The California State Teachers’ Retirement System (CalSTRS) opposes proposed state bill legislation that would restrict it from new or renewing investments with private equity firms wholly or partially owned by a sovereign wealth fund (SWF) affiliated with a country with a poor record on human rights.
California Assembly Bill 1967 targets private equity investments, which was the best performing asset class in the pension fund’s portfolio last year, producing a 33% return.
CalSTRS estimates the bill could lead to a potential loss of investment revenue of between US$1.5 billion to $5.3 billion over five years.
“We can’t eliminate the portfolio’s best performers by banishing the top-tier private equity firms,” says Jack Ehnes, the fund’s CEO. “This bill ignores the realities of the global financial marketplace where sovereign wealth funds are passive investors in a growing number of the most attractive investment opportunities in the world.”
Earlier this week, the president and CEO of the CPPIB testified before the U.S. Congress to explain that the board is not an SWF. To read U.S. Congress Examines CPPIB Model, click here.
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