The New York Legislature passed a bill late Friday that would increase the size of the $120 billion New York State Common Retirement Fund's basket clause to 25% from 15% of assets, giving fund officials a freer hand in setting the fund's asset mix. Maximum allocations to individual asset classes are set by state law. The bill is now on the desk of Gov. George E. Pataki.
New York Comptroller Alan Hevesi, who is sole trustee of the plan, was instrumental in having the bill introduced, although he had wanted the Legislature to remove the maximum allocations for most asset classes in the portfolio, said David Neustadt, spokesman for Mr. Hevesi.
If signed into law, the measure would allow the Albany, N.Y.-based fund to boost investments in top-performing asset classes. "Since real estate, private equity and international equity are the asset classes that have done well as of late, it's highly likely (the basket clause) will be used in those areas," Mr. Neudstadt said.
Under current law, the fund can invest no more than 5% of total assets in real estate. The fund also can invest up to 70% in domestic equities, of which no more than 10 percentage points may be invested in international equities, up to $1 billion. There is no cap on private equity investments, which fall under the existing basket clause.