In the 12 months ending December 31, 2009, the S&P 500 index gained 23.5%, moving from 903.25 to 1115.10. At the same time, NYCERS total assets rose by 17.5% from $30.4B to $35.7B driven by the same market rebound.
In particular, NYCERS holdings with its domestic stock indexed managers, and its government and corporate bond managers gained 22.3%, closing the year at $15.5B up from $12.7B. The interesting aspect of this is that NYCERS paid only $1.8M in management fees for this return.
At the same time, the rest of the portfolio returned 16.2% moving from $17.7B to $20.6B. For this performance, NYCERS paid $132.2M.
If the NYCERS trustees had invested the entire portfolio with the indexed stock and the government/corporate bond managers, the portfolio would have been worth $37.2B instead of $35.7B and NYCERS would have saved $130M in fees.
| Managers | Assets 12/31/2008 | Assets 12/31/2009 | Return % | Fees - 2009 |
|---|---|---|---|---|
| US Stock Index | $9.651B | $12.333B | 27.80% | $295,108 |
| US Government Bond | $1.229B | $1.007B | -18.03% | $261,158 |
| US Corporate Bond | $1.794B | $2.161B | 20.48% | $1,211,612 |
| Sub-total | $12.675B | $15.503 | 22.31% | $1,767,878 |
| Total Portfolio | ||||
| Actual Reported | $30.396B | $35.727B | 17.54% | $134,000,000 |
| Low Risk - Low Cost | $30.396B | $37.179B | 22.31% | $4,000,000 |
This is a clear example how a low risk/low cost strategy actually is more profitable than a high risk/high cost strategy. NYCERS makes no attempt to review the effectiveness of its investment decisions.
A note of warning: NYCERS lost $387.2M on its real estate investments in 2009, a 32.7% loss.
