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New York City Says It Will No Longer Invest in Hedge Funds

April 14, 2016, 4:14 PM UTC
JACOB K  JAVITS CENTER, NEW YORK, NY, UNITED STATES - 2016/03/02: NYC Public Advocate Letitia James speaks to Hillary Clinton's supporters. Following her win of seven of the eleven Democratic primaries on "Super Tuesday," Democratic Presidential candidate Hillary Clinton spoke at a rally for her supporters at the Jacob K. Javits Center. (Photo by Albin Lohr-Jones/Pacific Press/LightRocket via Getty Images)
Pacific Press © 2016 Pacific Press

The board of New York City’s largest public pension fund voted on Thursday to unwind all of its hedge fund investments and stop future investments in the asset class, according to the city’s public advocate, a trustee at the pension fund.

The board of the New York City Employees Retirement System (NYCERS) voted to stop all future investments in hedge funds and “liquidate NYCERS hedge fund investments as soon as practicable in an orderly and prudent manner.”

The move by the $60.5 billion fund signals mounting dissatisfaction with hedge funds among public pension funds administrators. It follows a similar action by the California Public Employees’ Retirement System (Calpers), the nation’s largest public pension fund.

NYCERS had $1.7 billion invested in hedge funds as of June 30, 2015, according to its latest financial report. That amounted to 2.8% of total assets and was the smallest portion of its ‘alternative investments’ portfolio, which included an $8.1 billion allocation to private equity.

The report shows that NYCERS paid nearly $40 million in fees to hedge funds during its 2015 financial year. Its investments included Luxor Capital Group, Brigade Capital Management and Fir Tree Partners. Its hedge fund portfolio returned 3.89% over the year, according to its financial report.