March 28, 2013 RPA Minutes
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Nevada System of Higher Education

 

Minutes of 

Retirement Plans Advisory Committee Meeting

 

March 28, 2013

 
 
The Retirement Plan Advisory Committee (“Committee”), the fiduciary committee for the Nevada System of Higher Education Defined Contribution Savings Plans (“Plans”), met pursuant to notice on March 28, 2013 at the System Administration Office in Las Vegas, Nevada. Present were voting members Michelle Kelley, Kent Ervin, Mike Hardie (via videoconference), Pat La Putt, Carla Henson, Patricia Hughes, Paul Thistle, and Spencer Stewart. Frank Daniels, Steven Streeper, Robb Bay, and Alan Schlottmann were not in attendance. 
 
Attending the meeting by invitation were Henry Stone and Cynthia Hunt of the Nevada System of Higher Education. Also in attendance were Daniel Pawlisch, Chad Wubbena, and Adrian Kurniadjaja of Hewitt EnnisKnupp, Inc. (“HEK”).
 
The meeting was called to order at 10:30 a.m. PST by Chair Kelley. 
 
The Committee reviewed and approved the previous minutes from the Committee meeting held on February 21, 2013.
 
Pawlisch notified the Committee of Fidelity’s closing of the Fidelity Large Cap Growth Fund (FSLGX) and the Fidelity 130/30 Fund (FOTTX) and merging assets into the Fidelity Stock Selector All Cap Fund (FDSSX) which is currently on the Watch List. Pawlisch recommended that the Committee direct participant asset balances and future deferrals to the Plan’s Qualified Default Investment Alternative (QDIA) given HEK’s unfavorable view of the Stock Selector All Cap Fund. 
 
MOTION:
La Putt made a motion to accept HEK’s recommendation to utilize a QDIA mapping strategy for the Fidelity Large Cap Growth Fund and the Fidelity 130/30 Fund. She also requested that Fidelity work with the North & South benefit managers to coordinate the communication process to participants. The motion was seconded by Henson. Motion passed unanimously.
 
Pawlisch provided the Committee with an update in regards to the transition to the Vanguard Target Date Retirement Funds as the Qualified Default Investment Alternative (QDIA) for the RPA, TSA, 415(m), and the Medical Resident/Postdoctoral Scholar Retirement Plans. After working with the Plans’ administrative service providers and based on participant feedback received during the recent town hall meetings, Pawlisch recommend that the Committee postpone the transition to the Vanguard Target Date Retirement Funds. He recommended that it be made as part of the Plans overall transition to an open architecture plan design (January 2014). 
 
MOTION:
Ervin made a motion to postpone the transition to the Vanguard Target date Retirement Funds as the QDIA for the RPA, TSA, 415(m), and the Medical Resident/Postdoctoral Scholar Retirement Plans until January 2014. The motion was seconded by Henson. Motion passed unanimously.
 
Pawlisch provided an overview of the proposed tiered investment structure and the various options available for structuring the Plans to identify those practices that could be modified and/or implement to add value to the overall program going forward. The Committee discussed the materials and how the findings could affect participants. La Putt questioned HEK’s peer plan comparisons given participants lack of Social Security benefits and no defined benefit alternative/supplement. Thistle questioned the merits of having an annuity tier. Following a thorough discussion, it was agreed that while the Committee could continue to refine the investment structure, the proposed four tiered structure would provide participants with the key ingredients to form diversified portfolios that span the risk/return spectrum. Moreover, it balances the benefits of broad diversification with the disadvantages of too much choice.
 
Pawlisch introduced Wubbena and Kurniadjaja from HEK’s Global Investment Management Research Team and provided an overview of the investment manager search process. Wubbena led a discussion in regards to the proposed global equity investment manager candidates. He compared and contrasted the investment process and styles of the Dodge & Cox Global Stock Fund, the IronBridge Global Focus Fund, the MFS Global Equity Fund, and the Harding Loevner Global Equity Fund. After a thorough discussion of the merits and drawbacks or each approach, Wubbena asked for a motion.
 
MOTION:
Thistle made a motion to utilize MFS as the global stock fund manager as part of the Plans overall transition to an open architecture plan design. The motion was seconded by La Putt. Motion passed unanimously.
 
Wubbena led a discussion in regards to the proposed large cap value and large cap growth domestic equity investment manager candidates. He compared and contrasted the investment process and styles of the Diamond Hill Large Cap Fund, the Dodge & Cox Stock Fund, the MFS Value Fund, the T. Rowe Price Instl. Large Cap Value Fund, and the Barrow Hanley Large Cap Value Equity Fund. He also compared and contrasted the investment process and styles of the Harbor Capital Appreciation Fund, the Morgan Stanley Institutional Growth Fund, the T. Rowe Price Instl. Large Cap Growth Fund, and the Winslow Large Cap Growth Fund. After a thorough discussion of the merits and drawbacks or each approach, Wubbena asked for a motion.
 
