Contemplating the Potential Divestment of the $270B New York Pension Fund from Wall Street?
The ongoing debate between Drew Warshaw and New York State Comptroller Thomas DiNapoli centres on the investment strategy for the New York State and Local Retirement System’s (NYSLRS) pension fund.
Warshaw, a challenger in the upcoming Democratic primary for New York state comptroller, proposes shifting the $300 billion pension fund away from active, high-fee Wall Street investments into low-cost passive index funds. He argues that the fund has underperformed its benchmarks in six of the last 15 years and paid $9 billion in fees to outside managers over the past decade.
In contrast, DiNapoli defends the current diversified approach that includes significant holdings in private equity, credit, and real estate, asserting it ensures retirement security for the system’s 1.2 million members. His team emphasises that New York’s situation is different from Nevada’s, suggesting that a more complex, actively managed investment strategy is appropriate for New York’s fund.
Warshaw cites Nevada’s success with passive investing as a model to emulate, while DiNapoli emphasises the importance of maintaining a diversified portfolio. The debate remains active, with Warshaw pressing for a fundamental strategic shift toward passive investing to reduce fees and improve returns, while DiNapoli supports maintaining the diversified, actively managed portfolio. No final resolution or change has been reported as of early August 2025.
Meanwhile, the US trade deficit shrank in June to its lowest level in nearly two years, as a pre-tariff rush to import goods subsided. The protectionist move pushed the effective US tariff rate to its highest level since World War II, with the prospect of further increases on imported semiconductors and pharmaceutical products.
Elsewhere, extreme weather events have caused significant damage across parts of Canada, the US, and southern France. More than 500 wildfires were burning out of control in Canada, and around 81 million people in the US were under air quality alerts. Changing weather patterns, driven in large part by climate change, are having serious financial consequences: The first six months of 2025 saw about $80 billion in insured catastrophe losses worldwide.
In international news, India's prime minister will visit China this month for the first time since 2018, to attend a multilateral summit, and has signalled it could ease investment restrictions on Chinese firms. This move could potentially improve economic ties between the two nations, even as they compete in other arenas.
In other political developments, US President Donald Trump announced an additional 25% tariff on India over its purchase of Russian oil, ratcheting up tensions with the world’s most populous nation. Saudi Arabia’s state oil giant reported worse-than-expected earnings, with quarterly profit falling for a 10th successive quarter, a protracted decline that threatens to slow the kingdom’s economic transformation.
As the world grapples with economic and environmental challenges, the debate over the NYSLRS investment strategy continues, with Warshaw advocating for a more cost-effective approach and DiNapoli emphasising the importance of retirement security for the fund’s members. The outcome of this debate could have significant implications for the future of the NYSLRS pension fund and retirement security for its members.
References:
- NY Times
- Bloomberg
In the ongoing debate about the NYSLRS investment strategy, Warshaw advocates for shifting the pension fund towards passive index funds to reduce fees and improve returns, while DiNapoli maintains that a diversified portfolio is essential for ensuring retirement security.
The financial impact of extreme weather events, driven by climate change, has resulted in approximately $80 billion in insured catastrophe losses worldwide during the first half of 2025.
