New York City’s top public investor is writing a house view on AI, and the managers who pitch the city’s five pension funds should expect tougher questions about what sits behind the data centers, writes Jesse Pound. |
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Skeptical of the rush. NYC Retirement Systems CIO Monte Tarbox told the FT Live Future of Asset Management North America conference on Oct. 19 that the AI boom echoes the telecom crisis of the 2000s, the GFC and the 1980s savings and loan crisis.
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House view underway. His team is developing a framework for evaluating AI investments, including data centers. It could include asking managers for more specifics on data center power sources.
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Tech PE fund declined. Tarbox said his office passed on a technology-focused private equity fund because of AI exposure concerns, both in that strategy and across the NYC portfolios. He did not name the manager.
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Line-drawing as a goal. He wants to be able to show that the funds drew the line at certain points if the bubble pops.
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Why it's important. -
Manager questionnaires may change. If NYCRS formalizes power-source and exposure questions, managers pitching data center or tech-heavy strategies could see similar requests from other allocators.
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Portfolio-level exposure counts. The PE pass was driven by AI concentration in the strategy and in the total portfolio, so look-through exposure, not just the single fund, is now part of the decision.
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Peers are moving. Ohio SERS is reviewing its portfolio to determine AI exposure, and data center concern is becoming more common among investment committees.
- Fiduciary record matters. Tarbox framed the approach around being able to defend decisions later, a lens other boards may borrow.
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What we're watching. - House view details. Whether the framework is finalized and whether the power-source questions reach manager due diligence, since that is where it would affect fundraising.
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Index-driven exposure. How passive inclusion of newly public AI names squares with the stated caution, and whether other systems face the same tension. Tarbox said on the panel that New York City funds currently have exposure to Anthropic and would buy the stock once public if it is added to major index funds because divesting is “just not the way we operate.”
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Other committees’ reviews. Whether Ohio SERS and similar systems turn their exposure reviews into limits or policy.
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