The State Worker

How far should CalPERS go to make profitable investments?

Stephanie Hunt lights a Marlboro cigarette while posing for photos at a Smoker Friendly shop in Pittsburgh. Through outside investment managers, CalPERS has money in tobacco and other “sinvestments.”
Stephanie Hunt lights a Marlboro cigarette while posing for photos at a Smoker Friendly shop in Pittsburgh. Through outside investment managers, CalPERS has money in tobacco and other “sinvestments.” AP

Booze. Gambling. Smoking. Three words that describe Las Vegas – and some CalPERS’ investments.

Holdings in alcohol, casinos and tobacco accounted for $216 million of the fund’s $301 billion in assets at the end of fiscal 2014-15, according to its last investment report. Among its largest “sinvestments”: Anheuser Busch, British American Tobacco and Wynn Las Vegas.

(Despite selling off the tobacco stocks it controlled in-house 15 years ago, CalPERS decided to let its outside financial managers to continue investing in the industry.)

 
CalPERS' Sin Stocks
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Pension investments are back in the news with Monday’s announcement that CalPERS may invest more in tobacco. California congressmen Ted Lieu and Mark DeSaulnier, both Democrats, last week pressed the retirement system to sell off what they labeled its “morally suspect” holdings in ExxonMobil. Senate President Pro Tem Kevin de León, D-Los Angeles wants CalPERS and the California’s teachers retirement fund to sell their coal-mining interests.

Such pension-investment debates crop up and shift with political winds. After the Newtown school shootings, CalPERS and CalSTRS both came under pressure to drop their firearms investments. At other times, the funds have faced calls to cut financial ties to companies with interests in Iran, apartheid-era South Africa and elsewhere.

What boundaries should exist for pension-fund investments? Register your thoughts on this eternally-tense topic with our new poll.

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