New Jersey’s public employee pension fund continued to recover from heavy losses in 2022, gaining more than $5 billion in market capitalization in the fiscal year that ended June 30, bringing the total to about $91.4 billion.
That represented an investment return of 9.1%, which exceeded the fund’s benchmark and expected long-term return, according to a report from the New Jersey Treasury Department’s Investment Office.
That’s still about $7 billion below the high point in 2021, when the fund reached nearly $100 billion in post-pandemic gains, but New Jersey continues to guide the fund through historic swings in capital markets. It’s been a strong year for investment managers. World wide.
“Capital markets are very volatile and remain fluid,” Investment Director Shoaib Khan told the State Investment Council in a virtual meeting on Wednesday.
New Jersey’s pension fund, which supports the retirement of more than 815,000 active and retired state and local government employees, has long been ranked as one of the most underfunded in the nation. .
Democratic Gov. Phil Murphy’s administration, with the help of state lawmakers, has made significant progress in restoring the program to full funding.
The past two state budgets have included full payments to pension funds of about $7 billion each year, the first time in a quarter of a century that this has happened. And the state’s current $54.3 billion spending plan, signed by Murphy in late June, includes another $7.1 billion in full payments.
This has helped New Jersey achieve a series of credit rating upgrades over the past year, putting the state on a solid path toward fully funding its pension system. However, investment managers continue to face economic headwinds that threaten to dampen recent market value gains, including the threat of a prolonged recession.
“If you peel back the onion a little bit, there are a lot of concerns,” Khan said, adding that among other factors casting a shadow on global financial markets, the rapidly evolving geopolitical situation and the He mentioned the Preparatory Board’s measures against inflation.
Thanks to a tactical decision made in early 2022, when Russian President Vladimir Putin invaded Ukraine and annual U.S. inflation began to climb towards 40%, the investment manager was able to move the fund into a short-term market. put us in a strong position to weather market turmoil. Best of the year.
As financial storm clouds gathered in January and February last year, fund managers became more defensive and increased their cash reserves, Khan said.
As of June 30, the end of the fiscal year, the fund’s cash holdings were nearly 5 percent higher than normal, allowing the fund to avoid actual losses and take advantage of new investment opportunities as they arise. We have the flexibility to do so.
“The overweight in cash is simply a response to the environment we’re in, it’s tactical,” Khan said.
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derek hall may reach dhall@njadvancemedia.com. Follow him on Twitter @Derekun Hall.
