Police Officer's Pension Fund Investment PolicyCITY OF BOYNTON BEACH
POLICE OFFICERS' PENSION FUND
2100 North Florida Mango Road
West Palm Beach, Florida 33409
Telephone: 561.889.4577
Sent via e-mail- mpf@dms.fl.gov
November 28, 2023
State of Florida, Department of Management Services
Division of Retirement
Municipal Police Officers' & Firefighters' Trust Funds Office
Keith E. Brinkman
Bureau Chief, Local Retirement Systems
3189 S. Blair Stone Rd.
Tallahassee, FL 32301-6812
Re: Investment Guidelines
Dear Mr. Brinkman:
Toll Free Fax: 866.769.0678
I would like to take this opportunity to present you with the Investment Policy/Guidelines for the
Boynton Beach Police Pension Fund. This is being provided in accordance with Section 112.661,
Florida Statutes. The Board of Trustees unanimously approved this addendum to the IPS on
November 14, 2023.
Should you have any questions or concerns, kindly contact me at the phone number cited above.
Thank you in advance for your time and attention in this matter.
Respectfully,
Louis Penque, Plan Administrator
FOR THE BOARD
C' Board of Trustees
State of Florida (file)
City of Boynton Beach, City Clerk's Office (via e-mail- cityclerk(o)-bbfl.us)
Frank Wan
BonniJensen
BOYNTON BEACH POLICE OFFICERS' PENSION FUND
Investment Policy Statement
1. PURPOSE OF INVESTMENT POLICY STATEMENT
The Pension Board of Trustees maintains that an important determinant of future
investment returns is the expression and periodic review of the Fund's investment objectives. To
that end, the Trustees have adopted this Investment Policy Statement to apply to all of the assets
of the fund.
In fulfilling their fiduciary responsibility, the Trustees recognize that the pension fund is
an essential vehicle for providing income benefits to retired participants or their beneficiaries. The
Trustees also recognize that the obligations of the Fund are long-term and that the investment
policy statement should be made with a view toward performance and return over a number of
years. The general investment objective then is to obtain a reasonable total rate of return — defined
as interest and dividend income plus realized and unrealized capital gains and/or losses — that
meets or exceeds the actuarial interest rate assumption net of fees to ensure the Fund is actuarially
sound. This return is expected on a regular basis over roiling actuarial measurement periods.
The Trustees, the Fund's investment manager(s), and investment monitor/consultant shall
comply with the following fiduciary standard:
A fiduciary shall discharge its duties with respect to the Fund solely in the interest of the
participants and beneficiaries and
a. for the exclusive purpose of providing benefits to participants and their
beneficiaries and defraying reasonable expenses of administering the pension Fund;
b. with the care, skill, prudence and diligence under the circumstances then prevailing
that a prudent person acting in a like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with like aims;
c. by diversifying the investments of the Fund so as to minimize the risk of large
losses, unless under the circumstances it is clearly prudent not to do so.
Reasonable consistency of return and protection of assets against the inroads of inflation
are paramount. However, the volatility of interest rates and securities markets make it necessary
to judge results within the context of several years rather than over short periods of one- or two -
years or less.
2. INVESTMENT PERFORMANCE OBJECTIVES
The below listed performance measures will be used as objective criteria for evaluating
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BOYNTON BEACH POLICE OFFICERS' PENSION FUND
Investment Policy Statement
effectiveness of the investment manager(s):
A. Total Fund Performance
The performance of the total Fund will be measured net of fees for rolling three -
and five-year periods. These periods are considered sufficient to accommodate
the market cycles experienced with investments. The performance of the total
Fund will be compared to a Benchmark comprised currently of. 30% MSCI
ACWI Equity Index, 25% Russell 1000, 32% Bloomberg US Aggregate Bond
Index, 2% NAREIT Index, 2% S&P Global Infrastructure Index, 5% NCREIF
Index Open -End Diversified Core Equity, 2% DJ -UBS Commodities Index,
and 2% ML 3 -Month T-bills. Alternative benchmark: 70% R1000 and 30%
Bloomberg US Aggregate Bond Index.
2. On a relative basis, it is expected that the investment manager's performance
will rank in the top 40th percentile of an appropriate balanced universe over
three- to five-year periods.
3. On an absolute basis, it is expected the total Fund return will equal or exceed
the actuarial earnings assumption rate over rolling five-year periods. For each
actuarial valuation, the Trustees will determine the total expected annual rate of
return for the current year, for each of the next several years, and for the long-
term thereafter.
B. Fixed Income Performance
The fixed income portion of the portfolio is expected to meet or exceed the return
of the Bloomberg Barclays Capital US Aggregate Bond Index, and rank within the
top 40th percentile of an appropriate fixed income universe over three- and five-
year periods.
