The New York City Employees Retirement System has divested its $1.5 billion portfolio of hedge funds, citing poor performance and high fees.

“We have not seen the results that we had expected,” said trustee Henry Garrido, the executive director of District Council 37 of the American Federation of State, County and Municipal Employees.

The Teachers’ Retirement System and the New York City Board of Education Retirement System do not invest with hedge funds.

The April 14 vote by the civil employees’ pension system known as NYCERS reflects the willingness of public pensions to abandon the investment vehicles that have become politically controversial. Hedge funds have drawn fire in recent years for their support of charter schools and other conservative causes. In 2014, the California Public Employees’ Retirement System, the largest U.S. pension system, divested its $4 billion portfolio of hedge funds, also citing high fees.

The American Federation of Teachers co-authored a report in November recommending that 11 large public pension plans — including NYCERS — conduct asset allocation reviews to find “less costly and more effective diversification approaches” than hedge funds.

Bloomberg, April 14
Crain’s New York, April 14
Pensions & Investments, April 18