Resolution No. 2019-32R • CITY OF CLERMONT
— Chace of Chaerfcre RESOLUTION NO. 2019-32R
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CLERMONT, LAKE COUNTY, FLORIDA ADOPTING AN
INVESTMENT POLICY FOR THE 457(b) DEFERRED COMPENSATION
AND 401(a) DEFINED CONTRIBUTION EMPLOYEE RETIREMENT
PLANS; REPEALING ALL PRIOR RESOLUTIONS IN CONFLICT
HEREWITH; AND PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the City Council of the City of Clermont deems it advisable and in the best
interest of the City, that the Investment Policy for the 457(b) Deferred Compensation and 401(a)
Defined Contribution Employee Retirement Plans be adopted;
NOW, THEREFORE, BE IT RESOLVED, that the City of Clermont Investment
Policy is hereby adopted as follows:
SECTION 1.
The City Council does hereby adopt the City of Clermont Investment Policy for the 457(b)
Deferred Compensation and 401(a) Defined Contribution Employee Retirement Plans as set
forth in Attachment A, attached hereto and incorporated herein. The City Council of the City of
Clermont may amend the Investment Policy by Resolution when deemed necessary and in the
best interest of the City of Clermont.
SECTION 2.
Any resolution previously adopted by the City Council and in conflict herewith is hereby
repealed to the extent of the conflict.
SECTION 3.
This Resolution shall take effect immediately upon its adoption.
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CSM,NT CITY OF CLERMONT
RESOLUTION NO. 2019-32R
DONE AND RESOLVED by the City Council of the City of Clermont, Lake County,
Florida this 22nd day of October, 2019.
. : ,t, CITY OF CLERMONT
Gail L. Ash, Mayor
- ATTEST:
Tracy Ackroyd owe, City Clerk
Approved .. e orm : d legality:
Danie antzaris, City Attorney
Investment Policy
457 (b) Deferred Compensation and
401 (a) Defined Contribution Plans
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CLER ONT
Choice of Champions'
City of Clermont, Florida
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Table of Contents
A. Purpose 1
B. Duties and Responsibilities 1
C. Administrative and Compliance Objectives 2
D. Asset Classes 3
E. Investment Options and Managers Selection Criteria 4
F. Performance Monitoring 4
G. Plan Evaluation 5
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A. Purpose
The purpose of this Investment Policy ("Policy") is to provide guidelines and objectives
for the administration of the City's 457(b) Deferred Compensation and 401(k) Defined
Contribution Plans (`Plans").
B. Duties and Responsibilities
1. Sponsor (City)
The City is responsible for the administration of the Plan, including establishing,
reviewing, and implementing investment objectives, policies and guidelines. As
fiduciaries under the Plan, the City's primary responsibilities are to:
a. Prepare and update the Policy as needed.
b. Provide a diversified menu of investment options for participants at a
reasonable cost.
c. Establish investment goals which will be used to select and monitor
investment options.
e. Control and monitor associated expenses and fees.
f. Monitor and supervise service providers.
g. Avoid prohibited transactions and conflicts of interest or take action to
correct any such transactions.
h. Provide information and educational opportunities to enable participants to
make informed investment choices.
2. Participants
Plan participants are responsible for their own investment decisions and bear the
ultimate risk and responsibility for their account investment elections. The City will
strive to provide a suitable range of investment options, allowing participants to
invest in accordance with their own retirement goals, risk tolerances and
investment time horizons. Because of the broad range of ages, the City will select
a diverse number of investment options with the intention of creating the potential
for participants to select investment options that meet individual needs and risk
tolerances.
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3. Investment Advisor (the "Consultant")
The Consultant shall exercise the same standard of care, skill prudence and due
diligence used under a similar circumstance that an experienced investment
professional, acting in a similar capacity and fully familiar with such matters, would
use for similar retirement plans with similar goals in accordance and compliance
with all applicable laws, rules and regulations. In addition, the Consultant shall
assist the City as follows:
a. Establish and update the Policy, including objectives and guidelines for
the selection of investment options and the review of fund managers and
plan service providers.
b. Measuring and evaluating investment performance and risk in
accordance with Policy guidelines.
c. Reporting absolute and comparative performance and adherence to
Policy guidelines.
d. Any other tasks deemed appropriate by the City.
4. Recordkeeper/Custodian
The recordkeeper/custodian is responsible for collecting and holding Plan assets
in trust for the exclusive purpose of providing benefits for the Plan's participants
and beneficiaries.
