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Ashby Monk, Ph.D., executive director of the Global Projects Center at Stanford University and a senior research associate at the University of Oxford, has been blogging about sovereign and pension funds since 2008. 

Follow him on Twitter at @sovereignfund.

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‘Alternatives’ Soon To Become ‘Conventionals’

As I so often do, I was reading the annual report of a large public pension fund early this morning (which, if anything, shows you that it ain’t all glitz and glamour down on the Avenue of Giants). Anyway, I was specifically reading the newly released 2012 annual report for the $70 billion New Jersey State Investment Council. It’s an interesting and short report, which I recommend you read. 

In particular, I was intrigued to see the chart below, which documents the increasing importance of alternative assets for this fund... and the rapid nature of this rise to prominence. The portfolio was only launched in 2006 and it looks to make up almost 20% of the fund's AUM today. And, moreover, if you were to continue plotting this chart out until 2018 or so, I’d wager that 'alternatives' would be the single biggest asset class that this pension fund holds. 

In other words, it won't be long until 'alternatives' turns into the most conventional of all the asset classes. Noodle on that one for a bit...