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457(b) Deferred Compensation Plan Committee recommendation to close and transition the Perimeter Small Cap Growth Investment Fund (PSCGX) to the Wasatch Small Cap Growth Fund (WAAEX).
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Recommended Action: Approve the recommendation to close and transition the Perimeter Small Cap Growth Inv fund (PSCGX) to the Wasatch Small Cap Growth fund (WAAEX).
Pursuant to resolution 100-2008, the resolution establishing a Deferred Compensation Committee and Plan Statement of Investment Policies and Guidelines, the Committee evaluates the investment fund performances of the Plan and is authorized to make decisions regarding the fund performance of investments based upon Plan investment policy and guidelines. Investment options that do not perform at or above their respective benchmark will be subject to the Plan's policies regarding underperforming investment options.
The Committee with the consulting firm Advised Assets Group, a group that reviews the Plan's fund performance on a quarterly basis, identified a failing fund: Perimeter Small Cap Growth Inv (PSCGX) fund. This fund has failed due to the fund's poor investment performance and management. The fund has failed the Plan's investment overall composite and Morning Star ratings in the last three quarters. The Committee is recommending that the Board close the Perimeter Small Cap Growth Inv fund (PSCGX) and transition all assets to the Wasatch Small Cap Growth fund (WAAEX) with high overall return ratings and low risk and expense. The transition will take approximately 45 days with a mandated 30-day notice to all participants. Transition will be completed by December 5, 2012. If participants are comfortable with this transition they do not need to take any action. However, participants that wish to move their existing account balance to other available investment options may do so prior to December 4, 2012.
Alternatives: Participants will continue to be offered an investment opportunity known to be substandard, creating a potential violation of the county's fiduciary responsibility to its employees who participate in the deferred comp program.
Financial Considerations: There is no cost to the County for this 457(b) Deferred Compensation Plan transition.
Legal Considerations: The authority for this action is K.S.A. 19-101. A simple majority vote is required.
Policy Considerations: There are no policy implications affected by approving this recommendation. This request follows the 457 Statement of Investment Policies and Guidelines.