State’s Hedge Fund Losses Stoke Debate

NEW JERSEY’S decision to invest billions of dollars of state pension savings into lightly regulated hedge funds is prompting renewed debate, as the state has begun recording hundreds of millions of dollars in losses from the hedge fund holdings.

With Wall Street sputtering over the last few months, the $4.2 billion the state poured into hedge funds since 2006 declined in value to $3.5 billion by the end of the year, according to a detailed analysis of 28 funds in the state’s portfolio.

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“It’s a billion-dollar experiment,” he said. “It cost the pension fund $1 billion to learn these lessons.”