Earlier this week, the nation’s largest public pension system announced the adoption of a new permissible country review process that takes into account broad financial factors as well as transparency, political stability and labor practices/standards.
That new policy called for a gradual liquidation of equity investments in:
- the Philippines
All four of the newly excluded markets have outperformed broader world markets this year, with Indonesia, Malaysia and the Philippines posting increases ranging from 25% to 29%, according to the Financial Times.
Private equity makes up 5% of the $150 billion total portfolio, with another 4% invested in international bonds, CalPERS spokesman Brad Pacheco told Reuters.
CalPERS is not planning a similar ‘human rights’ review of its private equity investments — because these are in funds that commonly follow international human rights, labor and environmental standards, according to the report.
Word of CalPERS decision rippled through Southeast Asian markets on Thursday, as investors fretted about the impact of the withdrawal – and the potential for other US pension funds to undertake similar moves with their portfolios.