Retirement insights from a Colorado PERA perspective

A distant view shows a mountainous landscape with sloping peaks, green trees in the foreground, and a cloudy sky above.

Recent <a href="https://news.gallup.com/poll/389780/investors-stand-esg-investing.aspx" target="_blank" rel="noreferrer noopener">polling by Gallup</a> shows nearly half of U.S. investors are interested in sustainable funds that take into account environmental, social and governance (ESG) factors, but few have heard much about them or invested in them. Additionally, 70 percent of respondents said they would be likely to include ESG funds in their 401(k) portfolio, if their employer offered them.



Since 2011, PERA has offered the PERAdvantage Socially Responsible Investment (SRI) Fund to members interested in directing their PERAPlus 401(k), 457 or Defined Contribution (DC) Plan savings into sustainable investments.



While PERA invests Defined Benefit (DB) Plan funds on behalf of PERA members and retirees, the SRI Fund provides members the opportunity to invest their personal savings with a focus on socially responsible or ESG leadership. The fund is designed for long-term performance through investment in companies that demonstrate strong ESG practices — that is, companies that have shown an ability to manage risks and take advantage of opportunities associated with environmental, social and governance issues. 



<h4 class="wp-block-heading">What makes the PERAdvantage SRI Fund “sustainable”</h4>



PERA offers a range of <a href="https://coperaplus.empower-retirement.com/participant/#/articles/COPERA/investmentInformation" target="_blank" rel="noreferrer noopener">PERAdvantage fund options</a> to 401(k), 457, and DC Plan participants, but the SRI Fund is the only one with a stated focus on environmental, social and governance factors. In 2019, <a href="https://peraontheissues.com/pera-updates-socially-responsible-investment-fund/" target="_blank" rel="noreferrer noopener">PERA updated the SRI Fund</a>, selecting new asset managers with portfolios offering better market coverage, lower costs and a stronger focus on ESG leadership.



The SRI Fund has two underlying portfolios: The BlackRock ACWI ESG Fund (stocks), which makes up approximately 60 percent of the fund, and the TIAA-CREF Core Impact Bond Fund (bonds), which makes up approximately 40 percent of the fund. Both portfolios include investments that are tilted toward positive ESG exposure. The bond fund also includes investments aimed at driving positive environmental and social impact.



For example, the BlackRock fund <a href="https://www.msci.com/documents/10199/8769a870-eaa5-ec35-8558-424489802702" target="_blank" rel="noreferrer noopener">mirrors an index</a> with more than 500 stock holdings, but companies with primary business in tobacco, controversial weapons, fossil fuel extraction and thermal coal power are not included. Holdings in the information technology sector make up nearly a quarter of the index, with some of the top holdings including companies like Apple, Microsoft and Tesla.



The <a href="https://documents.nuveen.com/Documents/Nuveen/Default.aspx?uniqueId=a1a3498b-5238-4226-824e-92e2cd2f830f" target="_blank" rel="noreferrer noopener" class="broken_link">TIAA-CREF bond fund</a> includes investments in projects like affordable housing, renewable energy and land conservation. TIAA-CREF says the investments in the Core Impact Bond Fund resulted in the avoidance of nearly 275 million metric tons of emissions, energy savings of 7.7 billion kilowatt hours and the conservation of nearly 850,000 acres in 2020.



As with all PERAdvantage funds, the primary objective of the SRI Fund is to deliver financially sustainable risk-adjusted returns to participating members. In 2021, the SRI Fund <a href="https://content.copera.org/peradvantage-sri-fund-a-sustainable-investing-option-for-401k-457-and-dc-plan-participants/" target="_blank" rel="noreferrer noopener">provided a return of 10.2 percent</a> for the year. The 10-year annualized return was 8.8 percent. As of the end of 2021, PERA members had more than $40 million invested in the fund.



