N.J. Public Worker Pension Fund’s Investment Returns Surged In 2nd Half Of 2020

New Jersey’s pension fund grew by $6.6 billion in the first half of the fiscal year, closing out 2020 with $83.3 billion in assets, Division of Investment Director Corey Amon announced Wednesday.

From July 1 to Dec. 31, the pension fund returned 14.8%, ahead of its benchmark and double its long-term assumed rate of return. For calendar year 2020, the pension fund delivered a 10.75% return, according to a Division of Investment report.

The pension fund benefited from strong public market returns in the new fiscal year, Amon said, noting the preliminary investment returns of 14.8% do not reflect up-to-date private-market valuations. It’s likely, however, once updated those valuations will push the fund’s returns higher.

“It’s been a really remarkable roller coaster ride over the past year and we’re certainly grateful for the types of returns the cap markets have provided and helped strengthen the financial position of the pension fund along the way,” Amon told the State Investment Council during a virtual meeting Wednesday.

The good news carried into 2021, with the fiscal year returns up about 17% as of Monday, Amon said.

New Jersey’s pension fund, among the worst-funded in the U.S., supports the retirement of about 800,000 active and retired state and local government workers.

Between July 1, 2019 and June 30 — which Amon described as a “challenging global economic and investment environment” — the fund generated a 1.2% return, far short of its long-range target. Pension fund assets were valued at $76.7 billion at the end of the fiscal year.

“The pension fund was not immune to the adverse impact that the COVID-19 pandemic had on the global economy and on investment returns,” Amon said. “Fiscal year returns were impacted by certain private market investments, which are inherently longer-term strategies. Investments in real estate and certain private credit strategies, for example, were meaningful detractors to overall returns.”

Nevertheless, private market investments historically have been one of the pension fund’s best-performing portfolios, Amon said, “and looking forward, we believe the private markets will continue to realize the performance advantage versus public market securities.”

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