N.J. to slash pension investments in hedge funds that were criticized by unions
Samantha Marcus, NJ Advance Media for NJ.com
TRENTON — The State Investment Council on Wednesday agreed to slash New Jersey’s investments of public-sector pension dollars in hedge funds by more than half, responding to labor union concerns that the alternative investments aren’t paying off.
At the council’s last meeting in May, union representatives called for drastic reduction in the pension system’s hedge fund stake, from 12.5 percent to 4 percent, but the move failed on a tie vote. Council members appointed by Gov. Chris Christie warned such a change would be imprudent without fully vetting its impact on the total investment strategy.
The compromise plan will see the investments cut back to 6 percent, and reduce the investment in alternatives from about one-third to a quarter.
“This is a good first step to significantly reduce hedge fund exposure,” Adam Liebtag, vice chairman of the council and a representative of the AFL-CIO, said in a statement. “The new plan will reduce fees by $120 million and help put the pension plan on stronger footing.”
Liebtag wanted to shift that money to standard investments such as cash, stocks and bonds.