Episode summary
How New Jersey's $84B Pension Fund Positions for What's Next
Summary
Shoaib Khan says New Jersey’s $84 billion pension fund is balancing risk and return with a long horizon, but in a world shaped by volatility, geopolitics, and a strong run in U.S. equities, the team is thinking carefully about when market conditions could shift. He says the fund’s approach is to stay flexible across public and private markets, keep liquidity available, and be ready to reduce downside if geopolitical events force a reaction.
He says geopolitics is the hardest variable to forecast because investors have no control over it, so the portfolio has to be built to absorb shocks and capture opportunities when they appear. He also says the denominator effect was effectively a non-event for New Jersey because the fund was underweight private assets and overweight cash when markets moved in 2021 and 2022.
Khan says the fund keeps a 35% target to private markets, but is shifting exposures within that bucket as supply chains, nearshoring, and new industries such as AI, EVs, and robotics reshape the opportunity set. He says private credit remains attractive but requires selectivity as retail capital flows in and may change liquidity dynamics. He also says the Emerging Managers Platform has expanded into private equity, real estate, private credit, and a transition sleeve, and has already committed hundreds of millions of dollars.
Key takeaways
- Khan says geopolitics is the most difficult variable to forecast, so New Jersey builds portfolios to be reactive and liquid rather than predictive.
- He says the denominator effect was a non-event for New Jersey because the fund was underweight private assets and overweight cash in 2021 and 2022.
- The fund’s private markets target remains 35%, but Khan says allocations are being shifted within privates toward newer areas like AI, EVs, robotics, and nearshoring-linked themes.
- Khan says private credit still offers opportunity, but rising retail capital could increase volatility and make underlying liquidity more important to monitor.
- He says the Emerging Managers Platform has already committed hundreds of millions of dollars and has revealed strong talent in smaller and transition-stage firms.
Notable quotes
“geopolitics is probably when we look at number of of factors number of variables and then and you know but geopolitics in my mind in my opinion is probably the most difficult to forecast”
“for the New Jersey pension fund, uh that's been a non-event simply because in 2021, 2022, we weren't allocating to new private market investments”
“We are seeing changes in the supply chain. We are seeing countries that were you know uh such a huge part of a particular you know along the supply chain that's all shifting now”
“there is a lot of retail capital that has come in and that will come in and that's going to create a certain level of volatility in these asset classes”
“the quality and the caliber of talent that we have seen there is just been incredible and and and and the level of exposures the diversification”
How the episode opens
Job, heading into alts, New York, what's most top of mind for you as you think about portfolio construction in the second half of the year?
Yeah, look, I mean, there are a lot of things that are keeping us busy these days as you know. Uh, so there are a number of things that are on the forefront. I mean, first and foremost, and and by the way, they're all equally important, I would say, but certainly risk and return in in today's environment, but more importantly going forward and and and and looking forward several years, uh, that's important.
And as you know, we're long-term investors and we have long-term, you know, relatively long-term time horizons and we are invested across asset classes. So to for us, you know, we are constantly looking at the environment. We're looking at investor sentiment.
We're looking at the various market forces that are out there in the market uh you know, volatility or lack of volatility at at different points in time. So those are always you know at the top of the mind irrespective of any environment and certainly more recently we've gone through an asset liability study an asset allocation study and so getting a sense of where the outlook is for each of these asset classes I think that's that's something that keeps us busy then of course uh public markets or or or I should say public equity markets have been on a tear for a while now and and certainly the US market has has really been active in spite of everything that's going on around us. Uh invest there seems to be investor conviction.
Of course, it's backed by fundamental factors as well, consumer confidence and and and and earnings expectations. But nonetheless, uh as we as as we look forward to the next few years as as I think about, you know, the topics that we're going to talk about at the at the event at the Alts New York event, you know, uh public equity markets is certainly one of them.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- portfolio construction
- private markets allocation
- private credit and retail capital
- geopolitical risk
- denominator effect
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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