NY State Pension Returns 6.2% in Fiscal Q3, Cashes Out Another Public Equity Fund

The New York State Common Retirement Fund returned a robust 6.19% in the third quarter of fiscal 2023-24 to raise its asset value to $259.9 billion as of December 31, 2023.

The pension giant, whose fiscal year runs from April 1 through March 31, also reported more than $830 million of investment commitments during December 2023, while cashing out of yet another public equity fund.

The quarterly performance, which alone surpassed the fund’s annual long-term expected rate of return of 5.9%, followed a 1.59% investment loss the previous quarter and a 3.08% gain during the fiscal year’s first quarter.

“The markets have seen an improvement over the past quarter, but some volatility remains,” New York State Comptroller Thomas DiNapoli said in a release. “Economic opinions are mixed about the year ahead, and uncertainty persists. Still, thanks to our prudent management and long-term strategy, our pensioners and members can remain confident that their pension benefits are safe.”

As of the end of calendar 2023, the NYSCRF’s asset allocation was 41.84% publicly traded equities (down from 44.14% nine months earlier); 22.62% cash, bonds and mortgages (up from 21.53%); 14.75% private equity (up from 14.61%); 13.30% real estate and real assets; and 7.49% credit, absolute return strategies and opportunistic alternatives (up from 6.33%).

During December, the pension fund terminated its investment in Wellington Management’s Asia ex-Japan Contrarian Fund. The $243 million the pension had invested in the international equity fund was allocated to cash, as the termination raised the total amount the NYSCRF cashed out of public equities in calendar 2023 to more than $4.6 billion.

In addition to terminating the public equity fund, the pension fund committed approximately $830 million in investments in December, more than half of which was earmarked for two funds within its real assets portfolio. The pension fund committed $275 million to DigitalBridge Group’s DigitalBridge Partners III fund, which marks a new relationship for the NYSCRF. The closed-end fund seeks to acquire digital infrastructure assets, including macro cell towers, data centers, fiber, small cell networks, edge infrastructure and other related businesses.

It also committed $200 million to the Carlyle Group’s Carlyle Renewable and Sustainable Energy Fund II, a closed-end fund focused on middle market transactions targeting traditional renewable energy such as wind and solar, as well as newer energy transition strategies such as industrial applications and electric vehicle infrastructure.

Within its private equity portfolio, the pension fund will invest $175 million in Altaris’ Health Partners VI fund, which will focus on health care investments primarily in North America. Altaris is also a new relationship for the pension fund.

The pension fund also committed $100 million to Insight Venture Management’s Empire Co-Invest II fund, which will invest in co-investment opportunities alongside the Insight Partners XIII fund.

Another $20 million was allocated within the private equity portfolio to Contour Venture Partners, which will seek seed-stage investments in the B2B, SaaS, enterprise SaaS, financial services technology and digital health spaces, mainly in New York City.

Within its real estate portfolio, the pension fund set aside more than $62 million for the forward purchase of a 175-unit single-family-rental development in Poinciana, Florida.

The pension fund also announced that it will divest its corporate bonds and actively managed public equity holdings in eight oil and gas companies, including Exxon-Mobile after determining that they are not ready to transition to a low-carbon economy. The other companies are Guanghui Energy, Echo Energy, IOG, Oil and Natural Gas Corporation, Delek Group, Dana Gas, and Unit Corp.

As of the end of 2023, the pension fund’s holdings in the eight companies were worth approximately $26.8 million combined.

“Climate change is an increasingly urgent risk facing all investors, and I am determined to protect the state’s pension fund by keeping it at the forefront of efforts to mitigate risks to our investments,” DiNapoli said in a statement. “This reduces our fund’s exposure to fossil fuels.”