By Anupreeta Das
NEW YORK (Reuters) - A proposed California law banning pension funds from investing in buyout shops that have sold stakes to sovereign wealth funds could set a precedent that narrows investment options and returns for the funds, the head of Massachusetts' state pension fund said on Monday.
Speaking at the Reuters Hedge Funds and Private Equity Summit in New York, Michael Travaglini, the executive director of Massachusetts' Pension Reserves Investment Management Board (PRIM) said he was concerned about the growing trend of legislation that places economic limitations based on political causes.
"If over the next five years, you pass 15 different divestment bills, that impact on the fund in our investible universe is significantly larger," Travaglini said.
The number of bills are going to go up, and our returns are going to go down, he added.
Several U.S. states, including Massachusetts, have passed divestment laws and pulled money out of stocks to protest killings in Sudan's Darfur region. The U.S. government has accused Sudan of genocide, but Sudan has denied the charge.
The Massachusetts fund is one of the largest and most successful in the country, managing about $50.3 billion in assets.
Travaglini said his fund sold about $450 million worth of securities as a result of the Sudan divestment law.
"Selling $450 million of $50 billion won't create a noticeable effect," he said. Continued...
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