The California Public Employees’ Retirement System(CalPERS)has approved US$500 million for investments directly linked to prices of energy, metals, and agricultural products, and in companies that produce and distribute such natural resource commodities.
“Our goal is to further diversify our assets and take advantage of long-term market opportunities for positive returns in the resources sector,” says Rob Feckner, CalPERS board president. “Commodities can play an important role in helping us lock in potential gains and reduce risks across the CalPERS portfolio.”
The pension fund currently invests 8.4% of its assets in the natural resources sector, focusing mostly in energy and raw materials production and distribution. It also has other investments in utilities, transportation, and chemicals that are affected by developments in the natural resources arena.
CalPERS will decide as early as next summer whether to create a new natural resources/commodities asset class within the $220 billion pension fund—besides the current classes of public equity, private equity, fixed income, and real estate.
Pension funds have become attracted to commodities as the price of oil hit an all-time high earlier this year and gold reached its highest in 26 years. To comment on this story email craig.sebastiano@rci.rogers.com.