Finance

CalPERS could put money back into tobacco stocks

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The California Public Employees' Retirement System could put money back into tobacco stocks after exiting the sector more than five years ago.

"CalPERS has been reviewing changes to its divestment policy as part of an ongoing investment office-wide project to revise all investment policies," spokesman Joe DeAnda said in an email to CNBC.


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The nation's largest public pension fund with $290 billion in assets, CalPERS divested its tobacco holdings in 2000. In September 2015, Wilshire Associates completed a divestment analysis for CalPERS and found the value of excluding tobacco holdings through Dec. 31, 2014, was as high as $3.04 billion. It projected the annual impact of continuing to exclude tobacco holdings was $112.6 million in 1 in 5 years and $172.1 million in 1 in 20 years.

"CalPERS regularly reviews its investment portfolio, and the proposed changes to the divestment policy would enable investment office staff and the board to better evaluate the impact of divested assets on the pension system," said the CalPERS spokesman. "The proposed changes speak generally to divestments and not to any particular divested category. No changes have been made to the existing divestment policy at this time and the board will continue this discussion during their April meetings."

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The California pension fund has been at the center of social activist investing for several years. In 2011, CalPERS agreed to sell holdings in companies doing business in Iran and Sudan. In 2013, it sold investments in two gun makers. And last year, the state passed a law ordering the fund to unload its holdings in coal-producing companies by June 2017

Meantime, the California State Teachers Retirement System largely eliminated its investments in the tobacco industry in 2000. However, some active managers in CalSTRS still held the stock until 2009, when the fund system completely and formally divested from tobacco holdings. Other state public pension funds also have divested tobacco holdings, including Vermont and Massachusetts, among others.