Business Week reports:
In March 2000, California state Treasurer Philip Angelides announced a bold new initiative. Angelides felt the Golden State could do good for both the citizens of the world and its retirees by taking state pension fund money out of two asset classes that were performing horribly at the time, tobacco stocks and emerging markets, and reinvesting in something with a social benefit — businesses and real estate in low-income neighborhoods in his home state. Angelides called the initiative the "Double Bottom Line," because it would produce both a social return and strong investment results.
Eight years later, Angelides is gone, but the state's two big pension funds are still wrestling with the fallout of the initiative. A recent report from the California State Teachers' Retirement System (CalSTRS), revealed that the $170 billion fund, the nation's third-largest, would have been $1 billion richer if it had stayed in tobacco stocks. Meanwhile, investments in California real estate are proving particularly painful for the nation's largest fund, the $230 billion California Public Employees' Retirement System (CalPERS). Among other bad deals, it faces a loss of nearly $1 billion on one land investment alone.
It's hard to beat the S&P 500 when you are a huge fund,but it becomes much easier to under perform the index when you put irrational investing norms into action.Do you think Mr. Angelides performed his fiduciary responsibility as a trustee? Here's more on Angelides from
Forbes in May of 2004:
Calpers' 13-member board is a mix of politicians, political appointees and union reps. State Treasurer Philip Angelides, a contender for the governorship, has long received campaign funds from supermarket billionaire Ronald Burkle, his wife or his companies. Director Willie Brown, former San Francisco mayor, did legal work for a Burkle company, Yucaipa, some years ago. Brown and Angelides, in turn, voted for investing $200 million of Calpers money in a Burkle fund. Angelides said he bases his votes on the "best interest of taxpayers and pensioners." A Yucaipa spokesman said the political contributions had no bearing on the investment. Brown declined comment.
In February 2002 Calpers agreed to invest up to $560 million in Burkle's Yucaipa to provide financial services to other pension funds and unions. The Calpers board approved the idea three weeks before Burkle reportedly hosted an Angelides fundraiser.
In 2002 Angelides and then-director Kathleen Connell, state controller at the time, received campaign funds from Richard Wollack, a real estate investor. Calpers committed $100 million for a venture with Wollack's Premier Pacific Vineyard the same year. Calpers says it tried to ban campaign donations to its directors a few years ago but lost in court--in a case filed by then-state Controller Connell. An attempt to contact Connell was unsuccessful.
