NJ Fund Seeks Expanded Range Of Investments

May 8, 2003 (PLANSPONSOR.com) - New Jersey's Division of Investments has proposed rules to allow the state's $56 billion pension to purchase an expanded array of financial instruments.

Among the investments the division is seeking permission for are asset-backed securities, exchange-traded funds and futures contracts based on stocks.   Even though the division routinely has proposed related rules, the number of changes being proposed at one time is unusually high, a spokesman for state Treasurer John McCormac told Dow Jones.

However, the acting director for the division said the proposals are more incremental than revolutionary.   He said new rules would give the division more flexibility to take advantage of opportunities when they arise.

Garden “State”

New Jersey’s pension fund, one of the few managed strictly by employees of the state, has seen its share of troubles. Over the last three years, the fund has experienced losses of $26 billion, which eventually led to the resignation of the chief investment officer (See  Jersey Pension Chief Quits, Gets New Assignment ) Also, the fund ranked as one of the five worst performers last year according to a Reuters survey (See Study: Public Pension Funds Shedding Underperforming Managers ).

However change may be in the air.   Last year, Governor Jim McGreevey appointed Orin Kramer to head the state’s policy-setting Investment Council (see New Garden State Pension Investment Chief Recommended ).   Kramer immediately said the fund should be better diversified, while questioning the fund’s dismal performance.   These comments have been interpreted as a sign he may eventually shift assets to external managers, even though no plans have been announced.