NYC Comptroller Lander Announces Nearly $32B in Pension Investments Allocated to Diverse and Emerging Asset Managers

 

$26.5b alone allocated to minority- and women-owned asset managers, an increase of nearly $10b since Fiscal Year 2022, advancing equity and inclusion across the five funds’ investment portfolios

New York City Comptroller Brad Lander released the Fiscal Year 2025 report of pension investments and commitments with minority- and women-owned asset management firms. Over the course of FY25, investments reached an historic $26.5 billion, rising more than $3 billion since the end of FY24 and nearly $10 billion from the $16.82 billion in investments and commitments at the beginning of Comptroller Lander’s tenure.

“Expanding access to investment opportunities with the New York City retirement systems consistent with our fiduciary duty has been an essential tool in our efforts to secure long-term risk-adjusted returns,” said New York City Comptroller Brad Lander. “Year-after-year our data affirms that MWBE asset managers have been some of the strongest performers throughout our portfolios and that deepening partnerships with diverse-owned asset managers who are all too often left out of the conversation must remain a strategic imperative. I am proud of what we have accomplished, led by the indomitable Taffi Ayodele, and the meaningful gains we have secured for our pension beneficiaries while moving the equity needle forward.”

This announcement reflects continued progress on the Comptroller’s Bureau of Asset Management’s efforts to increase transparency on pension fund investments and advance equity and inclusion across the funds’ portfolios consistent with the fiduciary duty to achieve strong risk-adjusted returns. This is the fourth public reporting of these investments. In 2022, Comptroller Lander launched this transparency tool with the belief that you cannot manage what you can’t measure.

“For decades, research has highlighted the glaring equity gaps across the asset management industry, and the barriers to accessing capital for small and diverse-owned investment firms. There is no doubt that when opportunities for a wider pool of talent are provided, asset owners and allocators benefit from better decision-making, more diversity of thought and perspective, and creative approaches to securing returns for beneficiaries. Our growing ecosystem of MWBE asset managers coupled with robust investment returns are a testament to that and we have no intention of slowing down these efforts,” said Head of Diverse and Emerging Manager Strategy Taffi Ayodele.

“The increase in allocations to top-performing diverse-owned and emerging asset managers reflects the shared commitment between Comptroller Lander, the Bureau of Asset Management and the New York City retirement systems to strengthen our investment performance in part by strengthening the pool of talent we work with,” said Valerie Red-Horse Mohl, Deputy Chief Investment Officer for Responsible Investing. “It has been proven time and time again that diversity is a business advantage – not a hindrance. I am encouraged by the returns we see from these managers and we remain focused on fostering additional pathways to reach our near-term aspirational goals and set best practice standards.”

In 2023, following an analysis of the performance of the funds’ existing emerging and diverse managers which showed that investment firms owned by people of color and women remain among the pension funds’ best performing managers, Comptroller Lander announced critical changes to the program consistent with fiduciary duty. As a result, the Comptroller’s Bureau of Asset Management anticipated reaching 20% of investments with MWBE managers by 2029, and 15% by 2025. MWBE asset managers now manage 14.6% of the five pension funds’ actively-managed US assets, just shy of that goal.

In addition to investments with MWBE asset managers, the funds also expanded investments with smaller Emerging Managers to $13.02 billion, an increase from $10.36 billion in FY24.

Other investment highlights from the report include:

• More than a quarter of the investments across the funds’ public equity (27.37%), private equity (27.41%), infrastructure (28.76%) and hedge funds (66.91%) asset classes are managed by MWBE firms.
• Exposure to MWBE firms has increased in nearly every asset class, with the largest increase of nearly $2 billion in public equity following strong market performance.
• The funds have doubled their allocations to women of color in FY25, demonstrating clear progress in efforts to close one of the asset management industry’s most evident equity gaps.
• In Private Markets, MWBE firms in the Systems’ portfolio continue to outperform their respective benchmarks, with an average PME Spread of 7%—an increase from the ~5% average reported over the past two fiscal years.

The report also includes an accounting of the work of the Comptroller’s Bureau of Public Finance in their management of New York City’s debt issuance. For more than three decades the City has promoted MWBE participation in bond transactions. In one sign of meaningful progress, fees paid to MWBE firms in the City’s GO and TFA underwriting syndicate and selling group have increased nearly $19 million between FY22 and FY25.

The robust diverse and emerging manager program is a central part of the Comptroller’s Office’s Environmental, Social and Governance (ESG) program and efforts to evaluate how investment managers are seeking the best talent available and supporting diversity, equity and inclusion in their organizations and the investments they manage on behalf of the Systems and to encourage them to address the business case for DEI and the systemic risks of socioeconomic inequality. This evaluation is integrated into the full investment due diligence process conducted by the Comptroller’s Bureau of Asset Management, in line with fiduciary duty.

To read the full report, visit https://comptroller.nyc.gov/reports/mwbe-and-emerging-manager-pension-investments.