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Implementation of strategic asset allocations for NYC pension systems

0:29:22

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Comptroller Lander explains the process of implementing strategic asset allocations for New York City's pension systems.

Strategic asset allocations are typically reviewed every 3 to 5 years.
Each of the five pension funds has a general consultant who works with the Bureau of Asset Management to adjust allocations based on economic projections and risk-return expectations.
Recent legislation increased the limit on investments in private markets and alternative investments from 25% to 35%.
The new strategic asset allocations adopted by each plan modestly increased private markets investments.
Implementation of the new allocations is being done gradually, moving money step-by-step into the designated areas.

Justin Brannan

0:29:22

ask you a little bit about that announcement, but could you tell us, what are some of the drivers of the the pension system returns?

0:29:26

So the biggest driver this year has been that public equities

0:30:10

Talk a bit about how you're working to implement the, strategic asset allocations for each system.

Brad Lander

0:29:34

have been performing very well.

0:29:38

And, you know, basically, of the pension portfolio, roughly half of it is in public equities, roughly a little less than a quarter is in fixed income, and a little more than a quarter and growing is in private markets, private equity, infrastructure, real estate, etcetera.

0:29:57

Fixed income has not been doing that well, but public equities, the stock market broadly, both in the US and ex US, have been performing strongly, and that has been driving driving our pension fund growth this year.

0:30:15

Yeah.

0:30:16

So we do that every strategic asset allocation, you do every 3 to 5 years, and we work each of the funds, the 5 funds has a general consultant.

0:30:26

And so our economics and, team at Bureau of Asset Management works closely with them.

0:30:33

And, you know, you you'll look at the risk and return expectations based on projections of where the economy will be and adjust a little more in infrastructure, a little less in fixed income.

0:30:46

The the main thing that happened this year was in my 1st year in 2022, my office led the effort in Albany to remove some of the restrictions on public pension funds in New York that limited it so that you could only invest essentially 25 up to 25 percent in all of the private markets and alternative investments basket, and that lagged far behind what most of our peers were doing.

0:31:14

So the legislation increased the limit to 35%.

0:31:18

We're not going all the way from 25 to 35, but the strategic asset allocation that each plan adopted increased private markets investments modestly, but but a little bit across each plan.

0:31:30

And now we're working hard to implement that plan.

0:31:34

The great staff we have are, you know, slowly you do it kind of step by step by step, moving money into the places that that asset allocation identified.

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