Filed Under:Annuities, Variable

New Jersey backs off emerging markets as pensioners cut ETFs

New Jersey's $76.8 billion pension fund has cut its holding of developing-nation ETFs to less than $1.8 billion.
New Jersey's $76.8 billion pension fund has cut its holding of developing-nation ETFs to less than $1.8 billion.

(Bloomberg) -- No other U.S. pension, endowment or foundation manager has invested as heavily in emerging-market ETFs as the New Jersey Pension Fund, a $3.2 billion gamble at its height. Now the state’s reversing course.

The $76.8 billion fund, the 12th largest public pension manager in the U.S., has cut its holding of developing-nation exchange-traded funds to less than $1.8 billion, according to filings through March 31 compiled by Bloomberg. The fund’s managers had boosted the position from just $115 million in 2009 to over $3 billion by the end of 2012.

Gains for the pension fund of 14.6 percent last year were limited by losses of 2.94 percent on emerging-market equity investments, according to the New Jersey State Investment Council’s 2013 annual report. That compares with a 4.98 percent decline in the MSCI developing-nation gauge and a 29.6 percent advance in the Standard & Poor’s 500 Index, the benchmark for U.S. stocks.

In March, developing-market equities traded at their lowest level on a price basis against the MSCI World Index of developed-nation stocks in more than five years. The ratio between the two indexes has since rebounded as emerging-market stocks rallied in the past three months, led by gains in Brazil and India ahead of national elections.

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