NJ Pension Fund Gains 6.3% In December; Down 17.5% For '08
16 January 2009 - 10:01AM
Dow Jones News
New Jersey's pension fund rose 6.31% during the month of
December, though the plan, like many across the U.S., ended the
year sharply down from 2007 levels.
The fund, with an estimated portfolio value of $63.9 billion,
rose $3.3 billion for the final month of the year, thanks to strong
results from its domestic bond, international stock and domestic
stock portfolios, the state's director of the division of
investment told the plan's investment council Thursday. For the
full year, New Jersey's pension fund is down an estimated 17.47%, a
level that still managed to beat its benchmark of negative
20.11%.
New Jersey had made large purchases in investment-grade
corporate bonds in October through December, and that portfolio
delivered a nearly 11% return for December, according to Director
William G Clark's report to the state's investment council. The
plan's international equity portfolio rose 8% and its domestic
equity portfolio rose 2%, outperforming their benchmarks for the
month.
Clark said in his report to the council that the fund was a net
buyer of $30 million in U.S. equities in December, primarily in
small and mid-cap exchange traded funds and convertible bonds and
preferred stock. Those purchases were partially offset by sales of
stocks in the financial and technology sectors, including sales of
Prudential Financial Inc. (PRU), Wells Fargo & Co. (WFC),
Merrill Lynch & Co. (MER), Bank of America Corp. (BAC), Intel
Corp. (INTC) and General Electric Co (GE). The fund shifted to
buying long-term corporate bonds in lieu of owning the underlying
stocks, with purchases that included Alcoa Inc. (AA), Cameron Corp.
(CAM) and Sprint Nextel Corp. (S).
It made net purchases of about $198.2 million in domestic fixed
income in December, including British Telecom, Cameron Corp.,
Northrop Grumman Corp. (NOC), Procter & Gamble Co. (PG),
Transocean Ltd. (TRIG) and Weatherford International Ltd. (WFT).
The purchases were partially offset by sales of Ginnie Mae-backed
mortgage securities.
The plan also funded $157.9 million in alternative investments
during December, according to Clark's report. The state is planning
to slow its new commitments to private equity, real estate and
hedge funds, and focus more on credit-related investments within
private equity and real estate. It's also shifting to purchasing
interests in existing alternative investment partnerships in the
secondary market, on the theory that institutional investors will
be forced to sell these portions of their portfolios to raise cash
and rebalance.
-By Lynn Cowan, Dow Jones Newswires; 301-270-0323;
lynn.cowan@dowjones.com
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