The New Jersey State Investment Council voted Wednesday to make several adjustments in asset allocations for the $88.7 billion New Jersey Pension Fund, Trenton.
The changes affect four of 12 asset categories. Council members:
- Raised the domestic equity allocation to 28% vs. the current target of 27% of total assets.
- Increased the non-U.S. developed market equity allocation to 14% vs. the current target of 13.5%.
- Raised the high-yield fixed income allocation to 4.5% vs. the current target of 4%.
- Cut the cash equivalent allocation to 2% vs. the current target of 4%.
The actual allocation to cash equivalents as of May 31 was 9.23%, a reflection of the defensive strategy by the division of investment, which handles investments for the pension fund and is a unit of the state Department of the Treasury.
The council voted on an allocation study by RVK, which the division of investment had commissioned.
The RVK study was based in part on the firm's January 2023 analysis of actuarial data for the seven pension funds within the New Jersey Pension Fund.
The study said the market value funded ratio was 56% as of the fiscal year ended June 30, 2021, the latest available data. RVK projected a funded ratio of 50% for the fiscal year that ended June 30, 2022.
"Projected market value funded ratio remains below 60% through 2029 and (will) rise above 70% in 2037," the RVK study said.
Separately, the division of investment reported that the New Jersey Pension Fund's net return for the11 months ended May 31 was an estimated 5.36% vs. a benchmark of 5.39%. Data for June, the final month of the previous fiscal year, was not available.
The estimated annualized net return for the three years ended May 31 was 8.63% vs. a benchmark of 8.59%, and the estimated annualized net return for the five years ended May 31 was 6.27% vs. a benchmark of 7.29%.