Big Apple pensions' return highest in 26 years

Lawrence Schloss
Lawrence Schloss

New York City Retirement Systems returned 23.23% for the fiscal year ended June 30, the highest aggregate return for the city's five pension funds in 26 years.

The previous high was the 24.5% return for the year ended June 30, 1985.

The five pension funds had combined assets of $119.9 billion for the latest fiscal year, up 22.6% from 12 months earlier, confirmed Lawrence Schloss, deputy New York City comptroller for pensions and chief investment officer for the city's pension systems.

For the fiscal year ended June 30, 2010, the aggregate return was 14.21%, he said.

Mr. Schloss said the recent fiscal year's performance was driven by a heavy weighting in equities, taking profits in high-yield bond investments, cutting costs and terminating poorly performing managers.

For the year ended June 30, the system's aggregate returns by asset class were 32.9% in domestic equity, 31.22% in international equities, 25.68% in real estate, 18.9% in private equity and 7.5% in fixed income. Funds in the pension system made their first hedge fund investments in June totaling $117 million.

For the five years ended June 30, the pension system recorded an annualized return of 5.15%. For the 10 years ended June 30, the annualized return was 5.6%.

The aggregate asset allocation as of June 30 was 42.1% in U.S. equities, 18.3% in international equities, 25.4% in fixed income, 6.2% in private equity, 2.2% in private real estate, 0.1% in hedge funds and 5.7% in cash.

The pension funds in the New York City system will individually be reducing exposure to U.S. equities, increasing investments in hedge funds and increasing investments in private equity during the current fiscal year, with the amounts and allocations determined by the boards of each of the funds.

The five 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; New York City Fire Department Pension Fund; and the New York City Board of Education Retirement System. Each fund is financially independent and has its own board of trustees.