The New Jersey Division of Investments plans to move as much as $500 million into its high-yield portfolio in 2014.
The division manages seven Garden State pension funds totaling $74.3 billion in assets. The move expanding high-yield holdings is scheduled to occur in the division’s second-highest revenue plan, with holdings currently at $3.5 billion. A $100 million investment in high-yields already occurred in May.
“We try to take advantage when things go down,” division director Tim Walsh told reporters. “If we get a little concerned, we’ll take money off the table.”
The New Jersey division is also considering an investment in floating-rate debt in an effort to take advantage of an expected rise in interest rates. Walsh said the state has tried floating-rate debt in the past on a very small scale.
New Jersey Gov. Chris Christie signed a pension reform bill in 2011 designed to make up for 15 years of the state underfunding its pensions and set a goal of full funding by 2018. However, the bill has put the state in a bind, requiring an additional $600 million in annual contributions from the state totaling $5.5 billion.
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