Sunday, September 13, 2015

Listen to Regents' Committee on Investments, Sept. 9, 2015

As promised, the audio for the Sept. 9 Regents' Committee on Investments meeting is at the link below. Most of the meeting was a review of the performance of the portfolio under management of the Chief Investment Officer Jagdeep Bachler for the year ended last June 30. About $98 billion is involved, of which $55 billion is the defined benefit pension. Much of the financial talk differed little from what you would find in the business section of the LA Times, e.g., slowdown in China, risks from the Middle East, whether the Federal Reserve will raise interest rates, etc. There was reference to a policy to "simplify" the portfolio by reducing the number of assets, i.e., fewer stocks, fewer outside contracts with managers who have to be monitored.

There was a public comment period in which there was a call for coal and fossil fuel divestment. But as it turned out, the headline of the event (about which we previous posted) was the announcement by Bachler that UC had sold off its direct holdings of coal and oil sands companies. We provide a separate link to that discussion below for you convenience. The sell off was repeatedly justified in economic terms, e.g., the regulatory climate was unfavorable to these companies. Bachler later said his sustainability policy is what is needed as opposed to a list of things he should not hold ("no exclusionary list"). There is a fog of ambiguity around all of this; sometimes what is being done is just good economics and sometimes it has a social function.

Finally, at the tail end of the discussion, Bachler seemed to agree that the projected earnings for the UC pension should be something like 6%/annum rather than the current 7.5%. Such a change would substantially raise the measured unfunded liability. (We note, as we have before, that the actual unfunded liability will depend on actual earnings in the future which will be what they will be regardless of how they are projected at any point in time.) 

The audio of the entire session (around two hours) is at the link below:

The coal and oil sands divestment can be heard at the link below:

The 6% remark is at the link below:

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