The core of the discussion is a critique of the New York State Pension Fund's investment strategy. Warshaw alleges that paying high fees to a vast number of active managers has led to significant underperformance relative to market benchmarks, creating a substantial financial burden for taxpayers.
The episode delves into the classic financial debate between active and passive management. Warshaw makes a strong case for abandoning the current strategy of trying to pick outperforming managers and instead adopting a diversified, low-cost index fund approach for the state's massive pension fund.
Warshaw frames the lack of affordable housing as the most serious domestic policy crisis in the country, citing statistics like one in seven NYC public school students being homeless. He proposes using the pension fund's capital to directly address this by creating a dedicated $10 billion investment fund for affordable housing.
Beyond the pension fund, Warshaw advocates for a more efficient and responsive state government. He uses examples like creating a model building code to reduce construction costs and proactively returning the $20 billion in the Unclaimed Funds to citizens, rather than making them navigate a difficult system.
Keep pulling the thread on Drew Warshaw.