Goldman Sachs to manage $2B of NY pension fund’s money

Written By Unknown on Kamis, 11 September 2014 | 18.18

New York's pensioners are going to rely on Goldman Sachs to pave the way to happy returns.

The investment bank's asset-management arm will manage $2 billion of the New York State Common Retirement Fund's money, as well as be able to advise on $98 billion more, in the biggest allocation the state has ever made.

That means that Goldman Sachs Asset Management has direct or indirect control of at least 55 percent of the retirement payments for state employees, firefighters and police, mostly outside of New York City.

The total size of the pension is $180.7 billion, making it the third-largest in the US, according to the fund. Most of that money — $100 billion — is in stocks.

The $2 billion mandate allows GSAM to invest in other investment managers or hedge funds, according to an announcement from Thomas DiNapoli, New York's comptroller and head of the pension.

"Identifying new opportunities is key to the continued growth of the fund's long-term value," DiNapoli said. "This partnership is designed to help strengthen the fund as it provides benefits to New York's current and future public employee retirees."

Goldman, headed by CEO Lloyd Blankfein, won't be able to invest in their funds, according to a member of the pension fund's investment staff.

The bank's group has about 300 people who will provide "strategic advice" for the $98 billion it isn't directly investing, the announcement said.

GSAM will also be able to make recommendations on other managers that the pension fund should or should not hire.

Most of the $2 billion came from uninvested money and low-cost funds that track benchmarks like the Standard & Poor's 500 Index, the staffer said.

While the fees are undisclosed, they are "very reasonable," the staffer said.

The ability to pipe up on other investments isn't totally new at the New York pension — smaller "emerging" managers have been offered that type of sway, the staffer said.

It's unclear if the pension offered GSAM advisement on the rest of its stocks in order to cut down on fees.

New York's state pensions are about 91 percent funded as of the end of last year, making them one of the healthiest systems in the US, according to a report from Morningstar.


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