NJ Pension Fund Returns 9.06% in Fiscal 2018

Solid returns raise fund’s total market value to $78.2 billion.

New Jersey’s Pension Fund returned 9.06% net of fees for the fiscal year ended June 30, beating its benchmark of 8.65%, and helping boost its total value to $78.2 billion. The fund’s assumed rate of return is 7.5%. 

“This is certainly welcome news for both the state and local governments, and most importantly, public employees,” said New Jersey Treasurer Elizabeth Maher Muoio in a release. 

According to the New Jersey Division of Investment, the state’s pension fund had three-, five-, and 10-year annualized gains of 6.9%, 8.23%, and 6.75%, respectively, compared to its benchmark’s returns of 7.21%, 8.00%, and 6.36%, respectively, for the same time periods. The fund also has 20- and 25-year annualized returns of 6.17% and 7.99%, respectively, however, there was no comparable data for its benchmark.

The top-performing asset classes in the portfolio were private equity, US equities, real estate, real assets, and global diversified credit. Buyouts-venture capital returned 17.94% for the fiscal year, debt-related private equity earned 14.97%, while US equities returned 12.78%. Real return real assets and commodities increased 12.7%, and equity-related real estate gained 12.59%.

The fund’s investment portfolio has tech-heavy slant as its five largest US equity holdings are Amazon, Microsoft, Apple, Alphabet (Google), and Facebook. The fund’s target asset allocation is 56.25% in total global growth, 21.5% in total income, 8.75% in total real return, 8.5% in total liquidity, and 5% in total risk mitigation.

The state has a scheduled pension contribution of a record $3.2 billion for fiscal year 2019.

Despite the fund’s gains, New Jersey still has a funding ration of 31%, one of the worst in the country.

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