Policy: Entitlements

NYC to invest more pension funds with small firms

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News,Business,New York City,Entitlements,Pensions

NEW YORK (AP) — New York City Comptroller Scott Stringer will announce Friday that the city plans to invest $1 billion of its pension funds with smaller, and often women or minority-owned, management firms.

The commitment, which was first revealed to The Associated Press on Thursday, will dramatically increase the number of smaller investment firms — known as "Emerging Managers" — that will get a shot at working with a portion of the city's $150 billion pension system.

"This $1 billion commitment to Emerging Managers is a major investment in diversifying our roster of pension fund managers and improving the risk-adjusted returns of pension funds," Stringer said in a statement.

Emerging Managers, as defined by the city comptroller's office, have under $2 billion of assets or less than a three-year track record. With the new commitment, the city will have invested a total of more than $14 billion with the smaller firms, $9.8 billion of that to firms that have women or minorities as majority owners.

The new investment also means that Emerging Managers now have access to all of the pension funds' asset classes: public equities, private equities, hedge funds, fixed income and real estate.

Stringer's aides stressed that the new commitment, which will likely take months to fulfill, is not just an altruistic favor to smaller firms. Rather, they believe it also makes good business sense to invest some money with smaller firms that may take more creative approaches than giant investment companies.

"The funds are constantly on the lookout for the most talented investment managers in the world," said Stringer, a Democrat who took office in January. "Today we are saying that our doors are open to those firms that have what it takes to grow our pension funds."

Stringer will announce the new commitment at the annual Investment and Emerging Manager Conference, which is being held at the Manhattan headquarters of the United Federation of Teachers. The proposed investments will be subject to trustees' approval.

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