CalPERS Selects Environmental Equity Managers - Firms Will Manage Up To $500 Million

The California Public Employees' Retirement System (CalPERS) selected six U.S. and international managers to invest up to $500 million in environmental public equity funds.

Approval of the pool was the latest step in an ongoing effort to utilize managers who have a superior track record of investing assets using environmental strategies.

The managers that will receive CalPERS funds, subject to successful negotiation of fees and terms, are:

• AXA Rosenberg, of Orinda, California, which manages a domestic product including under-valued companies selected from an environmentally-friendly universe;
• Brandywine Asset Management, an independently operated subsidiary of Legg Mason of Wilmington, Delaware, which applies environmental research to invest in international stocks selling below normal valuation levels;
• New Amsterdam Partners of New York City, which examines environmental, social and sustainability factors to invest in domestic growing companies that are reasonably priced;
• Piper Jaffray, a public traded Minneapolis, Minnesota, company that combines environmental research and analysis by the KLD firm, and environmental screening by INTECH for its domestic product; and
• State Street Global Advisors (SSGA) of Boston, Massachusetts, which manages domestic and international products also being considered for the CalPERS pool. Innovest Strategic Value Advisors, an SSGA affiliate, rates each company investment prospect based on “eco-efficiency” ratings.

"These investment managers have proven their ability to deliver potential enhanced investment returns, and the research shows that environmentally screened funds can outperform their counterparts," said Rob Feckner, CalPERS Board President. "Our decision to select them for this new 'spring-fed' pool also sends a strong signal to corporations that we're serious about their environmental strategies."

In March 2005, CalPERS invested $75 million in the iShares KLD Select Social Index Fund managed by Barclay's Global Investors as part of the environmental investment program. The Fund seeks to maximize exposure to large capitalization companies that have positive social and environmental characteristics while maintaining risk and return characteristics.

"The firms that we selected for the equity investment pool today will use a variety of approaches to advance responsible environmental practices," said Charles P, Valdes, Chair of CalPERS Investment Committee.

Staff will determine whether to extend the contracts through annual reviews, and fund the managers mainly by tapping passively managed public equity assets or cash inflows.

CalPERS is the nation's largest public pension fund with assets totaling more than $196 billion. The System provides retirement and health benefits to more than 1.4 million State and local public employees, retirees, and their families.