WON’T SAY HOW, EH? CA state retirement fund lost 71% of $468M put in clean energy, won’t say how.
CETF losses show “the combined dangers of private equity and ESG investment — you have a very opaque investment choice that appears to have been chosen because of its green credentials, and yet it’s now generated a huge loss for taxpayers and retirees,” said Joffe with regards to CETF’s losses and focus on “clean” energy and technology. “CalPERs would be better off focusing on a diverse portfolio of publicly-traded equities to get better long-term returns.”
In response to an inquiry by The Center Square, CalPERS defended its private equity strategy and shifted blame for CETF’s performance on prior management.
“The CalPERS Clean Energy & Technology Fund dates back to 2007, before the pension fund’s board and staff worked together to tightly focus our private equity strategy,” wrote CalPERS spokesperson Abram Arredondo to The Center Square. “Since then, we have diversified our investments to reduce risk, selected the highest performing asset managers and lowered fees by entering into co-investments.
“Since that time [2022], we have reduced fees by 10 percent,” continued Arredondo. “The private equity class has been our best performer for the past 20 years and we believe our members deserve access to its income-producing opportunities.”
To make up for the pension’s funding gap, CalPERS has multiplied its investments in private equity, which, at least on paper, have outperformed its other assets.
However, financial experts warn these reported gains are based on “guesstimates.”