C. Private Real Estate Performance
The Private Real Estate portion of the portfolio is expected to meet or exceed the
return of the NCR.EIF Index Open -End Diversified Core Equity, and rank within
the top 40th percentile of an appropriate Real Estate universe over three- and five-
year periods.
D. Private Credit Performance
The Private Credit portion of the portfolio is expected to meet or exceed the return
of the Bloomberg Barclays Capital US Aggregate Bond Index.
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BOYNTON BEACH POLICE OFFICERS' PENSION FUND
Investment Policy Statement
3. INVESTMENT STANDARDS AND GUIDELINES
Liquidity. The Fund's investment manager(s) shall be kept informed of the liquidity
requirements of the Fund. The investment portfolio shall be structured in such a manner as to
provide sufficient liquidity to pay obligations as they come due. To the extent possible, an attempt
will be made to match investment maturities with known cash needs and anticipated cash-flow
requirements.
Custodian: The Board of Trustees has a retained and will continue to retain a third parry to
be custodian of the Fund's assets. All securities shall be designated as an asset of the Fund, and
no withdrawal of securities -in whole or part -shall be made from safekeeping except by an
authorized member of the Board of Trustees or the Board of Trustee's designee. Security
transactions between a broker dealer and a custodian involving the purchase or sale of securities
by transfer of money or securities must be made on a "delivery vs. payment" basis, if applicable,
to ensure that the custodian will have the money or security, as appropriate, in hand at the
conclusion of the transaction.
Bid requirement: The Trustees shall determine the approximate maturity date based on
cash flow needs and market conditions, analyze and select one or more optimal types of
investment, and competitively bid the security in question when feasible and appropriate. Except
as otherwise required by law, the most economically advantageous bid must be selected.
Risk and Diversification: The investments held by the Fund shall be diversified to the
extent practical to control the risk of loss resulting from over -concentration of assets in a specific
maturity, issuer, issuer, instrument, dealer, or bank which financial instruments are bought and
sold.
A. Authorized Investments:
Commingled equity, fixed income, money market, and alternative (real estate,
listed infrastructure, commodities) funds and institutional mutual funds whose
investments are restricted to securities meeting the criteria outlined in Section 3B.
B. Limitations
1. Illiquid investments, as described in Chapter 215.47, Florida Statutes, are
prohibited.
2. Foreign investments are limited to 25% of the total pension fund, at market.
3. All repurchase agreement transactions shall adhere to the requirements of the
Master Repurchase Agreement.
4. Under Protecting Florida's Investment Act ("PFIA"), scrutinized companies
published by the State Board of Administration are prohibited, unless an indirect
investment is unable to divest, as provided for in Florida Statutes section 215.473.
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B0YNTON BEACH POLICE OFFICERS' PENSION FUND
Investment Policy Statement
5. The following investments are prohibited, unless authorized by the Trustees:
a. Futures (exceptions are mutual and commingled funds)
b. General obligations issued by a foreign government
C. Hedge funds
d. Insurance annuities
e. Internally managed assets
f. Limited partnerships
g. Margin Accounts
h. Options (exceptions are mutual and commingled funds)
4. COMMUNICATIONS
A. The custodian shall apprise the Trustees of all transactions and shall forward all
proxies to the investment manager(s) within ten calendar days. On a monthly basis,
the custodian shall supply an accounting statement that will include a summary of
all receipts and disbursements and the cost and the market value of all assets. On a
quarterly basis, the investment manager(s) or investment monitor/consultant shall
provide a written report affirming compliance with the security restrictions and a
summary of common stock diversification and attendant schedules. The
investment manager(s) shall deliver each quarter a report detailing the Fund's
performance, adherence to the investment policy statement, forecast of the market
and economy, portfolio analysis and current assets of the Trust. Written reports
and personal presentations shall be delivered to the Trustees within 60 days of the
end of the quarter. The investment manager(s) will provide immediate written
and/or telephone notice to the Trustees of any significant market related or non -
market related event, specifically including, but not limited to, any deviation from
the standards set forth in Section 3B above.
B. The investment manager(s) will disclose any securities that are not in compliance
with Section 313 in each quarterly report.
C. The Trustees shall retain a monitoring service to evaluate and report on a quarterly
basis the rate of return and relative performance of the Fund.
D. The Trustees will meet quarterly with the investment monitor/consultant to review
the Performance Report. The Trustees will meet with the investment manager(s)
and investment monitor/consultant to discuss performance results, economic
outlook, investment strategy and tactics and other pertinent matters affecting the
Fund on a quarterly basis.
