New and Innovative Investment Strategies in Infrastructure for the $60 Billion New York City Employees' Retirement System (NYCERS) Pension Fund

Currently, New York City Employees' Retirement System (NYCERS) pension fund has minimal exposure to infrastructure. As one of the Trustees of NYCERS, Transport Workers Union (TWU) Local 100 requested the Capstone team to recommend new infrastructure investments that are suitable for NYCERS.  In addition, TWU challenged the team to develop new criteria beyond traditional investment metrics, such as risk-adjusted returns, in order to better capture the benefit of infrastructure investments to TWU membership.

The Capstone team first reviewed NYCERS current infrastructure investment policy and infrastructure holdings, and then summarized the universe of available infrastructure funds and companies investment options for NYCERS through research on Bloomberg and Preqin.  The team proposed new criteria, discussed those criteria with TWU and applied criteria to rank available infrastructure investments.  They further created a new investment product with listed companies in the subway and bus manufacturing supply chain.

The Capstone team found objective data to apply new criteria in evaluating an infrastructure investment’s exposure to the New York metro area, jobs created, and use of unionized workers as well as performance.  While NYCERS has no exposure to listed infrastructure funds, the new criteria identified three suitable funds.  In addition, the Capstone team’s new criteria identified ten unlisted infrastructure funds that perform well compared to industry benchmarks.  NYCERS currently has no strategy to evaluate investments that support the supply chain of subway and bus manufacturers; therefore, the team created a new listed infrastructure fund that outperforms the US equities market and has high likelihood to appreciate due to the MTA Capital Plan.