Minutes (download Microsoft Word doc)
AAPG Committee on Investments
April 3, 2001
The meeting on the AAPG Committee on Investments (herein after referred to as "Committee") convened at 10:00 a.m., April 3, 2001, in Tulsa, Oklahoma.
The following were in attendance: Chair, Jim Gibbs; Committee Members: George Bole, Jim McGhay, Dick Howell, Terry O'Hare, Pierce Pratt; and Ed Picou, Executive Committee Liaison. Also attending were AAPG Executive Director, Rick Fritz, AAPG Employees' Pension Committee Members: Don O'Nesky, Chair; Pat Hurd, Larry Nation, and Anne Payne. Greg Weaver and Doug Anderson representing Marquette Alliance.
Chairman Gibbs welcomed all the attendees and asked each attendee to introduce themselves. Gibbs announced this would be his last regular meeting as Chairman of the Committee.
2. Approval of Minutes
Bole moved/McGhay seconded: to approve the minutes from the October 24, 2000 meeting with the addition of Greg Weaver listed as presenting item 4, Third Quarter 2000 Market Environment and item 5, Third Quarter 2000 Investment Results. The motion carried.
3. Report by AAPG Executive Director (Rick Fritz)
a. End-of-the-year cash flow problems are behind us with a steady flow from Convention registration and dues.
b. Expenses are down and we continue to monitor them very closely.
c. Publications program has been a continuing problem with few new books and those we do have are more expensive than we would like, thus not selling as they should. We are going to address this by putting some of our newer Memoirs on sale for $49.00 each. This will be happening very soon.
d. We just completed negotiations to buy out the PLS Expo which they have in the late summer each year.
Our first APPEX will be August 28 - 29, 2001 at the Adams Mark - Westchase in Houston. Next year it will be in mid-September. We have had very positive response from the companies. We will max out with 300 booths, and if we do that we will move to the Brown Convention Center next year. We are currently holding space for next year at both the Adams Mark and the Brown Convention Center. Member loyalty to AAPG has been noted for this project versus NAPE. HGS and SIPES will participate financially.
Also, PESGB will be involved in advertising plus if successful we will have an APPEX in London every other year. This APPEX is coming on at the right time since we do not have an International meeting this year which traditionally has provided our needed cash in the fall. PLS will be primary sponsor and will help sell the event (already have $15,000 in sponsor money). We will be using the AAPL model which is very successful. If anyone wants to help we need volunteers.
e. We put a Bulletin option on the dues statement this year allowing members to select either the current hard copy of a CD/internet option. For additional $27.00 a member can get both. Thus far 1500 members have opted for the CD/internet.
4. Fourth Quarter 2000 Investment Results Environment (Greg Weaver/Doug Anderson)
a. The market has been so good for so long but we knew it could not continue forever. But this is not the time to throw out our strategic plan. Unfortunately the tendency by some people is to get out of their plan and sell. Of course, we know it is the worst time when markets are down.
b. It is good we had a plan in place that provided diversification in both value and growth. It is interesting that the Russell 2000 value and growth share 40% of the same stocks.
c. The NASDAQ last year was -59.8% which was more than the Dow Jones lost in the stock market crash in 1929. Also, the S&P 500 cap weighted lost -21.9% which is below the Bear Market threshold.
d. Last year the Barra Growth lost -38.3% versus the Barra Value of -1.3%. The Barra Mid Cap growth under performed as compared to the Barra Mid Cap Value -24.9% versus + 16.1%. Also, the Barra Small Cap Growth under performed as compared to Barra Small Cap Value -19.3% versus +16.4%. The small caps are much more stable than in the past.
e. Independence struggled over the last few years but the last year they outperformed the market (2.32% versus S&P -8.19%). While they are negative the last quarter they are still outperforming the market (-3.88% versus S&P - 5.43%).
f. MAS Mid Cap Growth was a major disappointment last year at -30.10% versus the S&P 400 at 8.92%. They are still down the last quarter at -5.46% versus the S&P 400 3.77%.
g. The AMR International Equity Fund out performed the MSCI EAFE last year -1.25% to -17.39% and out performed the MSCI EAFE the last quarter 1.01% to -4.16%.
h. PIMCO, our fixed income fund, had an exceptional year at 14.01% compared to the Lehman Aggregate 13.44%. In the last quarter PIMCO was still running ahead of Lehman 4.53% to 4.42%.
i. Last year our total fund outperformed its allocation index by 3.29% to 3.16% and the last quarter 1.48% to -.26%.
j. There was discussion about possibly adding a small cap value fund to the portfolio. There was general agreement on the Committee that it should be seriously considered. Gibbs asked Greg Weaver to have his recommendation on small cap value funds, at the next meeting, possibly 10% of the total fund. Gibbs stated we have diversified and have come a long way. He likes more diversification rather than less.
k. Gibbs asked that the funds be re-balanced in accordance with the approved allocations once we receive the March 31, 2001 statements. Marquette will review the statements and make their recommendation so the staff can notify BOK, the Custodian Bank.
5. AAPG Member "Group" Retirement Program Proposal (revised) from Milliman & Robertson (MAR) (Greg Weaver/Doug Anderson)
a. At the last meeting a representative from M&R gave an excellent presentation concerning their program, how they could improve on the current program, and how they could grow the program. This is a tax deferred program thus only U.S. taxpayers are eligible. However, the Committee wanted assurance all members that are U.S. taxpayers could participate including retirees and self-employed. The M&R representative stated he would take it back and have the answer for the next meeting.
b. M&R had information for this meeting answering all the concerns of the Committee.
c. Gibbs moved/Bole seconded: to recommend the AAPG Executive Committee approve moving the AAPG member retirement program from Retirement Plan Strategies to Milliman and Robertson effective October 1, 2001 with oversight to remain in the Investment Committee. There was unanimous approval.
On April 5, 2001 in a teleconference meeting the AAPG Executive Committee approved the recommendation.
d. The Committee also thought it necessary to give a name to this program similar to what the Insurance Committee now has with GeoCare. The five top choices by the Committee and from which they will select are in order GeoVe$t, GeoFund$, Geo$afe, Geo$ave and GeoFinancial.
Gibbs will work with the Committee to select one of these names so M&R can start planning their marketing. An attempt will be made to have the name so M&R can headline it at the AAPG Annual Convention in Denver.
6. New Business
There was no new business.
7. Next Meeting
The next regular meeting was set for Monday, October 29, 2001 in Tulsa.
The meeting was adjourned at 1:10 p.m.
Donald A. O'Nesky
1. Marquette Alliance, Inc. February 2001 Update
2. The Milliman and Robertson Proposal for the Member Retirement Program
Pierce Pratt, Chairman
Terry Hollrah, Vice Chair