Stringer proposes diversity initiatives for NYC pension systems managers

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New York City Comptroller Scott Stringer announced proposals to encourage greater diversity among investment managers that are hired by the city’s pension funds.

Speaking Friday at the annual Bureau of Asset Management’s Emerging and Minority and Women-Owned Business Enterprises Manager Conference, the comptroller launched a plan to find one or more investment managers who are committed to investing in best-in-class first-time funds and early-stage investment firms managed by emerging managers, including MWBE firms.

“We are constantly building on our emerging manager programs not just because it’s the right thing to do – it has delivered strong results for our beneficiaries,” Stringer said. “Now we’re taking a bold step forward and staking a new goal in our on-going effort to level the playing field for qualified managers — no matter who they are or who they know.”
The bureau is surveying the market in the applicable asset classes — private equity, real estate, infrastructure, hedge funds and alternative credit — to identify all qualified firms for this role and hopes to finish the search by the end of the year. Selected firms are subject to review and approval by each of the five pension system’s board of trustees.

The city's five main pension funds are the New York City Employees' Retirement System; the Teachers' Retirement System of the City of New York; the New York City Police Pension Fund Subchapter 2; New York City Fire Department Pension Fund Subchapter 2; and the New York City Board of Education Retirement System.

Additionally, the comptroller appointed Chavon Sutton to the new position of director of diversity and inclusion in the bureau, where he will work with emerging managers who are interested in doing business with the pension systems.

Stringer also announced several other plans regarding the pension systems’ diversity initiatives, some of which are subject to review by the board of trustees.

The comptroller proposed:

  • Opening up the MWBE brokers program to include firms owned by veterans with disabilities;
  • Expanding capital commitments to emerging managers by allocating an additional $500 million to the direct private equity Emerging Manager Program;
  • Expanding the bureau’s consultants’ scope of services to include tracking, monitoring, and identifying emerging managers, including MWBE asset managers;
  • Establishing a goal to allocate 10% to emerging managers across each asset class; and
  • Expanding the asset classes targeted by the ongoing MWBE Broker Dealer program to include high-yield bonds.

The city’s general obligation bonds are rated Aa2 Moody's Investors Service and AA by S&P Global Ratings and Fitch Ratings. As of June 30, NYC’s outstanding GOs totaled $38.63 billion.

“Ensuring our access to the best investment talent available is part of our fiduciary duty; it promotes competition, diversifies our portfolio and makes our investments stronger. That requires searching for talent in less conventional places, and making sure that industry roadblocks don’t keep our managers from hiring the best," Stringer said. "We have a responsibility to allocate our funds wisely – and bringing growing, talented, and diverse investors, including minority and women-owned firms, to manage our portfolio is the right strategy for the future.”

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Public pensions Pension obligation bond Pension funds MWBEs Scott Stringer New York City Pension Funds