NYC Investment Chief Schloss Headed to Angelo, Gordon

Larry Schloss, chief investment officer of New York City’s $145 billion retirement system, is leaving to become president of investment adviser Angelo, Gordon & Co, Comptroller John Liu said.

Schloss, 59, a former global head of private equity at Credit Suisse First Boston, is departing three months before Liu’s term ends. Schloss, who earned $224,000 a year, expanded investments in hedge funds and junk bonds and hired more staff. He also called for the city’s five funds, which farm out all of their assets to more than 300 investment firms -- including New York-based Angelo, Gordon -- to manage money internally.

“We were fortunate that Larry Schloss chose to enter public service after building a sterling reputation in the private sector,” Liu said today in a statement. “He has worked tirelessly to improve the funds’ performance.”

During Schloss’s almost four-year tenure, pension assets grew by $45 billion, and the funds returned 11.9 annually for the three years ending June 30, Liu said. He also pared the city’s private-equity portfolio of underperforming managers and invested $700 million in funds that will finance housing, including for people displaced by Hurricane Sandy.

Seema Hingorani, who oversees hedge funds for the comptroller’s Bureau of Asset Management, will serve as interim chief investment officer, Liu said.

Wall Street

New York City pensions paid investment firms about $370 million in fees in fiscal 2012, according to its financial report. Schloss recommended that the pensions hire staff with Wall Street experience and pay them higher wages to manage money in-house. The approach would cut costs and boost returns, he said. Trustees were skeptical and didn’t adopt the strategy.

While he’s joining a firm that oversees $24 billion assets, including public pension money, Schloss said he still believes that New York should manage money internally.

“The right number is probably 50-50 inside, outside,” Schloss said in a telephone interview. “You’ve got to start somewhere. It doesn’t change my view at all.”

The 38 staff members in the Bureau of Asset Management oversee five funds for police, firefighters, teachers, school administrators and civil-service workers. They get paid an average of $100,000 a year, less than the median base salary of a first-year Harvard Business School graduate.

Investment Returns

Angelo, Gordon oversees $24 billion in assets. The firm manages $460 million for New York City in three different funds. Returns have ranged from 13 percent to almost 20 percent since inception, according to Liu’s office.

Schloss said he received a letter from the city’s Conflicts of Interest Board clearing his move and will be prohibited from contacting municipal officials for a year. He can’t receive fees from any investments the city made with Angelo, Gordon while he was chief investment officer.

“We are pleased Larry is joining us as president,” co-founder John Angelo said today in a statement. “He is a seasoned investment professional who has provided leadership and insight to both public and private institutions.”

Schloss will become a partner in the private firm and the 10th member of its executive committee, the company said.

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