US - The California State Teachers' Retirement System (CalSTRS) could consider a move back into tobacco industry investments after it emerged the fund had lost out on nearly US$1bn in revenues from the move out of the space.
At a recent board meeting of the CalSTRS investment committee, Jerilyn Harris, retiree representative, said the failure to invest in tobacco-related investments had resulted in $837m of unrealised funds.
According to public representative Roger Kozberg, the move out of the tobacco industry was carried out "at the wrong time".
The $142bn fund divested from the tobacco industry due to the potential legal risk of such investments.
CalSTRS CIO Christopher Ailman however, pointed out that recent legal decisions favouring the tobacco industry had led to several changes in the possible risk such investments could pose. In spite of this, the CalSTRS staff still held the belief the industry would still expose the fund to significant risk.
This idea was disputed by Ian Lanoff, fiduciary consultant from Groom Law Group. "It is time to reevaluate the findings of the industry risk survey," he said.
Lanoff noted that, given the strength of the the market in the tobacco industry, the threat of industry-wide bankruptcy filings was not significant.
The committee concluded that bringing the tobacco industry back into the CalSTRS investment policy would need to be discussed vis-a-vis the timing and the cost.
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