Randi Weingarten, president of the American Federation of Teachers, is asking the New York City Employees' Retirement System to pull money out of hedge funds.

"Hedge funds are becoming a bad bet for working families,” the union head said in a statement. “A recent AFT report found that public employees in New York City and 10 other pension funds would have been better off if they had never invested in hedge funds.”

In addition to lagging the broader market, hedge funds charged enormous fees, she said.

“Pension funds paid an average of $81 million in management fees in 2015 alone,” according to the statement. “Adding insult to injury, many of the billionaire hedge fund managers use their profits to launch political attacks on public pensions, public services, public schools and the mechanisms that give working people a shot at success.”

The NYC retirement system wouldn’t be the first public pension to dump hedge funds.
The California Public Employees' Retirement System two years ago decided to divest $4 billion from hedge funds, citing their high fees.

“We concluded that we would eliminate the hedge fund program in order to reduce the complexity, reduce the costs in the program, particularly in relation to our view that given the scale of Calpers, we would not be able to scale a hedge fund program to a size that would really move the needle,” Ted Eliopoulous, interim chief investment officer at the time, said in an interview.

The pension fund paid $135 million in fees in the fiscal year that ended June 30, 2014, for hedge fund investments that earned 7.1 percent, contributing 0.4 percent to its total return, according to Calpers figures.