NYC Pensions Ask External Managers For Full Fee Disclosure; No More “Business As Usual”

New York City’s five pension funds on Wednesday sent a letter to many of their external investment managers, requesting “full transparency” on fees – both historical and current – or risk being shut out of future pension investments.

The letter was sent to about 200 managers, according to the Wall Street Journal, which reviewed the letter.

Managers who don’t comply could get the cold shoulder from the city’s pension funds in the future, according to the letter.

More from the WSJ:

In what is one of the most aggressive moves yet, the New York City Retirement Systems, the nation’s fourth-largest pension fund by assets, is demanding certain external money managers divulge all of their associated fees and expenses—or risk being axed.

In a letter sent Wednesday to about 200 firms and reviewed by the Journal, Scott C. Evans, the chief investment officer of the city’s five pensions, wants “full transparency” on a range of fees, both on a historical basis and on a quarterly basis going forward.

Mr. Evans wants the historical analysis provided by the end of the year.

Pension funds like New York City’s say they only have a partial view on the total costs associated with non-traditional asset classes like hedge funds, private equity and real estate. These types of investments have drawn scrutiny from pension officials across the U.S., because the fee structures aren’t broadly known.

“Business as usual is not going to cut it for fund managers who want to do business with the New York City Pension Funds,” said Scott M. Stringer, the New York City comptroller, whose office oversees pensions, in a statement.

[…]

Mr. Evans said he will recommend the pensions’ trustees adopt a policy where external managers refusing to provide such cost-related information will be denied “new or increased” investments with the New York City funds.

The city’s five pension funds collectively manage around $163 billion in assets.

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