfolio will continue without substantial modification.)
a. Five years
b. Ten years
c. Twenty years
d. Other
4. Assuming long-term return goals are being met, how often are you prepared to accept the
probability of a negative portfolio return? Once every?
a. Three years
b. Five years
c. Ten years
d. Other
5. Given the longer-term nature of the fund and the expectation for short-term volatility in the
markets, what is the maximum loss that would be acceptable in any given year?
a. 0-5%
b. 5— 10%
c. 10—20%
d. Greater than 20%
6. How concerned are you with variability in the market value of the fund?
a. Very concerned with variability in the fund value
b. Somewhat concerned with year-to-year variability, but more concerned with long-term
growth
c. Focused on the long-term growth of the fund, unconcerned with short-term variability
7. Please circle any of the following which most closely define your view of risk.
a. The possibility of not achieving a targeted rate of return.
b. Wide swings in the market value of your portfolio over short (1 year)periods of time.
c. Wide swings in the market value of your portfolio overlong (3 years)periods of time.
d. Loss of principal
Approved by:
Name:
Title:
Date:
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