Learn more:



<ul>
<li><a href="https://www.copera.org/peradvantage-sri-fund-a-sustainable-investing-option-for-401k-457-and-dc-plan-participants" class="broken_link">SRI Fund fact sheet</a></li>



<li><a href="https://www.copera.org/peraplus-401-k-457-plans">Enroll in a PERAPlus 401(k) and/or 457 Plan</a></li>



<li><a href="https://www.copera.org/investment-stewardship">PERA’s Investment Stewardship program</a></li>
</ul>

PERAdvantage SRI Fund: A Sustainable Investing Option for 401(k), 457 and DC Plan Participants

In this story:



<ul><li>A new divestment bill would limit PERA&#8217;s investment options </li><li>PERA&#8217;s Board has stated that PERA serves the singular purpose of ensuring the retirement security of Colorado’s current and former public servants</li></ul>



<hr class="wp-block-separator"/>



A bill recently introduced in the Colorado House would limit the investments PERA has access to, which could affect the ability to maximize the long-term risk-adjusted return for members.



<h4 class="wp-block-heading">Bill Summary</h4>



If passed, the bill, <a href="http://leg.colorado.gov/bills/HB21-1246" target="_blank" rel="noreferrer noopener">HB 21-1246</a>, would do the following:



<ul><li>Require PERA’s Board to create an exclusion list of all direct investments PERA has in fossil fuel companies.</li><li>Within 6 months after completing the exclusion list, the Board would be required to determine whether divestment from the companies on the exclusion list complies with the Board’s fiduciary obligations.</li><li>If the Board determines that divestment from any company on the exclusion list does comply with its fiduciary duty, the Board would be required to divest from those companies on the exclusion list.</li><li>And the Board would be required to cease new direct investments in any company that is a fossil fuel company.</li><li>Beginning one year after the effective date of the bill, the Board would be required to ensure that no money or assets of the fund are invested in an indirect investment vehicle unless the Board is satisfied that such indirect investment vehicle is unlikely to have in excess of 2% of its assets directly or indirectly invested in fossil fuel companies.</li></ul>



<h4 class="wp-block-heading">The Position of PERA’s Board</h4>



PERA opposes divestment efforts unless such opposition is inconsistent with its fiduciary duty and recommends the legislature thoughtfully consider such proposals with caution and fiduciary care.



Per the Board’s <a href="https://www.copera.org/pera-board-of-trustees-updates-divestment-policy-statement" target="_blank" rel="noreferrer noopener" class="broken_link">Statement on Divestment</a>, PERA serves the singular purpose of ensuring the retirement security of Colorado’s current and former public servants. Global issues are difficult to prioritize and proper recourse falls beyond the duty of the retirement system.



<h4 class="wp-block-heading">The Problem With Divestment</h4>



<h5 class="wp-block-heading">Divestment is expensive. </h5>



Requiring PERA to divest comes with significant costs – including costs to research, sell, and replace its fossil fuel investments. This bill would cost millions of dollars just to implement and does not include the opportunity cost of continued investment in the securities that meet the stated criteria.



<h5 class="wp-block-heading">Divestment is a slippery slope. </h5>



Just in the past several years, advocacy campaigns have pressed pension funds to divest from countless industries for varying reasons. Divestment could cost PERA members more by limiting the investable universe and PERA’s ability to generate the investment returns that make their retirement benefit possible. PERA’s investment program has generated over $69 billion over the last 30 years – returns that fund benefits and fuel <a href="https://content.copera.org/recently-introduced-divestment-bill-would-affect-pera-investments/" target="_blank" rel="noreferrer noopener">local economies</a> across the state.



<h5 class="wp-block-heading">Divestment is not effective.</h5>



Divestment mandates are a blunt instrument designed to impose economic hardship on the subject companies, but often result in assets simply being transferred from one investor to another with no impact on the company’s financial position. To make a change you need a voice and divestment means leaving the conversation entirely. PERA prefers engagement with companies to promote responsible business practices because it has a real and lasting impact.



<h4 class="wp-block-heading">PERA’s Investment Framework</h4>



PERA&#8217;s investment framework has been the focus of previous PERA On The Issues stories, including:



<ul><li>A <a href="https://peraontheissues.com/peras-investment-objective-ensuring-retirement-security/" target="_blank" rel="noreferrer noopener">look into</a> the Board’s Statement on Divestment</li><li>How <a href="https://peraontheissues.com/investment-stewardship-considering-relevant-issues-like-esg-factors-in-investment-decisions/" target="_blank" rel="noreferrer noopener">PERA considers issues like ESG factors</a> when making investment decisions</li><li>How PERA has a positive track record of taking its role as shareholder seriously by <a href="https://content.copera.org/recently-introduced-divestment-bill-would-affect-pera-investments/" target="_blank" rel="noreferrer noopener">engaging with the companies it invests in</a></li><li>An overview of how PERA’s <a href="https://peraontheissues.com/issue-spotlight-responsible-investing/" target="_blank" rel="noreferrer noopener">commitment to stewardship</a> includes considering a variety of factors that could have a financial impact on PERA’s investments, including: carbon emissions, labor rights, natural resource utility, executive oversight, animal welfare, corporate culture, and social impact.</li></ul>

