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NYC Pensions Could Consider Hedge Funds Beginning in Fall

Date: Friday, June 15, 2007
Author: James Armstrong, Hedgefund.net

New York City’s pension plans are carving out an allocation to alternatives this fall, and hedge funds could end up as part of that allocation.

Speaking at the Plan Sponsor & Minority Manager annual consortium, New York City Comptroller William Thompson said his office has been talking about carving out a larger allocation of which hedge funds might eventually be a part. That allocation might be made in the fall, Thompson said, but he added the office has had other allocation timetables in the past it has not met.

“If we start to move down that road, we could have an emerging managers program as part of that,” Thompson said. “We’re not there yet, but we’re shifting there, and hopefully we’ll have something later this year.”

In an interview with HedgeFund.net, New York City Assistant Comptroller for Pensions Joseph Haslip said the board of the New York City Employees’ Retirement System (NYCERS) has already agreed to create a strategic bucket of about 6% to 8% of its portfolio for new active strategies. This bucket could include things like fundamental indexing, environmental managers and long-only activist funds.

“We may want to try that approach at the other boards, and then within that we may down the road look at the prospect of introducing some exposure, among many other things, of something like hedge funds or 130/30 funds,” Haslip said.

New York City has five different pension funds for police officers, fire fighters, teachers, non-teacher school employees and city workers not covered by the other four plans. Of them, NYCERS is the largest.

Regardless of whether the other boards create a new strategic bucket, Haslip said the comptroller’s office plans to go to all of the boards in the fall to talk with them about hedge fund investing. If the boards do want to invest in hedge funds, the comptroller’s office would work with consultants to figure out the appropriate level of exposure.

“It would probably be a relatively small exposure,” Haslip said. “Anytime we historically have invested in asset classes, we start slowly and grow over time.”

Last year, the City of New York reported about $100 billion in assets under management.