N.J. Admin. Code § 17:4A-1.2
The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:
"Absolute return strategy" means an investment strategy with the goal of achieving positive returns with less correlation than long-term-only strategies to traditional performance benchmarks.
"Bank loans" mean loans that are originated by commercial and/or investment banks or other lending syndicates. Bank loans are typically comprised of loans to corporations and tend to be the most senior debt in the corporate debt structure.
"Board" means the Board of Trustees of the Police and Firemen's Retirement System of New Jersey, established pursuant to N.J.S.A. 43:16A-13.a.
"Bridge financing" means interim financing used by entities until a long-term financing option can be arranged. Bridge financing typically comes in the form of a debt obligation or equity investment.
"Cash collateral" means cash and cash equivalents delivered by a borrower to secure its obligations under a securities lending agreement.
"Cash equivalents" mean United States treasury obligations, irrevocable bank letters of credit, or any other security that can be converted immediately to cash.
"Certificates of deposit" mean debt instruments issued by a bank or trust company, or by a wholly owned subsidiary or branch of a bank or trust company.
"Chief Investment Officer" means the employed full-time in-house investment advisor selected by the Board of Trustees of the Police and Firemen's Retirement System of New Jersey, pursuant to N.J.S.A. 43:16A-13.a(21).
"Closed-end global, regional, or country funds" mean funds that invest in underlying securities that concentrate on a specific industry, geographic market, or sector.
"Co-investment" means an investment by two parties (usually the limited partner and the general partner of a fund) alongside each other. If a limited partner in a fund has co-investment rights, it can invest directly in a company that is also an investment of the fund. The limited partner, therefore, ends up with two separate stakes in the company--one indirectly through the fund; one directly in the company. Co-investment may also include multiple like-minded institutional investors investing in a specific company or portfolio.
"Collateralized notes and mortgages" mean securities fully collateralized by mortgage-backed securities, credit card receivables, automobile loans, home equity loans, bank loans, or other forms of receivables originated in the United States, but does not include investments made pursuant to N.J.A.C. 17:4A-10, Private Credit Investments, 18, Real Assets, 24, Private Equity, or 26, Absolute Return Strategy Investments.
"Commercial paper" means secured or unsecured short-term debt issued by a company.
"Commingled funds" means all open-end and closed-end pooled investment vehicles. A commingled fund may be organized as a group trust, partnership, limited liability company, corporation, insurance company separate account, or other multiple ownership entity. An investment in a commingled fund may take the form of an investment in the fund or in the trustee, general partner, or other managing member of such fund.
"Commodity-linked investments" mean equity or debt investments from which all, or a portion, of the return is linked to the price of a particular commodity or equity security, or to an index of such prices. These include commodity-indexed deposits, loans, debt issues, and derivative products, such as forwards, futures, options, and swaps. In these transactions, the interest, principal, or both, or payment streams in the case of swaps, are linked to the price of a commodity.
"Commodity-related investments" mean equity or debt investments in the exploration, production, processing, transportation, storage, or trading of commodities, or other similar activities.
"Common pension fund" means a common trust fund established by the Director of the Division of Investment pursuant to N.J.S.A. 52:18A-90.1.
"Common stock" means shares of stock, other than preferred stock, representing ownership in a corporation or other form of legal entity.
"Control" means the power to exercise a controlling influence over the management or policies of an investment management firm or political action committee.
"Convertible debt issue" means a debt obligation of any corporation or other form of legal entity that is convertible into the common stock of the entity.
"Convertible preferred stock" means preferred stock of any corporation or other form of legal entity that is convertible into the common stock of the entity.
"Core real estate" means investments in existing, stabilized (meaning at least 80 percent occupied), well-leased assets.
"Covered call options" mean call options, including index-based call options, sold on common stocks held in the pertinent portfolio, except that index-based call options may be sold and subsequently repurchased if substantially all of the underlying securities contained in the index correspond to securities eligible for investment by, and are actually held in, the pertinent portfolio.
"Credit default swap transactions" mean agreements between two parties, whereby one party makes periodic payments to the other party and receives the promise of a payoff if a third-party defaults. The former party receives credit protection and is said to be the "buyer" while the other party provides credit protection and is said to be the "seller." The risk of default is transferred from the buyer of the swap to the seller of the swap.
"Credit structured products" mean investments whose cash flow characteristics depend upon a pool of collateral, one or more securities, indices, or similar strategies designed to replicate the return of a basket of securities, or that have embedded forwards or options or securities where the investment return is contingent on, or sensitive to, changes in the value of underlying assets, indices, interest rates, or cash flows.
"Currency swap transactions" mean agreements between two parties that involve the exchange of principal and interest in one currency for the same in another currency.
