TRENTON, N.J. — The $79 billion New Jersey Division of Investment, Trenton, took a giant step toward diversifying its portfolio and adding outside investment managers by hiring Strategic Investment Solutions.
The consultant hiring is seen as the beginning of a long process to improve the division's performance.
San Francisco-based SIS, which is about to sign a three-year, $1.8 million contract with the state, has its work cut out for it, from navigating potentially choppy political waters to understanding the division's history and its appetite for risk.
"In that situation, a big problem can be politics — how much control they (politicians) want and what they're going to let you do," said an investment consultant who asked not to be named. "That can be a stumbling block. But outside of that, I would try to get an understanding of their mindset — how they work, how they structure things. In this case it's a really big issue since (asset management) is in-house."
In a news release, New Jersey Treasurer John McCormac said the SIS would recommend appropriate asset allocations and ways of reaching those allocations, as well as helping develop investment policies.
"New Jersey's consultant services to date have been limited to monitoring and benchmarking performance," Mr. McCormac said in the statement. "While these functions are important, they fall short of what pension funds of New Jersey's size around the country do to keep in tune with the trends and changing paradigms in the financial markets."