MOTION:
Thistle made a motion to utilize T. Rowe Price as the large cap growth stock fund manager as part of the Plans overall transition to an open architecture plan design. The motion was seconded by Henson. Motion passed unanimously.
 
MOTION:
Thistle made a motion to utilize Diamond Hill as the large cap value stock fund manager as part of the Plans overall transition to an open architecture plan design. The motion was seconded by Henson. Motion passed 5 to 2.
 
Wubbena led a discussion in regards to the proposed small/mid cap value domestic equity investment manager candidates. He compared and contrasted the investment process and styles of the Cambiar Small Cap Fund, the Cramer Rosenthal McGlynn Small/Mid Cap Value Fund, the NWQ Small/Mid Cap Value Fund, and the Dimensional Fund Advisors U.S. Targeted Value Fund. After a thorough discussion of the merits and drawbacks or each approach, Wubbena asked for a motion.
 
MOTION:
Hardie made a motion to utilize Dimensional Fund Advisors as the small/mid cap value stock fund manager as part of the Plans overall transition to an open architecture plan design. The motion was seconded by La Putt. Motion passed 6 to 1.
 
Wubbena led a discussion in regards to the proposed small/mid cap growth domestic equity investment manager candidates. He compared and contrasted the investment process and styles of the Century Growth Opportunities Fund, the Janus Triton Fund, the Wells Fargo Advantage Discovery Fund, and the William Blair Small/Mid Cap Growth Fund. After a thorough discussion of the merits and drawbacks or each approach, Wubbena asked for a motion.
 
MOTION:
Thistle made a motion to utilize Janus as the small/mid cap growth stock fund manager as part of the Plans overall transition to an open architecture plan design. The motion was seconded by La Putt. Motion passed 6 to 1.
 
Stewart left for the remainder of the meeting.
 
Kurniadjaja led a discussion in regards to the proposed non-U.S. value equity investment manager candidates. He compared and contrasted the investment process and styles of the Dimensional Fund Advisors International Value Fund, the Dodge & Cox International Stock Fund, the MFS International Value Fund, and the Causeway International Value Fund. After a thorough discussion of the merits and drawbacks or each approach, Kurniadjaja asked for a motion.
 
MOTION:
Ervin made a motion to utilize Dodge & Cox as the non-U.S. value stock fund manager as part of the Plans overall transition to an open architecture plan design. The motion was seconded by La Putt. Motion failed on a 3-3 tie vote.
 
MOTION:
Thistle made a motion to utilize MFS as the non-U.S. value stock fund manager. The motion was seconded by Hardie. The Committee vote on the motion was 3-3. Chair Kelley voted in favor. Motion passed.
 
MOTION:
La putt made a motion to utilize Dodge & Cox as a second choice (back-up manager) for a non-U.S. value stock fund manager as part of the Plans overall transition to an open architecture plan design. The motion was seconded by Henson. Motion carried 6-0.
 
Kurniadjaja led a discussion in regards to the proposed non-U.S. growth equity investment manager candidates. He compared and contrasted the investment process and styles of the Artisan International Fund, the Harding Loevner International Equity Fund, the MFS International Equity Fund, and the William Blair International Growth Fund. After a thorough discussion of the merits and drawbacks or each approach, Kurniadjaja asked for a motion.
 
MOTION:
Ervin made a motion to utilize Harding Loevner as the non-U.S. growth stock fund manager as part of the Plans overall transition to an open architecture plan design. The motion was seconded by Henson. Motion passed unanimously.
 
Kurniadjaja led a discussion in regards to the proposed emerging market equity investment manager candidates. He compared and contrasted the investment process and styles of the Dimensional Fund Advisors Emerging Markets Value Fund, the Mondrian Emerging Markets Fund, the Schroder Emerging Markets Equity Fund, and the Aberdeen Emerging Markets Fund. Kurniadjaja advised the Committee that Aberdeen announced it would be closing its emerging markets strategy and was no longer a viable option. After a thorough discussion of the merits and drawbacks or each approach, Kurniadjaja asked for a motion.
 
MOTION:
Ervin made a motion to utilize Schroder as the emerging market stock fund manager as part of the Plans overall transition to an open architecture plan design. The motion was seconded by La Putt. Motion failed 2-4.
 
MOTION:
La Putt made a motion to utilize Mondrian as the emerging market stock fund manager as part of the Plans overall transition to an open architecture plan design. The motion was seconded by Thistle. Motion carried 4-2.
 
There being no further imminent business before the Committee, the meeting was adjourned at 5:00 p.m. PST.
 
 
 
________________________
Signature
 
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Date signed
 
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Concurring
 
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Date signed