"Debtor-in-possession financings" mean financing arranged by an entity while in a bankruptcy reorganization process.
"Direct investment" means the purchase of an interest in a company or venture directly, rather than through an investment vehicle.
"Director" means the Director of the Division of Investment.
"Division of Investment" means the Division of Investment, Department of the Treasury of the State of New Jersey.
"Equity investments" mean common stock, convertible and non-convertible preferred stock, rights, convertible debt issues, or any other security representing an ownership interest in a corporation, bank, master limited partnership, limited liability company, limited liability partnership, or other form of legal entity. Equity investments may also include investments in exchange-traded funds and closed-end global, regional, or country funds. Equity investments do not include investments made pursuant to N.J.A.C. 17:4A-10, Private Credit Investments, 18, Real Assets, 24, Private Equity, or 26, Absolute Return Strategy Investments.
"Equity swap transactions" mean agreements between two parties to exchange cash flows while still holding the original assets. The two sets of nominally equal cash flows are exchanged pursuant to the terms of the swap and may involve an equity-based cash flow that is traded for a fixed-income cash flow.
"Exchange-traded funds" mean funds that invest in underlying securities that track a predetermined index or strategy, a commodity, or a basket of assets, and whose shares can be traded like shares of common stock.
"Foreign currency transactions" mean agreements between two parties to exchange two currencies at a specific time in the future. Foreign currency transactions include both spot and forward contracts.
"Forward contracts" mean agreements to sell or buy a specified amount of a specified foreign currency at a rate fixed at the time of the transaction, but with delivery at a specified future time. These contracts take place on a date after the date that a spot contract settles. Forward exchange contracts may involve the purchase or sale of foreign currency.
"Funds-of-funds" mean funds set up to distribute investments among a selection of fund managers, who in turn, invest the capital directly.
"Futures contract" means an agreement between a buyer and a seller that is based on a referenced item, such as financial indices or interest rates, or a financial instrument, such as equity or fixed income securities, physical commodities, or currencies. Futures contracts may call for physical delivery of a specified quantity of the underlying asset at a specified price (futures or strike price) and date, or be settled in cash. Prices are determined by competitive bids on the applicable exchange. The terms of the contract are standardized and the applicable exchange is the counterparty to each cleared transaction.
"Global collateralized notes" mean securities collateralized by loans, receivables, claims, or any other assets.
"Global debt obligations" mean debt issued by any corporation, bank, trust, master limited partnership, limited liability company, or other form of legal entity, but does not include investments made pursuant to N.J.A.C. 17:4A-10, Private Credit Investments, 18, Real Assets, 24, Private Equity, or 26, Absolute Return Strategy Investments.
"Government agency obligations" mean debt obligations of any United States governmental agency that are not explicitly guaranteed by the full faith and credit of the United States government.
"Hedging" means combining a long position in an asset denominated in a currency other than United States dollars with a short position in the international currency in which the asset is denominated in order to offset fluctuations in the value of the underlying asset attributable to international currency fluctuations.
"High yield debt" means a debt obligation with a lower credit rating than investment-grade debt.
"Interest rate swap transactions" mean agreements between two parties where one stream of future interest payments is exchanged for another according to a prearranged formula. Interest rate swap transactions often exchange a fixed payment for a floating payment that is linked to an interest rate.
"International government and agency obligations" mean direct debt obligations of a sovereign government or its political subdivisions, debt obligations of agencies of a sovereign government that are unconditionally guaranteed as to principal and interest by the sovereign government's full faith and credit, and debt obligations of international agencies or financial institutions that are backed, but not necessarily guaranteed, by the collective credit of multiple sovereign governments, but does not include investments made pursuant to N.J.A.C. 17:4A-10, Private Credit Investments, 18, Real Assets, 24, Private Equity, or 26, Absolute Return Strategy Investments.
"Investment committee" means the investment committee established by the Board pursuant to N.J.S.A. 43:16A-13(e).
"Investment management firm" means one or more natural persons, corporations, partnerships, or other entities, incorporated or unincorporated, that provide investment management services.
"Investment management professional" means:
"Investment management services" mean:
"Investment vehicle" means an investment in which the PFRSNJ invests directly pursuant to N.J.A.C. 17:4A-10, Private Credit Investments, 18, Real Assets, 24, Private Equity, or 26, Absolute Return Strategy Investments.
"Joint venture" means a contractual agreement joining two or more parties for the purpose of executing a particular undertaking. All parties agree to share in the profits and losses of the enterprise.
"Mezzanine debt" means subordinated debt that may include embedded equity instruments.
"Money market funds" mean mutual funds that invest in short-term debt instruments and seek to maintain a stable share price of one dollar.
