NJ Pension Urged to Boost Alt Investments

(September 16, 2010) — New Jersey’s pension fund should put more money into alternative investments, such as private equity and real estate, to increase returns and guard against stock losses, consultants told the State Investment Council, according to Bloomberg.

While the current maximum percentage allowed for alternatives now is 19.3%, the San Francisco-based Strategic Investment Solutions Inc. told council members that the $68.3 billion fund should direct up to 43% of its assets in alternatives, heightened activity within the alternative space. “Over the past several years, alternative investments have significantly outperformed public markets on a risk-adjusted basis, and we believe they will continue to do so over the long term,” Pete Keliuotis, Strategic’s managing director, wrote in a memorandum to the council, according to the news service.

The state Treasury’s Investment Division manages money for New Jersey’s seven pension plans, which provide benefits to about 800,000 working and retired teachers, police officers and government employees.

Separately regarding New Jersey’s pension, the fund is preparing to elect a former Carlyle partner to chair the panel that makes investment decisions. Robert Grady, the former nine-year partner at The Carlyle Group, is scheduled to be named chairman of the state’s pension. Grady will replace Orin Kramer, who was appointed by former Democratic Governor James McGreevey. Under Kramer’s leadership, the pension moved $9.4 billion into hedge funds and other alternative investment strategies from equities, according to the fund’s latest monthly report.