"Stalled PE Funds Are the Conglomerates of Our Age" | Sanford Rich, NYC BERS

Sanford Rich, executive director of the New York City Board of Education Retirement System, talks to PEI's Chris Witkowsky about why cashflow needs drive the system's asset allocation and how that pushes it toward private credit despite his view that the market misprices illiquidity. He sets out the two questions he asks private credit managers, discusses stalled private equity as a drag, and covers private credit trading, secondaries and whether recent redemption headlines have changed the system's thinking.

1. Rich says the system is over 100 percent funded but running cashflow-negative by around 2.5 percent a year, heading toward 5 percent or more over the next five years, with city contributions tailing to zero around 2032.
2. He argues private credit gives up meaningful spread purely for illiquidity and that the market misprices it, while accepting the trade because the asset-liability analysis leaves little alternative.
3. He asks managers whether their due diligence budget is a burden and whether they routinely file UCC claims on the assets securing their loans, and says a 'no' to the first would concern him.
4. He describes stalled private equity as a drag on the portfolio, weighs lending to a company against holding its equity, and says recent redemption headlines have not changed the system's thinking.