The performance of New York City's five public pension plans was positive in the second quarter, the chief investment officer of the funds told trustees at Monday's common investment meeting held at the Dinkins Municipal Building in Manhattan.
In the second quarter, the financial performance of the five pension funds "all turned out about the same, right around 2% percent," said Scott Evans, Deputy Comptroller for Asset Management, adding that "for the fiscal year to date, we're right about 1.5% on average."
The performance was better than the median fund return of 1.8% for the second quarter and 1.3% as rated under the Wilshire Trust Universe Comparison, which measures performance of actively managed pension funds.
Evans also presented a draft statement of investment principals to the trustees that will be the basis for future discussions.
City Comptroller Scott Stringer is the custodian of the public pension funds, whose value is estimated at about $160 billion. Since he was elected in 2013, he has overhauled the administration of the system. In late 2015, he instituted the common investment meeting, which streamlined the boards' operations and consolidated 54 monthly investment meetings of the individual boards into six meetings of all trustees per year.
The Bureau of Asset Management assists the funds in picking investment advisors and consultants, though investment policies are adopted by each of the five pension funds' boards of trustees. And each of the boards establishes its own asset allocation policy and investment objectives. The funds invest in a variety of asset classes as well as making economically targeted investments.
The city's five main pension funds are the New York City Employees' Retirement System (NYCERS); the Teachers' Retirement System of the City of New York (TRS); the New York City Police Pension Fund Subchapter 2; New York City Fire Department Pension Fund Subchapter Two; and the New York City Board of Education Retirement System (BERS).
Earlier this month, Stringer and the trustees of NYCERS voted to study the impact on the pension portfolio of divesting from corporations that run private prisons.
The vote was taken after the U.S. Justice Department decided to phase out the use of privately operated prisons amid concerns about health, safety and cost-effectiveness.
Stringer will be introducing similar resolutions at BERS, TRS and the Police and Fire funds.
"As trustees, we have a fiduciary responsibility to ensure that we are acting in the best interests of our members while investing in ways that are consistent with our values as New Yorkers," Stringer said. "We believe the time has come to study whether our holdings in private prisons meet both our fiduciary standard as well as our standard to invest responsibly. My fellow trustees and I will carefully review these findings and take action accordingly."
The city's general obligation bonds are rated Aa2 Moody's Investors Service and AA by S&P Global Ratings and Fitch Ratings.
