New York City’s five pension funds will begin demanding staff demographic data from potential service providers to encourage diversity, Comptroller Scott Stringer announced at the system’s May 1 investment conference.
“For the first time—working with trustees—we’re asking firms that want our business to give us hard data about the composition of their investment teams and professionals,” he told to audience of investment professionals, internal staff, and media.
This information, gathered by surveys, is to become a formal criterion for determining which managers are most likely to outperform on a long-term risk-adjusted basis. The many consultants that assist in manager selection have likewise been instructed to consider diversity as a meaningful attribute.
“We’re doing this to add value to our funds, and the new information will help us select managers in the future,” Stringer continued. “Let me stress: This is a game-changing expansion of our commitment to opportunity.”
The $160 billion retirement system currently has $10.9 billion invested with minority and women managers, Stringer said. But since taking over the office in late 2013, Stringer and the pension funds’ CIO Scott Evans have made a broader push for diversity.
Stringer’s office recently graded City agencies on how well they engaged women and minority-owned firms for municipal contracts. He gave the retirement system a ‘C’—just a shade better than the ‘D’ averaged citywide.
“When we expand the pool of people with whom we do business, it strengthens our funds. And it improves fiscal performance,” Stringer told the conference attendees. “It’s got to be a living, breathing part of how we do business.”
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Kenneth Shimberg, Brown University