“Heads or tails, Wall Street wins,” City Comptroller Scott Stringer said. Photograph by FRED R. CONRAD/The New York Times/Redux

Most any fee, even a fraction of one per cent, will come to look big if it’s multiplied by tens of billions of dollars. So when New York City Comptroller Scott Stringer wanted to make a point recently about the fees the city’s public-sector pension system had paid to asset managers between 2004 and 2014, he didn’t have to work very hard to find an outrageous number. Over the past ten years, New York City public employees have paid out two billion dollars in fees to managers of their “public market investments”—that is, their securities, mainly stocks and bonds. Gawker captured the implication as well as any media outlet with its headline: “Oh My God Wall Street Is Robbing Us Blind And We Are Letting Them.”

Stringer’s office was barely more restrained, sending out a press release that called the fees “shocking.” The comptroller also issued an analysis that spelled out the impact of fees on the investment returns of the five pension funds at issue: those of New York’s police and fire departments, city employees, teachers, and the Board of Education. Though the comptroller didn’t specify which firms had managed the funds, they were likely a familiar collection of financial-industry villains. “Heads or tails, Wall Street wins,” Stringer said.

The rhetoric tended to brush past the fact that the pension funds didn’t actually lose money. In the analysis, their performance was being measured relative to their benchmarks, essentially asking, for every different class of asset, whether the funds performed better or worse than a corresponding index fund would have. For reasons unclear, the city’s pension funds have been recording their performance without subtracting the fees paid to managers, but the math shows that New York City’s fund managers outperformed their benchmarks by $2.063 billion across the ten-year period under review, and charged $2.023 billion in management fees.

Compared with the average public pension fund’s experience on Wall Street, this is actually, frighteningly, pretty decent. All too often, when researchers investigate pension-fund performance, they find that management fees have eaten up more than any outperformance the managers have generated. A study published in 2013 by the Maryland Public Policy Institute concluded that the forty-six state funds it had surveyed could save a collective six billion dollars in fees each year by simply indexing their portfolios.

I covered the institutional-fund-management industry as an analyst for ten years, and was never given specific information on the pricing of individual deals, but I would estimate, based on the growth of the funds from 2004 to 2014, the variance in the market (especially the crash of 2008), and the total fees, that New York City paid, on average, about 0.2 per cent, or what a fund manager would call “twenty basis points.” You would expect the trustees of such a large portfolio to strike deals on fees, and indeed twenty basis points is much lower than the average paid to managers of most actively managed mutual funds (between seventy-four and eighty basis points, according to the Investment Companies Institute). It is still far more, though, than the five basis points charged by the Vanguard index tracker fund to large institutional investors.

For extremely large pools, fees for equity funds tend to be between twenty and twenty-five basis points, and those for fixed-income funds potentially reach into the high single digits. New York’s pension portfolio is large and mature, so it ought to have a relatively high fixed-income weighting, which means that the city was probably paying too much. The fact that the funds were reporting their returns with the fees included shouldn’t fill the city’s public pension holders with confidence that the tendering and monitoring process was very sharp, either—$2.063 billion, gross of fees, is an inflated way of presenting the actual gains of forty million dollars, net of fees.

The bigger question is whether New York, and other places dealing with large public pension funds, ought to be paying these kinds of fees at all. The safest alternative, per the Maryland study, would be to index the pension funds at, say, five basis points. Following the presentation used by Stringer, this would mean, with close to certainty, that over a ten-year period New York City’s pension funds would pay five hundred million dollars to Wall Street and get no outperformance—a net cost of five hundred million dollars. A second possibility would be to keep the same fund managers and try to bargain down the fees, say to fifteen basis points. From 2004 to 2014, that would have meant one and a half billion dollars of fees paid for two billion dollars of outperformance, a net benefit of five hundred million dollars. But there would be no guarantee of outperformance in the future, and a considerable risk of underperformance.

There is a third possibility, one that Stringer’s office, in its disdain for Wall Street, might well be considering. To provide a little perspective, if the city’s pension pool were a sovereign wealth fund, its current value—a hundred and sixty billion dollars—would make it the twelfth biggest in the world, just below Singapore’s Temasek and quite a ways above Australia’s Future Fund. When you’re that big, it’s fair to ask why you’re paying external managers at all. (It’s sure not like New York City lacks fund managers to hire.) The Ontario Teachers’ Pension Plan, which is roughly the same size, carries out nearly all of its fund management in-house, and historically it has seen very good results.

Some—notably, Michael Bloomberg, in 2011—have proposed that the city move to a system along these lines. In 2013, Stringer himself identified a “yearning” among union trustees for this. Could it be that by directing public anger toward Wall Street, the comptroller is trying to move the debate in this direction?

There is a catch, though: however the funds are structured, outperformance won’t come cheap. The O.T.P.P. pays high salaries to attract its in-house managers. Its expenses were four hundred and eight million Canadian dollars in 2014 alone, well above the two hundred million dollars the New York funds averaged over ten years. That figure includes investments in private-equity operations such as 24 Hour Fitness and Helly Hansen, but this level of expense isn’t uncommon. Looking at a few sovereign-wealth funds, I didn’t find a single one of comparable size to New York City’s pensions that had paid as little as twenty basis points, whether their management was outsourced or not.

Which is to say that, while bashing Wall Street might help a shift toward another model, the city could end up paying just as much, or more, to generate the returns it wants. And if history teaches us anything, it’s that Americans tend to get upset when public employees are paid millions of dollars—unless, of course, they’re college-football coaches.