Enron Alternatives Boost Bottom Line

April 15, 2002 (PLANSPONSOR.com) - While investments in Enron stock have recently cost many an institutional investor millions, investment in the firm's partnerships have fared better.

In fact, over the years, the California Public Employees’ Retirement Fund (CalPERS) has actually profited by its investments in the once giant energy trader.

While CalPERS has lost an estimated $45 million on its investment in publicly traded Enron stock, it actually made $125 million in its first partnership with the energy trading company, which ended in December 1997. It expects to break even on its second partnership, which is in the process of liquidating following Enron’s bankruptcy filing if not exit with a small profit.

The $146.6 billion fund had approximately $7.5 billion, or 5.1% of its total assets, in alternative investments at the end of October, and had authorized an additional $662.5 million in new partnership commitments during the second quarter of last year.

These investments, which returned -13% over the 12 months before Enron imploded in October last year, actually outperformed the fund’s domestic and international equity allocations, which were down 24.9% and 24.3%, respectively, over the period.

And since March 1990, CalPERS’ alternative investments have retuned 16.8% compared to a 14.8% return on the 10-year, public-market Wilshire 2500 Index.