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RT: Sanctioned Russian Assets Lure Biggest US Pension Funds

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Tuesday, 23 October 2018 04:29 PM

America's biggest pension funds reportedly haven’t backed away from investing in Russia despite increasing political tensions.

The California Public Employees’ Retirement System, or Calpers, managing retirement savings of nearly two million Americans, has $1.1 billion dollars invested in Russian assets, including state-issued bonds and shares of companies hit by U.S. sanctions, RT.com reported, citing Russian business daily RBK.

“Apart from Russia’s state debt, the fund that controls pensions of California’s firefighters and police officers, reportedly holds $872 million in share depositary receipts of Russian firms – $658 billion of which are from companies subject to U.S. sanctions,” explained RT, a Russian international television network and website funded by the Russian government.

“Calpers has invested in Russian energy companies Rosneft, Gazprom, Novatek and Surgutneftegas. The Californian pension fund has added state-lender Sberbank shares, worth $238 million traded in the U.S., and VTB depositary receipts worth $12.5 million traded in Europe,” RT said.

Calpers is not the only institution investing in Russia. The second largest pension fund in the U.S., California State Teachers’ Retirement System, or Calstrs, held about $9.5 million in Russian bonds and nearly $164 million in Lukoil receipts as of the end of 2017, RT reported.

Meanwhile, Calpers also had about $460 million invested in Russian government bonds as of the end of June, up over 8 percent since last year, according to data provided to Bloomberg News.

Based on publicly disclosed figures, that makes the state of California Russia’s 10th-largest foreign creditor, behind other top U.S. investors including BlackRock Inc. and Stone Harbor Investment Partners.

In the sanctions standoff between Russia and the U.S., the vulnerability goes both ways after two years of inflows from carry traders briefly turned Russian debt into an investor darling. The holdings in America’s largest pension expose a dilemma for lawmakers who are considering targeting Russia’s sovereign debt as part of new penalties being discussed to punish Putin’s government for alleged election meddling.

“It matters that pension funds are involved in Russian debt because they’re likely arguing against sanctions against sovereign bonds” to the Treasury’s Office of Foreign Assets Control, said Koon Chow, a senior strategist in London at Union Bancaire Privee. “It may not have much impact though, given the bipartisan U.S. support for punishing Russia further.”

The Russia investment hasn’t been a topic of public discussions for the board of Calpers, which has been a leader among U.S. pensions pushing for socially responsible investing.

A newly elected Calpers board member, Jason Perez, has said it shouldn’t focus on divesting to meet ethical investing goals. Calpers has around $360 billion in assets, with about a fifth of the total invested in fixed income, according to a September presentation.

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America's biggest pension funds reportedly haven’t backed away from investing in Russia despite increasing political tensions.
sanctioned, russian, assets, pension, funds
Tuesday, 23 October 2018 04:29 PM
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