New York: New York City Comptroller Brad Lander and trustees of the five New York City retirement systems (the Systems) today announced the strategic expansion of the Systems’ Emerging Managers programs during the Annual Diverse and Emerging Managers Investment Conference.

During the conference, Comptroller Lander also unveiled the second annual report of investments in MWBE and Emerging Manager firms.

“Expanding our investment with emerging and diverse managers strengthens our commitment to working with the best of the best to deliver on our obligations to maximize returns for current and future pensioners while increasing diversity among the firms we partner with. Since 2015, these managers have consistently outperformed their benchmarks, providing realized gains for each of our pension systems. Our efforts are central to ensuring the highest-performing firms are responsible for investing pension dollars,” said Comptroller Lander.

“This plan will help he City’s pension funds and retirement systems gain access to the best managers and the best investment ideas from an industry that is growing more diverse with each passing year,” said Bryan Berge, representative of Mayor Eric Adams, chair of the Board of Trustees of the New York City Employees’ Retirement System, and trustee of the New York City Teachers’ Retirement System, the New York City Police Pension Fund, and the New York City Fire Pension Fund.

During fiscal year 2023, the Systems’ total actively managed US based assets exposure to MWBE investment managers across all asset classes increased to $19.50 billion (12.68%) – up from 11.65% the prior year. This increase accompanies a strong 8% increase in investment returns for the fiscal year, surpassing the 7% actuarial target rate.

The expansion of the Emerging Manager program follows an analysis of performance among existing emerging and diverse managers, which found that since 2015, MWBE managers have outperformed their benchmarks net of fees in all asset classes. By expanding Emerging Manager programs and continuing to invest with high performing MWBE managers consistent with fiduciary duties the Comptroller’s Bureau of Asset Management anticipates that by 2029 20% of the Systems’ investments will be with MWBE managers, all while achieving strong risk adjusted returns.

The announced expansion is in line with industry standards and aligns with the overarching goal of securing long-term financial stability for pension beneficiaries, ensuring prudent diversification, and harnessing the potential of dynamic and successful asset management strategies. Increasing Emerging Manager exposure will allow the Systems to capitalize on the expertise and success demonstrated by emerging asset managers.

The Systems have already made several commitments to diverse and emerging managers since fiscal year 2022, including:

A $500 million allocation to Bivium Capital Partners for the development of an Emerging Manager Program in the Fixed Income asset class by the New York City Employees Retirement System (NYCERS) and New York City Teachers Retirement System (TRS).

Expansion of the Emerging Manager programs with GCM Grosvenor (Real Estate); BlackRock Emerging Manager Program (Infrastructure); and Neuberger Berman First Time Funds (Private Equity).

Increase in International Fund of Funds allocation in Public Equity from 6% to 10%.
The Comptroller’s Office is in the process of diligencing the following opportunities that will increase overall exposure to emerging and MWBE managers. Recommendations on these initiatives will go to the trustees for discussion and approval at the appropriate time.

The proposals include:

Expanding the successful Direct Emerging Manager Program in Private Equity

Creating a Direct Emerging Manager Program in Real Estate and Alternative Credit

Expanding the Fixed Income Emerging Manager Program to include Direct Emerging
To learn about the Comptroller’s Emerging Managers Program

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