Huge NYC Pension Fund is Dropping Hedge Funds
New York City’s $60 billion civil employees pension fund has reportedly decided to drop all of its investments in hedge funds.
According to Bloomberg:
New York City’s pension for civil employees voted to exit its $1.5 billion portfolio of hedge funds and shift the money to other assets, deciding that the loosely regulated investment pools didn’t perform well enough to justify the high fees.
The action Thursday by the trustees of the $51 billion Employees Retirement System, known as NYCERS, may signal a growing willingness among public pensions to pull their money from the investment vehicles, whose highly paid managers have become a political lightning rod and have frequently failed to outperform. In September 2014, California’s Public Employees’ Retirement System, the largest U.S. pension, divested its $4 billion portfolio saying it cost too much and was too small to affect its overall returns.
NYCERS invested with hedge funds “with the belief that these would add value to the performance – both by increased returns and decreasing risk by providing downside protection,” New York City Public Advocate Tish James said in a statement. “I have seen little evidence of either.”
Last year, NYCERS’s hedge fund portfolio lost 1.88 percent, lagging both the Standard & Poor’s 500 Index and the Barclays U.S. Aggregate Bond Index. Three-year returns were 2.83 percent.
Hedge funds still manage money for New York City’s pensions for firefighters and police officers. The city’s teachers’ and education administrators don’t invest with hedge funds.
Subscribe
If you enjoyed this article, subscribe to receive more just like it.
