New Jersey, whose former $80 billion+ pension system has shrunk to $59 billion, was one of the last big pension plans to start buying hedge funds, over the initial objections of public employee unions, Republicans, and some veterans of the state investment staff.
The state has already traded out of some of those positions: "The New Jersey Division of Investment, Trenton, decided to redeem its $100 million investment in the GoldenTree Master Fund," Pensions & Investments reports, citing NJ Treasury spokesman Tom Vincz. NJ "invested in the GoldenTree hedge fund in January 2007. But the fund, which invests in below-investment-grade bank loans, high-yield bonds, middle-market loans, real estate and equities, had suffered 'significant losses' in 2008." Besides GoldenTree, NJ has also "redeemed" investments in Satellite Fund II and the Black River Multi-Strategy Leveraged Fund, P&I reported.
How has New Jersey done with the $9.3 billion it put into hedge funds, private equity and other "Alternative Investments" as the market peaked in the mid-2000s? Better than if it had kept them in stocks, investment chairman Orin Kramer told me.