The New York City retirement systems’ five pension funds posted a combined investment return of 10% for the fiscal year ending June 30, raising their aggregate asset value to $274.38 billion from $253.19 billion one year earlier, when the pension funds returned 8%.
It was the second straight year public equities led the pension funds’ investment returns, earning 23% during the year, followed by emerging markets and alternative credit assets, which returned 15.1% and 12.3%, respectively. Private real estate was the worst-performing asset class, losing 7.1%, and was the only one that did not produce a positive return. Private real estate was followed by Treasury inflation-protected securities, or TIPS, and core fixed income, which returned 2.7% and 2.8%, respectively.
The pension funds’ 10% returned topped their actuarial target of 7%, which according to the Office of the New York City Comptroller, translates to $1.81 billion saved over the next five fiscal years. The pension funds also reported annualized three-, five- and seven-year returns of 2.8%, 7.4% and 7.5%, respectively. The below-target three-year returns can be attributed to fiscal 2022, when tanking stocks burdened the pension funds with a combined loss of 8.65%.
“Despite the economic challenges of the past few years, our strategic investment partnerships and careful portfolio management delivered strong returns for New York City’s pension funds and great savings for the city this year,” said New York City Comptroller Brad Lander in a statement. “Our ability to outperform last year’s 8.0% net return reflects the hard work of our talented Bureau of Asset Management team and the resilience and foresight of their investment approach.”
The pension funds include the Teachers’ Retirement System of NYC, the New York City Employees’ Retirement System, the NYC Police Pension Fund, the NYC Fire Pension Fund and the NYC Board of Education Retirement System. The pension funds are collectively the third largest public pension system in the U.S., according to the New York City Comptroller’s Office.
BERS had the highest return for 2024 at 10.6%, followed by the Police Pension Fund, which earned 10.2%. The Fire Pension Fund and the TRS each returned 10%, while NYCERS returned 9.9%.
As of the end of the end of fiscal year 2024, the pension funds collectively had an asset allocation of approximately 42% in public equities, 32% in public fixed income and 26% in alternatives.
“After several years of unprecedented global economic disruption, I’m pleased with the progress of the net returns we achieved as the markets continued their recovery,” said NYC Retirement Systems CIO Steven Meier in a statement. “However, as we plan for [fiscal] 2025, we must remain prudent and focused on recommending tailored investment opportunities that can ensure strong, consistent returns for years to come.”
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Tags: BERS, Brad Lander, New York City Employees' Retirement System, New York City Retirement Systems, NYC Board of Education Retirement System, NYC Fire Pension Fund, NYC Police Pension Fund, NYCERS, Steven Meier, Teachers Retirement System of NYC