A TRS news release said it made the divestments to comply with an Illinois state law (See Illinois Measure Bars Sudan Investments ) and that the fund’s board had requested a cost analysis of the move – a report that was delivered on Friday.
According to the news release, TRS has divested $2.4 billion from commingled index funds since the law took effect January 27, 2006. The fund still needs to divest securities representing approximately $900 million.
“While we still fully support the intent of the law, we’re concerned about the unintended cost to the System and to its participants,” said Stan Rupnik, Chief Investment Officer at TRS, in the news release.
All costs exclude opportunity costs and/or tracking error to TRS’s intended benchmark. In fact, the System has recently been excluded from TPG Partners V, L.P., one of TRS’s more successful private equity buyout relationships, due to the requirements of the Sudan divestment law.
Similar measures have been passed in the states of Maine (See Measure Requiring Sudan Divestment Passed in ME ) and New Jersey (See New Jersey Assembly Bans State Investment in Sudan ).