Key Takeaways
- • The New Jersey Pension Fund posted an unaudited net return of 14.82% for the fiscal year ended June 30, 2026, more than double its 7% assumed rate of return but still below its 15.06% benchmark, according to the Division of Investment report.
- • Private credit was the sole major private markets shortfall, returning 4.63% against an 8.64% benchmark, hurt by business development company redemptions and a software-sector drawdown.
- • Cash equivalents totaled $9 billion, or 10.3% of $87.3 billion in plan assets, far above a 2% allocation target, a key driver of the cautious-strategy return profile cited by CIO Shoaib Khan.
- • The fund made $855 million in binding commitments to five private equity funds and three real assets funds between July 24 and October 22.
- • Quarterly targets were revised for fiscal 2027, with cash raised to 2.5%, private credit raised to 9% from 8%, and private equity lowered to 11% from 13%.
Summary
The New Jersey Pension Fund, which manages $87.3 billion in total plan assets, reported an unaudited net return of 14.82% for the fiscal year ended June 30, according to pension officials who announced the results on Oct. 28. The return more than doubled the fund's 7% assumed rate of return but trailed its 15.06% benchmark. Over longer horizons, the three-year annualized net return of 12.16% fell slightly below its 12.53% benchmark, and the five-year annualized return of 7.22% lagged its 8.08% benchmark.
Shoaib Khan, the fund's CIO and director of the state treasury's Division of Investment, described the strategy as "relatively cautious," noting the fund allocates less exposure to risk capital than pension peers. Cash equivalents totaled $9 billion, or 10.3% of plan assets, against a 2% target. Khan said he was "cautiously optimistic" that some of this cash would eventually be deployed into private markets.
Most private markets categories beat their fiscal-year benchmarks, according to the Division of Investment report. Private equity returned 8.72% versus a 7.54% benchmark, aided by co-investments, diversified venture capital, early-stage venture capital and secondaries. Real estate, real assets and risk mitigation also exceeded their benchmarks. Private credit was the exception, returning 4.63% against 8.64%, with its three-year annualized return of 7.49% also trailing a 10.45% benchmark. The report cited idiosyncratic corporate defaults, heightened redemption requests at private BDCs, a sell-off in public BDCs and a software-sector drawdown. It nonetheless said the outlook for private credit remains favorable into 2027, citing strong equity markets, solid corporate fundamentals and the prospect of Federal Reserve rate increases.
Private markets allocations ended the year below target: private equity at 9.28% versus 13%, real estate at 5.84% versus 8%, and private credit at 6.77% versus 8%. The report described the fundraising environment as challenging. For the current fiscal year, the division is focusing on small to midsize buyouts, sector-specific investments and compelling secondary strategies. Since July 24, the fund has made $855 million in binding commitments to five private equity funds and three real assets funds.
In its unaudited report for the quarter ended Sept. 30, the first quarter of the current fiscal year, the fund showed cash equivalents had fallen to $7.82 billion, or 9% of $86.6 billion in total plan assets, and the cash target was raised to 2.5%. Private equity's target was cut to 11% from 13%, real estate's lowered to 7% from 8%, and private credit's raised to 9% from 8%. Real assets and risk-mitigation targets were raised to 4% and 3.5%, respectively.
Shoaib Khan, the fund's CIO and director of the state treasury's Division of Investment, described the strategy as "relatively cautious," noting the fund allocates less exposure to risk capital than pension peers. Cash equivalents totaled $9 billion, or 10.3% of plan assets, against a 2% target. Khan said he was "cautiously optimistic" that some of this cash would eventually be deployed into private markets.
Most private markets categories beat their fiscal-year benchmarks, according to the Division of Investment report. Private equity returned 8.72% versus a 7.54% benchmark, aided by co-investments, diversified venture capital, early-stage venture capital and secondaries. Real estate, real assets and risk mitigation also exceeded their benchmarks. Private credit was the exception, returning 4.63% against 8.64%, with its three-year annualized return of 7.49% also trailing a 10.45% benchmark. The report cited idiosyncratic corporate defaults, heightened redemption requests at private BDCs, a sell-off in public BDCs and a software-sector drawdown. It nonetheless said the outlook for private credit remains favorable into 2027, citing strong equity markets, solid corporate fundamentals and the prospect of Federal Reserve rate increases.
Private markets allocations ended the year below target: private equity at 9.28% versus 13%, real estate at 5.84% versus 8%, and private credit at 6.77% versus 8%. The report described the fundraising environment as challenging. For the current fiscal year, the division is focusing on small to midsize buyouts, sector-specific investments and compelling secondary strategies. Since July 24, the fund has made $855 million in binding commitments to five private equity funds and three real assets funds.
In its unaudited report for the quarter ended Sept. 30, the first quarter of the current fiscal year, the fund showed cash equivalents had fallen to $7.82 billion, or 9% of $86.6 billion in total plan assets, and the cash target was raised to 2.5%. Private equity's target was cut to 11% from 13%, real estate's lowered to 7% from 8%, and private credit's raised to 9% from 8%. Real assets and risk-mitigation targets were raised to 4% and 3.5%, respectively.
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