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Asset Allocation

NY State Pension Returns 6.2% in Fiscal Q3, Cashes Out Another Public Equity Fund

The $260 billion pension giant also said it will divest and restrict investments in Exxon Mobil and seven other oil-and-gas companies
By Michael Katz


The New York State Common Retirement Fund returned a robust 6.19% in the third quarter of fiscal 2023-24 to raise its asset value to $259.9 billion as of December 31, 2023.

The pension giant, whose fiscal year runs from April 1 through March 31, also reported more than $830 million of investment commitments during December 2023, while cashing out of yet another public equity fund.

The quarterly performance, which alone surpassed the fund’s annual long-term expected rate of return of 5.9%, followed a 1.59% investment loss the previous quarter and a 3.08% gain during the fiscal year’s first quarter.

“The markets have seen an improvement over the past quarter, but some volatility remains,” New York State Comptroller Thomas DiNapoli said in a release. “Economic opinions are mixed about the year ahead, and uncertainty persists. Still, thanks to our prudent management and long-term strategy, our pensioners and members can remain confident that their pension benefits are safe.”

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As of the end of calendar 2023, the NYSCRF’s asset allocation was 41.84% publicly traded equities (down from 44.14% nine months earlier); 22.62% cash, bonds and mortgages (up from 21.53%); 14.75% private equity (up from 14.61%); 13.30% real estate and real assets; and 7.49% credit, absolute return strategies and opportunistic alternatives (up from 6.33%).

During December, the pension fund terminated its investment in Wellington Management’s Asia ex-Japan Contrarian Fund. The $243 million the pension had invested in the international equity fund was allocated to cash, as the termination raised the total amount the NYSCRF cashed out of public equities in calendar 2023 to more than $4.6 billion.

In addition to terminating the public equity fund, the pension fund committed approximately $830 million in investments in December, more than half of which was earmarked for two funds within its real assets portfolio. The pension fund committed $275 million to DigitalBridge Group’s DigitalBridge Partners III fund, which marks a new relationship for the NYSCRF. The closed-end fund seeks to acquire digital infrastructure assets, including macro cell towers, data centers, fiber, small cell networks, edge infrastructure and other related businesses.

It also committed $200 million to the Carlyle Group’s Carlyle Renewable and Sustainable Energy Fund II, a closed-end fund focused on middle market transactions targeting traditional renewable energy such as wind and solar, as well as newer energy transition strategies such as industrial applications and electric vehicle infrastructure.

Within its private equity portfolio, the pension fund will invest $175 million in Altaris’ Health Partners VI fund, which will focus on health care investments primarily in North America. Altaris is also a new relationship for the pension fund.

The pension fund also committed $100 million to Insight Venture Management’s Empire Co-Invest II fund, which will invest in co-investment opportunities alongside the Insight Partners XIII fund.

Another $20 million was allocated within the private equity portfolio to Contour Venture Partners, which will seek seed-stage investments in the B2B, SaaS, enterprise SaaS, financial services technology and digital health spaces, mainly in New York City.

Within its real estate portfolio, the pension fund set aside more than $62 million for the forward purchase of a 175-unit single-family-rental development in Poinciana, Florida.

The pension fund also announced that it will divest its corporate bonds and actively managed public equity holdings in eight oil and gas companies, including Exxon-Mobile after determining that they are not ready to transition to a low-carbon economy. The other companies are Guanghui Energy, Echo Energy, IOG, Oil and Natural Gas Corporation, Delek Group, Dana Gas, and Unit Corp.

As of the end of 2023, the pension fund’s holdings in the eight companies were worth approximately $26.8 million combined.

“Climate change is an increasingly urgent risk facing all investors, and I am determined to protect the state’s pension fund by keeping it at the forefront of efforts to mitigate risks to our investments,” DiNapoli said in a statement. “This reduces our fund’s exposure to fossil fuels.”

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Home > News > Market Moves > Rate Cuts: The Fed and the Futures Market Draw Closer Together
Market Moves

Rate Cuts: The Fed and the Futures Market Draw Closer Together

Odds are that improved economic news will slow rate declines, but that may not be much of a tonic for stocks, says LPL.

By Larry Light


The spread on interest rates between what the futures market and the Federal Reserve board predict has tightened lately, as investors have grown less optimistic that the Fed will slice them deeply. That results from improved expectations that call for economic growth and no recession.

“The gap between market expectations for rate cuts this year and Fed projections—a source of both equity and fixed-income market volatility—has finally started to narrow,” stated a report by Adam Turnquist, chief technical strategist for LPL Financial.

U.S. gross domestic product expanded at a 3.3% annual rate, as of the December 2023 quarter, up from 2.5% from the year before, defying earlier estimates that GDP would be negative for last year. Personal income and spending reports for December also were up.

The Consumer Price Index, too, has ticked upward, suggesting to many its trend of falling has stalled out. The CPI was 2.9% in January, way down from the high of 9.8% in June 2022, but up from its 2.3% low point in June 2023. This poses frustration for the Fed, which wants 2% inflation.

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The futures market’s betting, from the CME Group, now leans toward four quarter-point cuts in 2024, with the benchmark fed funds rate finishing in a range of 4.25% to 4.50% by year-end, with the first cut coming in June. As recently as early January, the market had targeted six cuts, beginning in March, with the fed funds rate a half percentage point lower. Now, according to the CME, it is expected to reach a 3.50% to 3.75% band.

Fed policymakers’ prediction for 2024, from their last meeting in December, implied three cuts and an interest  rate in the 4.50% to 4.75% range. That was slightly more than its earlier indication from September. (The rate-setting Federal Open Market Committee’s members list their predictions every three months.) So now, only one anticipated cut separates the market and the Fed.

In addition to the impact on short-term rates, the more sanguine economic news has prompted higher yields on the 10-year Treasury, which has a bigger impact on the stock market. The 10-year now is at 4.25%, up from 3.84% at year-end 2023.

Higher 10-year yields potentially could attract investors away from stocks. Such a development, Turnquist wrote, “would likely act as a headwind for the broader equity market landscape.” The most vulnerable, he noted, would be defensive sectors, in particular utilities, consumer staples and real estate. “At the index level, global markets could also lag if yields continue higher,” he added.

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