The five pension funds in the $150 billion New York City Retirement Systems plan to make an aggregate commitment of $1 billion to emerging managers, Scott Stringer, the city comptroller said Friday.
Mr. Stringer didn't set a firm timetable for the commitments. They are expected to be made “over the coming months,” Eric Sumberg, a spokesman for Mr. Stringer, wrote in an e-mail.
This $ 1 billion commitment would bring the amount of money committed to or invested in emerging managers to $13.9 billion since the New York City Retirement Systems began its emerging managers program in 1991, Mr. Stringer said in a speech delivered at the comptroller's annual investment and manager conference in New York.
“The plan to allocate $1 billion to emerging managers is a major investment in diversifying our roster of investment managers and improving the risk-adjusted returns of our pension funds,” Mr. Stringer said, according to a transcript of his speech. Mr. Stringer is the fiduciary of the five city pension funds.
Mr. Sumberg wrote the comptroller's office “has presented the initial phases of this plan” to the separate boards of trustees of the five pension funds.
The boards “have agreed in principle to the commitments,” Mr. Sumberg added. “We will be working with the pension boards over the coming months on specific issues.” He didn't provide details on the proposed commitments.
In his speech, Mr. Stringer said the $1 billion commitment will include first-time commitments by the pension funds to emerging managers for the hedge fund and opportunistic fixed-income asset classes as well as an increase in the pension funds' commitments to real estate.
At the end of 2013, the five city pension funds' investments in emerging managers totaled $5.7 billion in public equity, $1.5 billion in fixed income and $300 million in real estate investment trusts, plus commitments of $5.2 billion in private equity and $271 million in direct real estate, according to a news release issued Friday by the comptroller's office.
The comptroller's office defines emerging managers as “firms that are smaller, or may have been overlooked by traditional search processes,” the new release said. Although the size of the firms varies by asset class, the news release said the term, in general, applies to companies with less than $2 billion in assets under management and in business for less than three years.
Most of the New York City pension funds' investments in and commitments to emerging managers have been made to minority- and women-owned businesses, the news release said.