The Failure of Private Equity Investments at NYCERS

Below are two screen shots from the June 17, 2025 NYCERS Investment meeting. The charts displayed were prepared by the Comptroller's office and presented to the NYCERS trustees.

The first chart alleges to show the rate of return on alternative investments in the NYCERS investment portfolio. The second chart alleges to show the rate of return relative to their targets measured in plus or minus basis points.

The Comptroller provided no documentation on how the amounts were arrived at. I consider the amounts in these charts to be inflated because the values listed were provided by the general partners running the individual investments and are just estimates.

But even accepting the figures as correct, we see a huge problem with the private equity class. For over ten years it has been 300 basis points (3%) under its target of the Russell 300 plus 300 basis points.

In plain English, NYCERS private equity investments performed exactly like a Russel 3000 index fund.

As of June 30, 2024 NYCERS reported:

• a Russel 1000 index fund worth $12.9B
  • with an investment fee of only $269,000 for FY-2024, and
• private equity investments at a value of $8.46B
  • with $163.4 million in investement fees plus $64.8 million in organizational costs for FY-2024.

On top of this obvious performance failure, the index fund is totally liquid and pays dividends every year from all the stock holdings in the fund.

The trustees are aware of this situation but continue to hire private equity managers. They did, however, dump some private equity managers in March of this year.