NEW YORK - William C. Thompson Jr., New York City's comptroller-elect, wants to add more private equity and real estate to the $85 billion New York City pension funds, and increase the diversity of the funds' managers.
In an interview with Pensions & Investments, Mr. Thompson said he plans to take a much more active role overseeing the funds than his predecessor, Alan Hevesi.
"I plan to be involved," Mr. Thompson emphasized. "I come to the table with an interest in seeing the funds invested more in New York City housing and economic development."
He plans to hire an independent firm to look at all of the funds' advisers and managers, to review their performance and to help determine whether the structure or asset allocation should be changed. This will be done through an RFP that Mr. Hevesi is helping him coordinate.
Other plans for the system include:
* Streamlining the search process. "It can take one to two years between the time the boards decide to do a hire, issue an RFP and make their selection, which defeats the purpose. I want to bring more staff into the asset management department, which should speed up the process, something everyone would like to see happen."
* Adding more private equity and real estate to diversify the portfolios - "it would help bridge the ups and downs of the stock market."
* Bringing diversity to the roster of managers, by hiring more women, Latin American and African American minority managers. This was a policy he pushed for as a trustee on the Board of Education's pension board, and as a result that pension fund hired three minority managers, he recalled.
Mr. Thompson also plans to ask trustees why the system shifted most of its large-cap mandates into index funds in the last year. And, finally, he is considering investing some of the system's money in rebuilding lower Manhattan. This is a project that New York State Comptroller Carl McCall, trustee of the New York State Common Retirement Fund, has been working on with Mr. Hevesi.
Mr. Thompson is hoping to reshape the New York City funds to be more like the $112 billion Common Retirement Fund, Albany, which he described as "far more aggressive in its investment strategy, investing money in New York State to create housing, and running large private equity and real estate programs." He was to meet with members of Mr. McCall's investment staff last week. Another model for the New York City plan is the $145 billion California Public Employees' Retirement System, Sacramento, said Mr. Thompson, praising its innovative approach to investing. He hopes to meet with the CalPERS investment staff in 2002 to learn how they operate, he said.
Mr. Thompson also said the job of chief investment officer will be upgraded to the same level as deputy comptroller.
"We're looking for someone (for the CIO job) who comes from Wall Street with technical skills to oversee the asset management side, and are spending a lot of time to find the right person for this," he said. The CIO will report to the first deputy comptroller, and that position also will be altered, structured as more of a chief financial officer than previously. It will entail less administrative work and focus more on public finance and asset management. It hasn't yet been determined whether the comptroller's representative on the system's five pension boards will be a deputy comptroller or assistant deputy comptroller. Those appointments are expected in the second half of January, said Mr. Thompson.
He added that while previous comptrollers have shown up at board meetings when "hot votes" were at stake, he plans to attend more frequently. "I don't want to be running the manager searches, but I want to be up to date on what's happening and be involved in the portfolios."