US. Real estate investments cost NYC pension funds $370M
In a big investment portfolio, some part of it will inevitably underperform. For the city’s biggest pension fund, that part has been private equity real estate.
The New York City Employees’ Retirement System ramped up its exposure to that category, only to see it underperform the stock market by $260 million and rack up at least $110 million in fees between 2016 and 2019, New York Focus reported.
During those years, the fund increased its portfolio in private equity real estate by 45 percent, including the investment of $150 million of new assets into the Blackstone Group, the publication reported.
“Even on the reported values, NYCERS’ private equity real estate portfolio has dramatically underperformed,” former Securities and Exchange Commission attorney Edward Siedle told New York Focus.
The actual numbers are probably even worse. Jeff Hooke, an investment banker and senior lecturer at Johns Hopkins University, said that unreported fees charged by private equity managers might have brought the cost of the pension fund’s fees up to $183 million.
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