E. The equity investment manager shall report to the Trustees on an annual basis with
respect to proxies, the issues, votes and dates, and if not voted, a written
explanation.
5. CRITERIA FOR INVESTMENT MANAGER REVIEW
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BOYNTON BEACH POLICE OFFICERS' PENSION FUND
Investment Policy Statement
The Board of Trustees wish to adopt standards by which judgments of the ongoing
performance of an investment manager may be made. With this in mind, the following are
adopted:
If, at any time, any one of the following is breached, the investment manager(s) will be
warned of the Trustee's serious concern for the Fund's continued safety and performance.
A. Four consecutive quarters of the investment manager's performance below the 40th
percentile in appropriate performance rankings.
B. Standard deviation for the Fund in excess of 120% of the market.
C. Loss by the investment manager(s) of any senior investment personnel.
D. Any change in basic investment philosophy by the investment manager(s).
E. Failure to attain a majority vote of confidence by the Board of Trustees.
F. Failure to observe the security quality restrictions in Section 3B.
6. INTERNAL CONTROLS
The Fund shall be governed by a set of written internal controls and operational procedures,
which shall be periodically reviewed by the Fund's certified public accountant (CPA). At the time
of every financial audit, the CPA shall review the controls that should be designed to prevent loss
of funds that might arise from fraud, error, or misrepresentation by third parties or imprudent
actions by the Trustees or the employees of the City of Boynton Beach.
7. CONTINUING EDUCATION
The Fund acknowledges the importance of continuing education for the Trustees. Ongoing
education will be provided by the Fund's actuary, attorney, custodian, investment manager(s),
investment monitor/consultant, and administrator. In addition, the Trustees are encouraged to
attend educational conferences in connection with their duties and responsibilities as Trustees.
Each Trustee is encouraged to attend a minimum of two conferences or seminars per year.
Additional conferences or seminars are also encouraged. Each Trustee may attend up to six
conferences in state and two conferences out-of-state, every year, without additional Board
approval.
8. FLORIDA STATUTES 112,185 AND APPLICABLE CITY OF BOYNTON BEACH
ORDINANCES
If at any time, this document found to be in conflict with Chapter 112 or 185, Florida
Statutes, or the applicable City of Boynton Beach Ordinances, the Statutes and Ordinances shall
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BOYNTON BEACH POLICE OFFICERS' PENSION FUND
Investment Policy Statement
prevail.
The Board and its investment managers shall comply with the applicable requirements of
Chapter 2023-28, Laws of Florida, including Section 112.662, along with regulations adopted by
the Department of Management Services.
A. Definition of pecuniary factor: The term "pecuniary factor" is defined as a factor
that an investment fiduciary "prudently determines is expected to have a material
effect on the risk or returns of an investment based on appropriate investment
horizons consistent with the investment objectives and funding policy of the
retirement system. The term does not include the consideration of the furtherance of
any social, political, or ideological interests." [112.662(1)]
B. Exclusive consideration of pecuniary factors: Only pecuniary factors may be
considered and the interests of the participants and beneficiaries of the system may
not be subordinated to other objectives, including sacrificing investment return or
undertaking additional investment risk to promote any nonpecuniary factor. The
weight given to any pecuniary factor must appropriately reflect a prudent assessment
of its impact on risk or returns. [112.662(2)]
C. Proxy voting: Only pecuniary factors may be considered when voting proxies.
[112.662(3)]
D. Filing requirements: The Board shall timely comply with the reporting requirement
of Section 112.662 by filing a comprehensive report by December 15 of each odd -
numbered year. [112.662(4)]. Investment managers and the Board's investment
consultant shall assist in the preparation of required reports and shall annually
confirm to the Board their compliance with Chapter 2023-28.
E. Contracting and external communication requirements: Manager contracts shall
comply with Section 215.855 as follows:
Any written communication made by an investment manager to a company
in which such manager invests public funds on behalf of the Board must
include the following disclaimer in a conspicuous location if such
communication discusses social, political, or ideological interests;
subordinates the interests of the company's shareholders to the interest of
another entity; or advocates for the interest of an entity other than the
company's shareholders:
The views and opinions expressed in this communication are those of the
sender and do not reflect the views and opinions of the people of the State
of Florida.
F. The Investment Consultant will provide Investment Managers for consideration who
invest only based on pecuniary factors as defined by Florida Statutes § 112.662.
