U.S. largest pension funds CalPERS and CalSTRS exposed to Russian assets

3 minute read
Register now for FREE unlimited access to Reuters.com

NEW YORK, Feb 25 (Reuters) - California Public Employees' Retirement System (CalPERS) and California State Teachers' Retirement System (CalSTRS), the two largest U.S. pensions funds, have exposure to Russian assets, which have come under pressure after Russia invaded Ukraine on Thursday, according to statements from the funds.

A spokesperson for CalPERS, which manages the largest U.S. public pension fund, said late on Thursday that the fund had around $900 million of exposure to Russia, but no Russian debt.

The spokesperson did not elaborate on the breakdown of the Russian assets and declined to comment on potential plans to trim those allocations.

Register now for FREE unlimited access to Reuters.com

CalSTRS, the second-largest U.S. pension fund, said it had investments in Russia and was monitoring potential risks to its portfolio. Its exposure to Russian assets was worth over $800 million in June last year, according to the latest available data and Reuters calculations.

CalPERS manages nearly $500 billion in assets, while CalSTRS has assets totalling around $320 billion.

"CalSTRS will follow any relevant financial sanctions levied by the United States Government," a spokesperson said in an emailed statement to Reuters.

International sanctions aimed at further limiting Russia's ability to access global financial markets after the country's attack on Ukraine have pressured already battered Russian assets. read more

Yields on Russian benchmark 10-year OFZ rouble bonds , which move inversely to prices, rose to 14.09% on Thursday, their highest since early 2015, though the bonds pared back some losses on Friday. The dollar-denominated RTS stock index (.IRTS) rose sharply on Friday but still stood near a two-year low.

According to the latest available data on its website and Reuters calculations, CalSTRS had exposure to nine Russian local sovereign bonds, so-called OFZs, with a market value of nearly $32 million as of June. Its holdings of Russian roubles had a market value of about $1.5 million at that time.

On the equity side, its allocations were worth around $800 million in June and included securities issued by energy companies like Gazprom and Lukoil, as well as by sanctions-hit Russian banks Sberbank and VTB.

"CalSTRS has investments in Russia, and as with all investments, we monitor potential risks to the portfolio to ensure our investments are protected. The Russian invasion of Ukraine is a potential risk and we are closely following developments", the spokesperson said.

Several global money managers have trimmed their exposure to Russian assets this week and in the weeks prior to the invasion.

Two Danish pension funds this week said they were pulling back from Russia, and Canada's second-biggest pension fund, Caisse de depot, said on Thursday it had sold its Russian positions. read more

Large U.S. money managers like BlackRock, Vanguard, and PIMCO, manage funds with billions of dollars of exposure to Russian bonds, according to data from industry tracker Morningstar Direct.

Among U.S. domiciled funds, the PIMCO Income Fund Institutional Class had the largest allocation to Russian government bonds, estimated at $1.16 billion by taking the portfolio weight times the fund's total net assets as of the end of last month, Morningstar data showed.

PIMCO declined to comment on plans to trim its allocations to Russian assets. A BlackRock spokesperson said on Thursday the world's largest asset manager was monitoring regulatory guidelines on Russia.

Vanguard said it was reviewing global sanctions and determining their impacts to its funds, and that it would comply with "applicable sanctions and government orders".

Register now for FREE unlimited access to Reuters.com
Reporting by Davide Barbuscia; Editing by Ira Iosebashvili, Bernard Orr

Our Standards: The Thomson Reuters Trust Principles.