The New York City comptroller, Scott Stringer, went public last week with news that billions of dollars have been leaking out of the city’s five public-employee pension funds, in payment for Wall Street money management that wasn’t worth it, according to a New York Times today. Stringer’s office did an analysis of the funds over the last 10 years and found that the high fees of managers and failure to reach performance goals had eaten away $2.5 billion of the pension systems’ value. If you take the funds’ gains since 2004, and subtract the fees, the analysis said, you end up basically at zero. To be more precise: The analysis found that over the 10 years, the managers of “private” asset classes, such as hedge funds and real estate, fell $2.6 billion short of target benchmarks after fees were accounted for, according to the editorial. Over the same period, managers of public asset classes, like stocks and bonds, slightly exceeded their benchmarks. “However, those managers gobbled up more than 95 percent of the value added — over $2 billion — leaving almost no extra return for the funds,” Stringer’s office said.
