New York Pension Fund May Lower Holdings in Stocks

Concerned about downturn risk in equities, the New York State Common Retirement Fund may tilt allocation to bonds.

The New York State Common Retirement Fund signaled that it may change its investment strategy from equities to bonds.

Anastasia Titarchuk, chief investment officer of the $216 billion fund, made the announcement on Monday at the Reuters Global Investment Outlook 2020 Summit in New York. The fund commissioned an asset allocation study that, if approved, will call for a decrease of several percentage points in the fund’s allocations to equities.

“At this point in the cycle we’re much more concerned about liquidity,” she said. “If we have a downturn, I don’t want to sell equities on the low.”

The assets likely will be investment-grade fixed income, such as US Treasury bonds. About half of the investments in the system are in global equities and about 25% are in bonds, said Titarchuk.

She is concerned about a lower rate of return on stocks up ahead. The fund pays out about $1 billion in benefits each month. Titarchuk also said the fund is likely to keep its private equity allocation around 10%, with managers’ high fees discouraging the idea of raising that percentage. 

“I actually give a little pause when I see the entire market move in one direction,” said Titarchuk, referring to the proliferation of private equity for large investors. “To me that’s more of an indication that it’s a crowded trade.”

In August, New York State Comptroller Thomas DiNapoli appointed Titarchuk CIO of the fund. As interim CIO, she challenged a bill that would require the state to divest from fossil fuels.

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