New York City Retirement Systems' chief investment officer has told hedge funds and private equity firms to provide “more complete and informative fee disclosures.”
If they don't, city retirement system executives will recommend to the trustees of the five city pension funds that they adopt a policy “by which they will not consider new or increased capital commitments,” CIO Scott Evans wrote in a memo Monday to all hedge fund managers and private equity managers dealing with the $162.9 billion retirement system.
“Business as usual is not going to cut it for fund managers who want to do business with the New York City pension funds,” New York City Comptroller Scott Stringer said in an e-mailed comment Wednesday.
“Beginning immediately, we're demanding that all private asset class managers disclose their complete historical and current fees and expenses as a condition of their continued relationship with our office,” wrote Mr. Stringer, who is the fiduciary for the five pension funds. “These disclosures are a critically important step toward achieving greater transparency from our money managers.”
Mr. Stringer has decried inadequate fee transparency several times in recent months. In July, he joined a group of public pension fund executives in asking the Securities and Exchange Commission to require more disclosure of private equity fees.
In April, Mr. Stringer called for an overhaul of the city's retirement system to include a better link between management fees and performance and improve manager selection.
In similarly worded memos Monday to hedge fund managers and private equity firm managers, Mr. Evans said the fee information would be published on the comptroller's website.
Mr. Evans said the information must be provided quarterly to each pension fund. He added the firms should send to each pension fund a one-time historical analysis of all fees charged “going back to the inception of each investment.”
Mr. Evans requested the information be available by year-end. The retirement system has provided fee-disclosure templates to the various managers.
As of July 31, hedge funds accounted for $3.35 billion, or about 2%, of aggregate city pension fund assets. Private equity represented $9.94 billion, or about 6.1% of total pension system assets.