The New Jersey State Investment Council has approved up to $400 million in private equity and real estate commitments as the approximately $87 billion pension system adjusts allocation targets while remaining underweight private markets.
The approvals include up to $250 million for American Industrial Partners Capital Fund IX and $150 million for TPG Real Estate Partners V.
American Industrial Partners targets North American industrial businesses across subsectors including capital equipment, metals and mining, and transportation and logistics. The fund expects equity investments of $400 million to $700 million in companies with a median enterprise value of $1.2 billion.
TPG’s flagship real estate strategy targets investments supported by long-term trends, sectors less correlated with economic cycles and distressed opportunities. Officials expect a portfolio of 30 to 35 investments, with equity commitments ranging from $200 million to $600 million.
The commitments coincide with changes to New Jersey’s portfolio targets. Private equity’s allocation target will decline to 11% from 13%, while real estate’s target will fall to 7% from 8% next year.
The risk mitigation strategies target will increase to 3.5% from 3%. Private credit represented 6.7% of assets, below its 8% target. Overall, private markets were approximately seven percentage points below the pension fund’s long-term target.
The system returned more than 7% through Sept. 30. Its private equity portfolio returned 8.7% for the fiscal year ended June 30, while staff committed $2.3 billion across eight funds or fund families during fiscal 2026.
Within the approximately $5 billion real estate portfolio, noncore strategies accounted for 71% of the allocation. Staff have adopted a more proactive investment approach.
The $2.5 billion risk mitigation portfolio benefited from discretionary and systematic macro strategies, while tail hedging lost money. Staff expect greater volatility and market dispersion to create opportunities for managers to outperform through active positioning across asset classes.
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