"Mortgage-backed pass-through securities" mean pass-through securities that are fully collateralized by residential or commercial mortgage securities and are issued by a sponsor deemed by the Board to be based in the United States, but does not include investments made pursuant to N.J.A.C. 17:4A-10, Private Credit Investments, 18, Real Assets, 24, Private Equity, or 26, Absolute Return Strategy Investments. In determining whether a sponsor is based in the United States, the factors to be considered include, but are not limited to, the sponsor's country of incorporation, its main equity trading market, its shareholder base, the geographical distribution of its operations, the location of its headquarters, and the country in which investors consider the sponsor to be most appropriately classified.
"Mortgage-backed securities" mean asset-backed securities that represent a right to receive a portion of the cash flows from mortgage loans. Residential mortgage-backed securities are typically secured by single-family or two-to-four-family real estate. Commercial mortgage-backed securities are typically secured by commercial and multi-family properties, such as apartment buildings, hotels, schools, retail, or office properties, industrial properties, and other commercial sites.
"Mortgage-backed senior debt securities" mean senior debt securities that are fully collateralized by mortgage securities, but does not include investments made pursuant to N.J.A.C. 17:4A-10, Private Credit Investments, 18, Real Assets, 24, Private Equity, or 26, Absolute Return Strategy Investments.
"Non-convertible preferred stock" means shares of stock that provide a dividend that is paid before any dividends are paid to holders of common stock and confer additional rights above and beyond those conferred by common stock; the shares are not convertible into common stock of the issuing entity. Non-convertible preferred stocks do not include investments made pursuant to N.J.A.C. 17:4A-10, Private Credit Investments, 18, Real Assets, 24, Private Equity, or 26, Absolute Return Strategy Investments.
"Non-core real estate" means investments in value-added or opportunistic strategies, including direct property investment with lease-up, development, or redevelopment risk. Non-core real estate includes recapitalizations across capital structures and property types and access to niche markets.
"Operational cash" means funds that have not been allocated for investment by the Board, but have instead been reserved for payment of benefits and administrative expenses.
"Opportunistic credit" means primary and secondary opportunities in performing, stressed, and distressed public and private securities. This includes senior loans, high yield debt, debtor-in-possession financings, and bridge financings, as well as post-reorganization equity.
"Opportunistic investments" mean investments that have one or more readily identifiable attributes that are sufficiently different from those of other asset classes permitted pursuant to this chapter, so as to be outside the scope of such asset classes.
"Payment" means any gift, subscription, loan, advance, or deposit of money or anything of value.
"PFRSNJ" means the Police and Firemen's Retirement System of New Jersey established pursuant to N.J.S.A. 43:16A-2.
"PFRSNJ-managed fund assets" mean PFRSNJ assets under the control and management of the Board, excluding the PFRSNJ proportionate interest in the common pension funds.
"PFRSNJ proportionate" means the percentage calculated by dividing the PFRSNJ's then-outstanding units of participation in a common pension fund by the total number of then-outstanding units of participation in the same common pension fund.
"Political contribution" means any gift, subscription, loan, advance, or deposit of money or anything of value made:
"Political party" means any political party or political committee organized in the State, including, without limitation, State legislative leadership committees, county committees, and independent committees. The term "political party" does not include a Federal or national campaign committee or a non-State political committee, even if such Federal or national or non-State political committee makes payments or contributions to which this subchapter would otherwise apply.
"Post-reorganization equity" means equity issued by an entity as part of a bankruptcy, reorganization, or other similar restructuring.
"Preferred stock" means shares of stock that provide a dividend that is paid before any dividends are paid to holders of common stock and additional rights above and beyond those conferred by common stock.
"Private credit investments" mean investments in opportunistic credit, global collateralized notes, bank loans, mezzanine debt, credit structured products, commercial and residential mortgage-backed securities, commercial and residential whole loans, and other similar strategies, including through equity participation.
"Private equity" means investments generally made through limited partnerships or other limited liability vehicles that, in turn, generally invest in the equity or debt of companies or entire business units or investment in the debt of equity of a trustee, general partner, or managing member of a fund, but does not include public securities or investments made pursuant to N.J.A.C. 17:4A-10, Private Credit Investments, 18, Real Assets, or 26, Absolute Return Strategy Investments.
"Private placement" means a negotiated sale in which the securities are sold directly to institutional or private investors, rather than through a public offering registered with the U.S. Securities and Exchange Commission or applicable foreign regulatory body. A private placement includes the sale of securities pursuant to Section 4(2), Regulation D, Regulation S, or Rule 144A pursuant to the Securities Act of 1933, as amended. Private placement does not include investments made pursuant to N.J.A.C. 17:4A-10, Private Credit Investments, 18, Real Assets, 24, Private Equity, or 26, Absolute Return Strategy Investments.
