Crain’s – Bet you didn’t know the city paid more than a half-billion dollars last fiscal year to Wall Streeters who manage pension funds for teachers, police, firefighters and other municipal workers. Bet you also didn’t know the fees have doubled since 2007 and quintupled in the past decade. The escalation has to stop, said City Comptroller Scott Stringer, a trustee for the city’s $160 billion pension system. “I am very concerned about the amount of fees we’re paying,” he told Crain’s last week. “We are looking at this.”
The first thing Mr. Stringer could do is fire the hedge-fund managers. It’s a no-brainer, really. The city’s $3.4 billion hedge-fund portfolio returned 6.8% in the year ended June 30. That’s way below the 24% returned by the S&P 500 in the same 12 months and the 16% returned by a Vanguard balanced index fund composed of 60% stocks and 40% bonds. It even falls short of an 8.6% benchmark for hedge funds set by the city.
