The New Jersey Division of Investment, Trenton, which manages investments for the $72.5 billion New Jersey Pension Fund, plans to transfer $1 billion from emerging markets exchange-traded funds to actively managed portfolios, confirmed William Quinn, a Treasury Department spokesman.
The division invests approximately $3 billion of emerging markets assets in ETFs and $2 billion in actively managed portfolios. The overall emerging markets portfolio is internally managed, although division staffers receive outside advice for the actively managed assets.
“The division believes it is appropriate to increase exposure to actively managed portfolios in the emerging markets asset class,” said a report this month from Division Director Timothy Walsh to the State Investment Council, which formulates investment policies for the division.
“Emerging markets equity is an inefficient asset class where active management can add alpha over the benchmarks,” according to the report. “The division’s actively managed portfolios, where we receive advice from advisers, have historically outperformed the benchmark.”
Mr. Quinn, in an e-mail, said the division will “move money out of emerging markets ETFs we currently hold, such as Vanguard and BlackRock, and into the actively managed fund advised by Lazard and Morgan Stanley.”
Mr. Quinn didn’t provide a timetable for the asset transfer.
The division’s March 21 report said up to $500 million will be transferred to the Lazard-advised portfolio and up to $700 million will be transferred to the Morgan Stanley-advised portfolio, but the aggregate amount won’t exceed $1 billion.