"Public authority" means any state or any political subdivision thereof, any authority, department, district, or commission, or any agency or instrumentality of any of the foregoing, or any agency or instrumentality of the Federal government, or a commission or other public body created by an Act of Congress or pursuant to a compact between any two or more states.
"Public authority revenue obligations" mean any bonds or other interest-bearing obligations of a public authority, the principal and interest of which are by their terms payable from a specified revenue source, but does not include investments made pursuant to N.J.A.C. 17:4A-10, Private Credit Investments, 18, Real Assets, 24, Private Equity, or 26, Absolute Return Strategy Investments.
"Put options" mean put options, including index-based put options, purchased or written for securities, assets, or foreign currencies permissible for investment.
"Put spreads" mean the purchase of put options on particular underlying securities, assets, or foreign currencies permissible for investment, with the simultaneous writing of put options on the same underlying securities, assets, or currencies, at a lower strike price.
"Real assets" mean equity or debt investments in real estate, infrastructure, energy, utilities, water, timber, agriculture, metals, mining and royalty trusts, and commodity-related and commodity-linked investments. Real assets include investments in products, services, and technology related to the above categories.
"Real estate" includes core real estate and non-core real estate.
"Repurchase agreements" mean agreements between parties whereby one party sells another a security at a specified price with a commitment to repurchase the security at a later date at a specified price.
"Royalty trusts" mean investments that generate an income stream for investors; these primarily include natural resource assets and pharmaceuticals and medical devices.
"Securities lending agent" means a third-party engaged to effect securities lending transactions on behalf of the PFRSNJ.
"Securities lending agreement" means a legal contract between a borrower and the PFRSNJ (or a securities lending agent on behalf of the PFRSNJ) that governs the contractual obligations of the parties.
"Securities lending transactions" mean arrangements whereby securities are loaned to a borrower in exchange for cash collateral. Ownership of the securities is transferred temporarily to the borrower.
"Senior loan" means a debt financing obligation that holds legal claims above other junior debt obligations. Senior loans may include embedded equity instruments.
"Separate account" means an investment vehicle with a sole investor that is unaffiliated with the investment vehicle's sponsor or manager. An investment in a separate account may take the form of an investment in the investment vehicle or in the trustee, general partner, or other managing member of such investment vehicle.
"Spot contracts" mean agreements to sell or buy a specified amount of a specified foreign currency at a rate fixed at the time of the transaction but with settlement (payment and delivery) on the spot date. The settlement cycle of spot contracts is generally related to the settlement cycle of the related security transaction.
"State and municipal general obligations" mean debt obligations of any state or any municipal or political subdivision thereof that are backed by the full faith and credit of the obligor, but does not include investments made pursuant to N.J.A.C. 17:4A-10, Private Credit Investments, 18, Real Assets, 24, Private Equity, or 26, Absolute Return Strategy Investments.
"State of New Jersey Cash Management Fund" means the common trust fund established pursuant to, and subject to, the provisions at N.J.A.C. 17:16.
"State official" means any person (including any election or political action committee for such person) who was, at the time of the political contribution, an incumbent, candidate, or successful candidate for Governor or for a seat in the Legislature. Communication with a State official includes communication with the employees and advisors of such official.
"Supervisor" means a person who has supervisory responsibility (whether or not related to investment management activities) for an investment management professional.
"Swap transactions" mean agreements between two parties to exchange securities or cash flows in the future, according to a prearranged formula. Swap transactions may include equity swap transactions, currency swap transactions, interest rate swap transactions, and credit default swap transactions.
"Third-party solicitor" means a third-party placement agent or lobbyist who solicits investment management business through direct or indirect communication with a State officer, employee, or official on behalf of an investment management firm, but does not include any person whose sole basis of compensation from the investment management firm is the actual provision of legal, accounting, engineering, real estate, or other professional advice, services, or assistance. The term "third-party solicitor," when used with respect to a particular investment management firm, shall not include a person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the investment management firm; a third-party placement agent or lobbyist who solicits clients other than the PFRSNJ to engage that investment management firm to provide investment management services; or a third-party placement agent or lobbyist who solicits the PFRSNJ on behalf of another investment management firm.
"Total PFRSNJ fund assets" mean PFRSNJ-managed fund assets together with the PFRSNJ proportionate interest in the common pension funds.
"Transient cash" means funds created by transactional activity in a portfolio and that is expected to be reinvested shortly after receipt.
"Treasurer" means the Treasurer of the State of New Jersey
"United States Treasury obligations" mean debt obligations of the United States Treasury or debt obligations of any other United States governmental agency that are explicitly guaranteed by the full faith and credit of the United States government.
N.J. Admin. Code § 17:4A-1.2