CalPERS Still Shuns Thailand, Malaysia
California Public Employees’ Retirement System, the largest U.S. pension fund, rejected a recommendation Tuesday from one of its investment advisors to return to investing in Thai and Malaysian stocks.
CalPERS also rejected advice from Santa Monica-based Wilshire Associates Inc. to start buying stocks in India, Morocco, Sri Lanka and Colombia. Wilshire’s recommendations were based on transparency or openness, political stability, labor standards, market regulations and other criteria.
The advice comes a year after CalPERS exited Thailand and Malaysia, missing out on markets that rose in 2002 as other markets around the world slumped. Thailand’s main SET index has risen 0.7% since that decision was made, contrasted with a 25% drop in the Standard & Poor’s 500 index. CalPERS board members said it was too soon to reverse their decision of a year ago.
CalPERS began considering civil liberties, press freedoms and political risk in making investment decisions after board members said investing in more stable countries with liberal practices would yield better long-term returns.
CalPERS will keep investments in Argentina, Czech Republic, Hungary, Israel, Mexico, Peru, Poland, South Africa, South Korea, Taiwan and Turkey, as advised by Wilshire.
The pension fund’s officials also disagreed with a recommendation to place the Philippines on a list of countries in which the pension fund should not invest. That list currently includes China, Indonesia, Russia, Pakistan, Venezuela and Egypt.
Philippine Finance Secretary Jose Camacho appeared before the CalPERS board and persuaded the fund to take another look at the country. Camacho told the board that they should take into consideration political, economic, judicial and financial market reforms undertaken in the country in the last year.
“This has the highest stakes for us,” Camacho said. “The signal it sends to other investors has tremendous impact for our country.”
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Fund Industry Seeks Review on Disclosure
The U.S. mutual fund industry will ask the government to review last month’s Securities and Exchange Commission ruling that requires firms to disclose their votes in corporate proxy contests.
The Investment Company Institute, the trade group that represents companies such as Fidelity Investments and Vanguard Group, said Tuesday that it will ask both the SEC and the Office of Management and Budget to review the paperwork requirements for the regulation, scheduled to take effect April 14.
The group wants the OMB, which oversees the Federal Paperwork Reduction Act of 1995, to ask the SEC to reconsider the proxy voting rule because it would cost the fund industry about $41 million a year and create too much paperwork to implement, said John Collins, an ICI spokesman.
The proxy voting rule was part of a package of shareholder protections proposed by Congress and the SEC to restore investor confidence after accounting scandals at companies such as Enron Corp.
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Fidelity May Not
Give Raises in 2003
Fidelity Investments, the largest U.S. mutual fund company, may not give raises this year because it is worried U.S. stock markets could decline for the fourth consecutive year.
FMR Corp., the Boston-based parent of more than 150 funds -- including Fidelity Magellan -- said Tuesday that it may forgo the performance-based salary increase unless stock prices and the economy turn around.
Fidelity is trimming costs after assets under management fell 12% in 2002 and its domestic stock funds had net redemptions for the first time in four years.
Money managers have been firing workers and reducing the number of funds as share prices have fallen for the last three years, the longest losing streak since the Great Depression.