5. Investment or Fund Manager (the "Manager")
As discretionary advisors, the Managers are to make all investment decisions for
the assets placed within their respective mutual funds. Discretionary investment
management includes decisions to buy, sell or hold securities and to alter asset
allocation with the parameters established in the mutual fund prospectus. The
manager must be a Registered Investment Advisor under the Investment Advisors
Act of 1940 or be exempt as part of a bank or insurance company.
C. Administrative & Compliance Objectives
The Plans are intended to operate in accordance with all applicable state and federal
laws and the regulations there under. Although the Plans are not subject to ERISA
(Employee Retirement Income Security Act of 1974), the Trustees may apply or rely
upon for guidance all or a portion of the regulations under ERISA Section 401(c) or
other similar sections. The Plan objectives are as follows:
1 . To comply with all fiduciary, prudence and due diligence requirements that
experienced investment professionals would utilize, as well as with all applicable
laws, rules, and regulations from various local, state, federal and international
political entities that may impact Plan assets;
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2. To provide participants with at least three investment options with different
risk/return profiles;
3. To provide participants Target Date options and Risk Based portfolios;
4. To provide participants with sufficient information so that the participants can make
an informed decision about his or her selection of investment option(s);
5. To permit participants to change investment options on a daily basis;
6. To have the ability to pay all benefit and expense obligations when due; and
7. To control and account for all costs of administering and managing the Plan.
D. Asset Classes
The following asset classes have been selected for participants to choose from:
1 . Stable Value
2. Target Date Funds
3. Lifestyle Funds
4. Large Cap Equities
5. Mid Cap Equities
6. Small Cap Equities
7. Real Estate Investment Trusts
8. Foreign Equities
9. Emerging Markets
10.Core Bonds
11 .High Yield Bonds
12.Specialty Funds
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E. Investment Options and Managers Selection Criteria
The following criteria is to be used in selecting investment options and managers:
1 . A minimum performance track record: The investment option must have a
reasonable performance record, typically a minimum of 3 years.
2. An historical return relative to its peers: The investment option should have
above average returns (to 50th percentile or better) compared to its peers
over a trailing performance period of three to five years.
3. The volatility: The amount of risk (volatility) of each investment option
should not be more than 20% higher than its benchmark over 3- and 5-year
time periods.
4. The investment manager's tenure: The investment manager or
management team should have a reasonably consistent tenure, typically a
minimum of 3 years, to ensure that past performance is attributed to the
current management team.
5. Consistency of investment style: The investment option's style or objectives
should be consistent over time. A reasonable level of style purity is
necessary so that participants can better diversify their investment options.
6. Expenses: the investment option should have reasonable expenses when
compared to like-type funds.
7. Daily valuation: Each investment option must be valued daily.
Any reference for comparative purposes to peers or benchmark will mean the
weighted average of such, where applicable for the portfolios.
F. Performance Monitoring
The City will review the results of all investments at least quarterly, or as often as the
City deems necessary. During such reviews, City will consider the performance of
each fund or manager against its appropriate benchmark and peer group. The City
will also be aware that the ongoing review and analysis of each fund shall be like the
due diligence implemented during the initial selection process. The City will continually
monitor the performance of the funds, and at its discretion may take corrective action
and replace any fund at any time. A formal fund evaluation may be initiated if any
extraordinary event occurs that could interfere with the fund's ability to fulfill its role in
the future, or if a fund fails to achieve predetermined performance objectives over the
predetermined time period. The criteria for evaluating a fund's performance are as
follows:
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1. Primary Factors
a. Bottom quartile peer group rank over four (4) consecutive quarters as
compared to the fund's peer group (comparable investment universe).
b. Rolling returns in the bottom 50th percentile for any three-year(3) period
or five-year period (5).
2. Additional Factors
a. Management changes;
b. Significant change in alpha;
c. Significant change in beta;
d. Significant increase in expense ratio; or
e. Other significant events.
3. Watch List
a. Failure to meet established criteria will result in a fund(s) being placed
on "watch list" for further analysis and monitoring.
G. Plan Evaluation
The City shall review and evaluate, no less than quarterly, fund conformance to the policy
and whether each manager continues to conform to the criteria outlined in Section F.
The City shall also review at least annually, all costs associated with management of the
Plan, including expense ratios and administrative fees.
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