MWBE asset managers outperformed their benchmarks and contributed to strong 10% net investment return for FY24, which saved taxpayers $1.8 billion
New York City Comptroller Brad Lander released a report announcing that investments by the City’s five pension funds with minority- and women-owned asset management firms grew to $23.1 billion in Fiscal Year (FY) 2024, an increase of $6.3 billion, or 37.5% since Lander took office. Assets under management by MWBE firms grew from $16.8 billion in FY22 (11.6% of actively-managed US assets), to $19.5 billion in (12.7%) in FY23, to $23.1 billion (13.3%) in FY24.
Investment firms owned by people of color and women are among the pension funds’ best performing managers. Private markets MWBE firms in the funds’ portfolio have outperformed their respective benchmarks with an average public markets equivalent (PME) spread of 5%, contributing to the funds’ strong overall performance. In FY24, the City’s five pension funds achieved a combined net return of 10.0%, surpassing their actuarial target rate of 7%, outperforming many of their peer pension systems across the nation, and saving taxpayers $1.8 billion.
“Our MWBE and emerging asset managers are among the best performers in our portfolio,” said Comptroller Brad Lander. “I’m proud of the nearly 40% growth in our investments with MWBE firms and committed to continuing to invest with them. Their performance this year helped us achieve a 10% return that saved taxpayers $1.8 billion – money we can use to invest instead in affordable housing, schools, and public safety.”
Beginning in 2022, Comptroller Lander released the first-ever report detailing the Comptroller’s Office’s work with minority- and women-owned investment firms, emerging managers, and MWBE professionals in municipal finance as a measure to increase transparency and accountability. For the third year, this report not only contains unparalleled transparency, but highlights the strides each of the pension funds and the Comptroller’s Office have made in their work to advance diversity, equity and inclusion within the financial services industry. The report provides granular details of the funds’ investments across each of the pension funds’ asset classes.
The pension funds also have a total of $10.36 billion in investments with or committed to Emerging Manager firms, which do not typically have access to larger institutional investors; as of June 30, 2024, investments with Emerging Manager firms represent 4.78% of Global-actively managed assets, up from $9.85 billion in 2023.
The report also highlights the work of the Comptroller’s Bureau of Public Finance, which manages all aspects of City capital borrowing for the Comptroller in partnership with the Mayor’s Office of Management and Budget. In Fiscal Year 2024, the Bureau contracted with MWBE firms for 26.33% of bond underwriting, 41.96% of financial and swap advising, and 22.96% of bond counsel.
The Comptroller’s Office’s ongoing commitment to diversity, equity, and inclusion (DEI) is part of a broader responsible investing approach, paying attention to environmental, social, and governance (ESG) risks in order to drive strong, long-term returns. This year’s report comes as attacks on DEI and ESG initiatives persist and appear likely to grow, leading some investors to roll back their programs and compounding an already challenging investment environment for diverse and small asset managers. The Office is committed to staying the course.
“This year’s strong returns shows that anti-DEI rhetoric, which purports that diversity hinders financial performance, is simply false” continued Comptroller Lander. “When we expand the pool of talent, creativity, and innovation among our asset managers, we achieve greater returns for our beneficiaries and invest in a growing economy.”
To read the full report, visit here.
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