The Arkansas Local Police and Fire Retirement System's investments increased in value by $15.3 million in the quarter ending June 30 to nearly $1.63 billion, the organization's investment consultant told the system's board of trustees on Thursday.
After the board's meeting, investment consultant Larry Middleton, executive vice president of Stephens Inc., said the system's investments had dropped by $25 million to $1.604 billion between June 30 and the close of business Wednesday.
Slowing economic growth in China, the world's second-largest economy, and the Federal Reserve's plans to raise interest rates by the end of the year have made the stock markets volatile in recent weeks, he told the trustees.
"We have had extreme volatility," Middleton said, and a temporary 1,000-point drop in the stock market "erodes confidence."
The system includes more than 17,000 working, volunteer, and retired firefighters and policemen.
Trustee Beverly Lambert of North Little Rock said the system's investments have increased in value from about $600 million in March 2009 to about $1.6 billion now and he's proud of the system's investment manager and staff.
"We have had ups and downs and the downs are spooky," said board Chairman Mike Gaskill, who is the mayor of Paragould.
The system's investment return was 0.9 percent in the quarter that ended June 30, ranking among the highest for public pension systems, Middleton said.
The local police and fire retirement system's fiscal year coincides with the calendar year and the system ended last year with investments valued at $1.592 billion, he said.
During the 12-month period that ended June 30, the system's investment return was 4.26 percent, ahead of the median return of 3.2 percent for pension systems valued above $1 billion, Middleton said. During this period, the system's investment increased by $100 million, he said.
On June 30, the system's investments included $903.2 million in domestic and international stock markets; $463.1 million in bonds; $180.6 million in so-called alternative investments, such as private equity, real state, infrastructure and commodities; and $82.8 million in cash, according to Stephens Inc.
Middleton said he plans to shift about $30 million of the funds from cash to bonds managed by investment managers.
He said he also wants the trustees' investment committee to consider reallocating an undetermined amount from Boston-based Wellington Trust Co., its stock investment manager managing the most assets for the system, to other stock investment managers.
Wellington Trust Co. managed $243.1 million in domestic stocks for the system as of June 30, Stephens Inc. reported.
At the end of 2014, the system included 6,323 working members with an average annual salary of $48,617 and 7,347 volunteer firefighters and police officers, said system Executive Director David Clark.
The system also included 3,825 retired members and their survivors with an average annual benefit of $10,704, Clark said.
The average annual retirement benefit for retirees who were paid salary was $20,304, while the average annual retirement benefit for volunteers was $1,092 at the end of last fiscal year, he said.
The system's employers paid $85.9 million, including $26.8 million from the state's insurance premium taxes, into the system last year, while the members paid $22.6 million into the system, Clark said.
The system's unfunded liabilities totaled $431.7 million at the end of last year with a projected pay-off period of 16.3 years, he said.
Metro on 09/04/2015