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Lebanon County pension fund posts small Q1 loss; managers report year-to-date recovery and conservative fixed-income strategy
Summary
The pension plan fell about 0.51% in the first quarter, ending March 31 at $135.36 million; presenters reported a year-to-date rebound (~+1.37% as of mid-May), a 65/28/6 allocation (equity/fixed income/alternatives) and a conservative fixed-income posture emphasizing high-quality corporates.
Investment consultants and Madison Investments presented first-quarter results for the Lebanon County pension fund and described portfolio positioning and recent performance at Wednesday’s meeting.
Pension consultants reported the plan began the year at about $138.7 million and, after distributions and market movement through March 31, stood at $135,363,914 — a decline of roughly 0.51% for the quarter. Presenters said more recent year-to-date figures through mid-May show a recovery: as of the brief update delivered at the meeting the plan was up about 1.37% year to date and valued at roughly $136.6 million.
Matt Esteli and Brad Holland of Stephens Nicholas introduced the review; Madison Investments’ Matt Gotzinger (mid-cap equities) and Doug Fry (fixed income) provided portfolio detail. The presenters described the plan’s asset allocation as roughly 65% equities, 28% fixed income and 6% alternatives, with cash near 1%.
Madison’s equity presentation noted a modestly negative first quarter for the mid-cap sleeve (Madison reported the mid-cap strategy was down 3.9% for the quarter but had recovered to be positive year to date through mid-May). Gotzinger described the manager’s investment approach as oriented to durable business models with “a substantial moat,” and said the team had added two new equity positions (Trex and Kinsale) while trimming a long-term holding (Armstrong World Industries).
On the fixed-income side, Fry told the board the portfolio has performed well since interest-rate volatility peaked: fixed-income returns were up about 2.4% in Q1 and about 3% through last week, with cumulative positive performance over the past 18 months of roughly 11.5% as rates normalized. Fry described the portfolio as conservatively positioned, primarily single-A-rated corporate bonds and treasuries, and said managers added a few corporate issues (Cisco, Chubb) during spread widening related to market uncertainty.
Consultants and staff discussed cash needs for the annual actuarial contribution. The controller and staff expect actuary numbers shortly and said the county has set funds aside so the pension contribution can be made without forced liquidation; the presenters said no liquidation would be necessary if the scheduled contribution arrives in short order.
No board action was required; commissioners received the report and asked staff to provide the actuary’s contribution figures when available.
