Calpers to Open Fund to China
online.wsj.com
By WAILIN WONG
December 20, 2006
California Public Employees' Retirement System will allow its emerging markets managers to invest in companies from China and other developing countries on a case-by-case basis, the U.S.'s largest pension fund said.
Calpers's amended policy goes into effect Jan. 1. The fund, which has $4.8 billion invested in emerging markets, currently bars equity investments in countries that fail to meet standards on political stability, transparency, market liquidity, investor protection and other criteria. The prohibited countries are China, Colombia, Egypt, Morocco, Pakistan, Russia and Venezuela.
Under the amended policy, external managers can make a case for individual companies and explain how they meet Calpers's permissible market guidelines and the United Nations Principles for Responsible Investment. The external managers are AllianceBernstein, Dimensional Fund Advisors and Genesis Investment Management.
"By allowing investment in selected public companies that meet our standards, we could encourage others to also qualify by raising their standards to meet our investment criteria," Calpers Board President Rob Feckner said.
The fund added that the change in policy "might account for a shift of only a few percentage points from the portfolios they currently oversee for Calpers."
Emerging-market equities have delivered stellar returns in recent years amid low global interest rates, high liquidity and lofty commodities prices. The Morgan Stanley Capital International Emerging Markets index is up 27% for the year. The MSCI China index has been a strong performer with year-to-date gains of 64%, while the MSCI Russia is 51% higher.
"This approach will minimize our investment risks but keep our options open to global economic growth and opportunities in emerging markets like China," Calpers Investment Committee Chairman Charles Valdes said. "Some of these markets offer promising investment opportunities." |
