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.

“Manager diversity is a fundamental component of the fiduciary duty of the New York City retirement systems and integral to enhancing the long-term value of the Systems,” said Chief Investment Officer Steven Meier. “It is correlated with improved investment outcomes – and evidence continues to show this. I am proud of the work of staff within the Bureau of Asset Management, led by Taffi Ayodele and under the direction of Comptroller Lander, in expanding our Diverse and Emerging Investment Program and championing diversity as a strategic imperative.”

“These programs not only contribute positively to our portfolio’s returns, but also drive tangible economic impact in historically underserved communities and help narrow the racial wealth gap within financial services,” said Taffi Ayodele, Director of Diversity, Equity and Inclusion and Emerging Manager Strategy.

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.”

About the New York City Retirement Systems
The New York City retirement systems, comprise the City’s five public pension funds (the New York City Employees’ Retirement System, Teachers’ Retirement System, Police Pension Fund, Fire Pension Fund and Board of Education Retirement System), and are the third largest pension system in the nation, valued at approximately $274.38 billion in assets under management as of June 30, 2024.

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