Bloomberg News

N.J. Pension Fund Assets Drop 9.9% in First 3 Months of Year

October 13, 2011

(Updates with alternative returns in sixth paragraph.)

Oct. 13 (Bloomberg) -- New Jersey’s pension-fund assets dropped 9.9 percent to $66.4 billion in the first three months of this fiscal year as global stocks declined, according to a report presented to the State Investment Council.

Assets as of the June 30 end of last fiscal year were $73.7 billion, after an 18 percent gain during the 12-month period. Since July 1, the fund for government workers has withdrawn $1.8 billion for benefit payments, according to a summary from the state Division of Investment.

The funds returned less than 1 percent in July before declining 2.9 percent in August and an estimated 4.2 percent in September, according to the report. International equity investments lost 22.8 percent during the three months while domestic stocks declined 15.9 percent. Fixed income returned about 9 percent.

The Standard & Poor’s 500 Index dropped 14.3 percent in the July-September quarter.

The Division of Investment manages funds for seven public retirement systems that provide benefits for more than 780,000 current and future retirees.

Alternatives Strategy

Hedge-fund investments dropped 3 percent for the quarter and commodities, with an estimated $100 million invested in gold and gold mining, were down 5 percent.

The pension pool intends to invest as much as $1.29 billion in alternative investments, which include hedge funds and real estate, to diversify beyond stocks and bonds, according to memos from Timothy Walsh, director of the investment division. As of June 30, about $13.2 billion, or 17.9 percent, of the fund’s portfolio was in alternatives.

The largest of the new investments is $200 million in Elliott Associates LP, a New York-based hedge fund founded by Paul Singer that focuses on distressed credit. Walsh also plans to invest as much as $200 million in Brevan Howard LP, a London- based hedge fund that manages an estimated $34 billion, including $26.1 billion in its flagship Brevan Howard Master Fund Ltd.

The pension system also will put $110 million in London- based AnaCap Credit Opportunities II LP, which buys credit-card debt, residential and commercial mortgages and liens with a focus on the U.K., Ireland, Portugal and Spain.

--Editors: Stacie Servetah, Ted Bunker

To contact the reporter on this story: Elise Young in Trenton, New Jersey at eyoung30@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net


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