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BOYNTON BEACH POLICE OFFICERS' PENSION FUND
Investment Policy Statement
G. If a Request for Proposals document is issued for Investment Manager services, the
solicitation document must include the following:
The Board of Trustees may not request documentation of or consider a
vendor's social, political, or ideological interests when determining if the
vendor is a responsible vendor. Additionally, the Board of Trustees may
not give preference to a vendor based on vendor's social, political, or
ideological interests.
9. REVIEW AND AMENDMENTS
It is the Trustees intention to review this document periodically and to amend this statement
to reflect any changes in philosophy, objectives or guidelines. In this regard, the investment
manager's interest in consistency in these matters is recognized and will be taken into account
when changes are being considered. If at any time any investment manager feels that the specific
objectives defined herein cannot be met, or the guidelines constrict performance, the Trustees
should be notified in writing. By initial and continuing acceptance of this Investment Policy
Statement, the investment manager(s) concurs with the provisions of this document.
Once the Trustees have adopted the investment policy statement, the investment policy
statement shall be promptly filed with the Department of Management Services, the Fund sponsor,
and the consulting actuary.
The effective date of the Investment Policy Statement and any amendment thereto shall be
the 31st calendar day following the filing date with the plan sponsor.
10. ASSET ALLOCATION
Deliberate management of the asset mix among classes of investments is both a necessary
and desirable responsibility. In the allocation of assets, diversification of investments among asset
classes that are not similarly affected by economic, political, or social developments is a highly
desirable objective. The Fund's general policy shall be to diversify investments within both equity
and fixed income securities so as to provide a balance that will enhance total return, while avoiding
undue risk concentrations in any single asset class or investment category.
The addition of real assets, such as real estate, commodities and infrastructure, to the
equity/fixed income portfolio may materially improve the ability of the portfolio to dominate
inflation over the long-term. As a collection, real assets diversify each other and to equities and
fixed income. Real assets may offer the potential for attractive levels of return.
In making asset allocation judgments, it is not expected that the Trustees will necessarily
seek to "time" subtle changes in financial markets, or that frequent or minor adjustments would be
needed. Instead, it is expected to develop and adopt expressed guidelines for broad allocations on
a long-term basis, in light of current and projected investment environments.
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BOYNTON BEACH POLICE OFFICERS' PENSION FUND
Investment Policy Statement
To insure broad diversification in the long-term investment portfolios among the major
categories of investments, asset allocation, as a percent of the total market value of the total long-
term portfolio, will be set with the following target percentage:
Asset Class/Strategy
Strategic Allocation
(%)
Policy Range Allocation
(%)
World Equities
30
20-40
US Equities
25
15-35
Fixed Income
27
20-40
Private Credit
5
0-7
Cash/Money Market
2
0-5
Alternatives:
11
2-20
Total
100
ALTERNATIVES
Private Real Estate
5
0-10
Public Real Estate (REITs)
2
0-7
Listed Infrastructure
2
0-5
Commodities (CCFs)
2
1 0-7
NOTE: Foreign securities are limited to 25% of the pension fund at market value.
11. PROCEDURE FOR REBALANCING ASSET ALLOCATION
At the end of each month, Russell Investments will compare the Fund's asset values and
their relative allocation percentages, to the rebalancing policy targets and ranges. Based on this
comparison, Russell Investments will determine what trades are necessary in order to bring the
investments as close to target as practical.
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BO YNTON BLA CH POLICL; 0F1;YCERS'PLNM0N FUND
1h m5on, ent PolityMatement
12. PROCEDURE FOR REBALANCING ASSETALLOCATION
At the end of each month, Russell Invcstineilts will compare the Fund's asset values and
their relative allocation percentages, to the rebalancing policy targets and ranges. Based on this
comparison, Russell Investments will deterinine what trades are necessary in order to bring the
investments as close to target as practical.
BOYN,rON BEACH POLICE OITICERS' RUSSELL INVESTMENTS
PENSIONI,,FUNI)
BY B
A�Xe
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s: 9 11 11 -usfy: ecs
As: I stment Maiiagw'
Date:
Date -
BURGESS CHAMBERS & ASSOCIATES,
INC.
Icy:
As: Registered Advisor-
Irate:
dvisor
Date: /I. l q „ �?3
9
November 2023
B 0 YNR ON BEA CH POLICE OFFICERS'PENSI ON FUND
Addendum tt)
lip vestment Policy Statemetit
This Addendum is a part of the Boynton Beach Police Officers' Pension Fund's
Investment Policy dated Noveniber 2023, and it is intended only to complement the
obJectives and guidelines outlined therein.
The index portfoli(i held outside of Russell Investments is expected to have as target
allocation of 70% equity and 30% fixed inoonle, and it will e compared against the total
fujid benchmark highlighted in section 2(` )1 of the Investinent Policy Statement.
(W, 5