NJBestNew Jersey Better Educational Savings Trust
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Of the $47 million invested in NJBEST overall, only 39.8% was invested in stocks.
As described by the portfolio manager, NJBEST stock holdings should be viewed as a core U.S.
While the portfolio manager suggested that NJBEST might purchase corporate bonds in 2002, the December 2001 year-end portfolio contained only U.S.
Although investment performance is not guaranteed by the state, NJBEST provides a moral, but not legally binding obligation clause that it will return at minimum the amounts contributed to the fund.
The following section evaluates the performance of NJBEST.
Exhibit 2 assesses the overall performance of the NJBEST equity and fixed income portfolios.
In its approximately three years of existence, the NJBEST equity portfolio has gained 6.89% while the S&P 500 index and Russell 3000 index lost 11.64% and 7.26%, respectively.
On the surface, other common indices appear to have outperformed NJBEST. For example, the Lehman Brothers U.S.
This surrogate group of funds had approximately 98% of its assets invested in bonds (100% for NJBEST), an average effective maturity of 6.3 years (6.01 years for NJBEST), an average effective duration of 4.5 years (4.20 years for NJBEST), and an average weighted coupon of 6.23% (5.35% for NJBEST).
Despite the impressive performance of the overall NJBEST portfolio, individual investors should look more carefully at individual trust performance, displayed in Exhibit 3.
Only the NJBEST columns and other bolded data represent actual returns.
Despite its conservative investing style and greater discretion, each NJBEST trust outperformed the comparable equivalent individual trusts, often managed by well-known managers with lesser asset allocation discretion but more diversified investments in foreign stocks and corporate bonds, as follows: A by 1.70%, B by 4.60%, C by 7.67%, D by 11.81%, and E by 9.57%.