New Jersey Division of Investment, Trenton, announced Thursday it has negotiated cuts in fees and expenses with several alternative investments managers.
The result will be cumulative savings of at least $40 million over the next five years, according to a news release from the state Treasury Department. The division of investment, which is part of the Treasury Department, manages investments for the seven pension funds that comprise the $70.84 billion New Jersey Pension Fund, Trenton.
The pension fund paid $127 million in advisory fees for alternative investments last year, William Quinn, a Treasury Department spokesman, said in an e-mailed response to questions.
The release didn’t identify the number, or names, of investment managers agreeing to the fee cuts. “We aren’t going to talk about how many advisers agreed to reductions,” Mr. Quinn wrote. “We have less than 20 alternative investment advisers in all.”
The division started negotiating with managers of alternative investments at the beginning of the current fiscal year, which started July 1, 2010.
The fee cuts coincide with proposed changes in regulations that would raise the pension fund’s maximum allowable allocation to alternative investments to 38% from 28%. The division plans to present the results of an asset allocation study at the March 24 meeting of the State Investment Council, which oversees the division’s activities, according to the news release.
“As fiduciaries, we have an obligation to the beneficiaries of the pension fund to maximize net returns, after fees, while of course managing risk appropriately,” Robert Grady, chairman of the State Investment Council, said in the release. ”Negotiating reductions in investment fees and expenses is an appropriate action for New Jersey to undertake.”