In the past four years, the NJ DoI has achieved annual returns of 9% or more, significantly improving the funding ratio and prospects of the state’s pensions, despite the spin-off of part of its investment portfolio. We were delighted to speak with its Director and Chief Investment Officer Mr. Shoaib Khan about the pension fund’s growth, the current strategy to put that capital to work, and the outlook.
[GSWF] The net assets of the NJ Pension Fund have stayed flat in the past 25 years at about US$ 80 billion. What is the Division of Investment’s mandate?
[NJDoI] The New Jersey Division of Investment manages US$ 86 billion (May 31, 2026) on behalf of 800,000+ members. In April 2024, the Division of Investment transferred US$ 20.8 billion of assets to be managed separately by the Police and Firemen’s Retirement System of New Jersey. The Division’s objective is to generate a return that meets at least the assumed 7% rate of return, allowing to cover potentially worse years.
[GSWF] The exposure to private markets has tripled from 8% in 2008 to 24% today. How will it look like in another 5 years?
[NJDoI] The current asset allocation plan in place since July 1, 2026, stipulates a target of 34.5% for private markets, including a reduction to private equity from 13% to 11% and an increase to real assets from 3% to 4%. I don’t expect drastic changes in the next five years, as the State Investment Council was ahead of the curve in raising the target allocation of private markets years ago.
[GSWF] Private Credit has grown significantly since 2023. What do you think of the withdrawal limits in the asset class?
[NJDoI] We have added to our private credit exposure over the last few years, and we continue to look for opportunities in the space. We are building a well-diversified private credit book up of 9% of the portfolio that can add additional value to the overall portfolio. In terms of withdrawal limits, we will need to fully understand the mechanics, frequency, and provisions offered to retail investors and will avoid offerings in which provisions offered to retail investors do not align well with the interests of institutional investors.
[GSWF] In June 2025, your holdings in Mag7 stocks represented a third of your domestic equities – is this proportion ideal?
[NJDoI] The NJ pension fund invests in domestic stocks utilizing a passive approach, so it’s not surprising that the U.S. public equity book would show a skew towards higher concentration. The IPOs of SpaceX, Anthropic, and OpenAI may exacerbate this trend.
[GSWF] What is the Division’s approach when it comes to ESG, and how has this evolved since 2018?
[NJDoI] The Division has a dedicated ESG team, a multi-pronged approach, and an ESG committee that meets periodically, and we continue to advance our investment stewardship priorities. The team focuses on including financial materiality and improvements in corporate disclosure and accountability and undertakes ESG due diligences of all prospective private market investments.
[GSWF] How is AI changing the institution and portfolio? Has the Council integrated AI in its internal processes?
[NJDoI] The pension fund portfolio has increasing exposure to AI in both public and private markets, and we continue to watch this closely and are developing tools to monitor the exposure. The Division recognizes the potential of AI and is currently working towards a technology platform that can effectively utilize AI to create greater efficiency. While we are currently not utilizing AI in a significant manner for investment research and portfolio construction and management, we anticipate this will change over time.
[GSWF] You have been with NJDoI for 5+ years – how do you compare it with your previous role at SBA Florida, and what are your goals for the next five years?
[NJDoI] Both organizations are among the largest U.S. public pension funds with well-diversified portfolios, great investment talent and well-grounded investment processes. While my role at Florida SBA was different, I believe my tenure there prepared me well for my position at NJDoI.
My targets include (i) improving the technological capabilities of the organization, (ii) looking for the very best investment partners, (iii) building on the successful roll out of the emerging managers platform in the private markets space, and (iv) translating the changes in portfolio construction into an investment performance that meets our goals, which I am highly confident we can do.
