New Jersey’s $79.7 billion pension fund for state and local government employees reported a 16.35% return on investments net of fees for calendar year 2019, a sharp turnaround from last year’s loss of nearly 2%. That matched its benchmark index’s performance for the year.
Over the three-, five-, 10, and 20-year periods ending Dec. 31, 2019, the pension fund had annualized returns of 9.46%, 7.15%, 8.33%, and 5.37%, respectively. This compares with its benchmark’s returns of 9.72%, 7.29%, 7.99%, and 5.24%, respectively, during the same time periods. The fund earned 8.38% over the 25-year period; however, there was no comparable data for the benchmark’s return.
US equities led the portfolio as the top performing asset class during the year, returning nearly 31%. Non-US developed equities returned 23.3%, and emerging market equities returned a shade under 19%.
“Global stocks led the way in a very strong return environment,” Corey Amon, director of the New Jersey Division of Investment, told the State Investment Council on Wednesday, according to NJ.com. “With nearly half the portfolio in global stocks, that was the key driver of calendar year returns in excess of 16% for the pension fund.”
The fund’s real estate investments also performed well, returning 13.3%, which was almost three times the corresponding benchmark’s return of 4.64%.
Target asset allocation of the fund is 59% in global growth, 18% in income, 13% defensive, and 10% real return. The asset allocation for each at the end of the year was within a percentage point of their respective target allocation, except for income, which accounted for 16.89% of the fund.
The fund’s top US equity holdings has a tech-heavy slant, led by Apple and Microsoft, which accounted for 4.17% and 3.59% of the portfolio, respectively. Alphabet, Amazon, and Facebook followed with 2.54%, 2.44%, and 1.55%, respectively. Rounding out its top-10 holdings are JPMorgan Chase, Johnson & Johnson, Procter and Gamble, and Bank of America.
According its most recent annual report at the end of June 2018, the pension had a funded ratio of only 38.4%.