The New York State Common Retirement Fund has begun the process of reorganising its investment operations, which includes streamlining its management structure, hiring additional staff and reviewing its use of external consultants.
“We want to add people across the asset classes, but particularly in the alternatives areas,” said Vicki Fuller, New York Common’s chief investment officer, during a conference call yesterday to discuss the pension system’s fiscal year-end results. “The real focus for the alternatives strategy is to add additional senior investment staff so that we hopefully can reduce costs by looking less at investing in funds and more at separate accounts or funds-of-one.” While the investment shift has been a focus area for some time, having a small staff has made it challenging to conduct the underwriting required to execute such investments successfully, she explained.
In addition, as it makes more investment hires, New York Common plans to conduct more due diligence and underwriting internally over time. “That will not mean that we will not use consultants, but it will mean that we will use them less or more judiciously,” Fuller added. “That is the goal: to make sure that we’re driving the due diligence and the underwriting and we’re using consultants as an important addition.”
Ultimately, the pension plan will cease to use some of its existing consultants while using others in a more targeted way. Still, New York Common issued a request for proposals in January for a real estate consultant and currently is in the process of completing its review. The selection of a consultant is expected to be made “as soon as possible,” Fuller said.
New York Common, the third-largest public pension plan in the US, posted an all-time high portfolio value of an estimated $160.4 billion for the fiscal year ending March 31 and an estimated 10.38 percent overall rate of return on its investments. Private equity, which accounts for 8.6 percent of the pension plan’s portfolio, generated a return of 11.75 percent during fiscal year 2013.