Recently Introduced Divestment Bill Would Affect PERA Investments

In 2019, mutual funds and ETFs with an ESG focus saw an inflow of <a rel="noreferrer noopener" aria-label=" (opens in a new tab)" href="https://www.cnbc.com/2020/01/14/esg-funds-see-record-inflows-in-2019.html" target="_blank">more than $20 billion</a> nationwide—nearly quadruple the amount these investment products added the year before. ESG funds (funds whose investment strategy includes environmental, social, and governance [ESG] factors) have increased in popularity during the past decade. At the end of 2019, the value of these funds topped $137 billion. While that number represents only one-tenth of one percent of the $20 trillion invested in all mutual and exchange-traded funds, experts expect <a rel="noreferrer noopener" label=" (opens in a new tab)" href="https://content.copera.org/pera-updates-socially-responsible-investment-fund/" target="_blank">ESG growth</a> to continue.



PERA members who have a <a rel="noreferrer noopener" label=" (opens in a new tab)" href="https://www.copera.org/recap-of-pera-boards-september-meeting" target="_blank" class="broken_link">PERAPlus</a> account have had access to the PERAdvantage Socially Responsible Investment (SRI) <a rel="noreferrer noopener" aria-label=" (opens in a new tab)" href="https://copera401k.voya.com/einfo/fundinfo.aspx?cl=CORADO&amp;pl=650301PU&amp;page=investment_informationfundinformationperadvantagesri&amp;domain=copera401k.voya.com&amp;s=dvw1wyshrdmo5misweslmbqg&amp;d=54707eb56287fc41622036248754ba04012ab13d" target="_blank">Fund</a> since 2011. The fund has two parts: an equity sleeve and a fixed income sleeve. Each sleeve screens investments for various ESG factors. At the end of 2019, PERA replaced both of these with products that have a wider reach and a lower cost. 



<blockquote class="wp-block-quote">“We went through each of the DC funds to see if there’s a better way to construct each. Our goal was to make each more efficient at a lower cost.” &#8211; Jim Liptak, Director of Equities at PERA </blockquote>



The change to the SRI Fund was the latest in a series of updates to PERAPlus Funds. “We went through each of the DC funds to see if there’s a better way to construct each,” said Jim Liptak, Director of Equities at PERA. “Our goal was to make each more efficient at a lower cost.” (In December, PERA On the Issues <a rel="noreferrer noopener" aria-label=" (opens in a new tab)" href="https://peraontheissues.com/peraplus-investing-costs-continue-to-fall/" target="_blank">covered</a> changes to the U.S. Small and Mid Cap Stock Fund). 



The SRI Fund was particularly well poised to benefit, as the still emerging ESG market is quickly evolving, giving investors more and better options. 



Change to the Equity
Sleeve



One challenge when constructing an ESG fund is choosing which investments count as sustainable or responsible. “Some people have specific issues they’re focused on—but those issues are different for everyone,” Liptak said. 



Rather than sort through dozens of industries and tens of thousands of companies, Liptak said his team worked to identify a partner that had a sound methodology, good performance, and low costs when evaluating the SRI Fund&#8217;s equity sleeve, which makes up about 60 percent of the fund&#8217;s total holdings. 



PERA found that partner in BlackRock and its product called the MSCI ACWI ESG Focus Index Fund, which tracks <a rel="noreferrer noopener" aria-label=" (opens in a new tab)" href="https://www.msci.com/documents/10199/8769a870-eaa5-ec35-8558-424489802702" target="_blank">the MSCI ACWI ESG Focus Index</a>. This index is designed to maximize its exposure to high ESG factors. 



In addition to preferring this methodology, Liptak said this fund gives investors exposure to emerging markets like China, Brazil, and India, something the other fund did not have. In total, the fund invests in nearly 500 companies. Finally, the costs are lower. Much lower. The annual fees for the equity sleeve of the SRI Fund dropped from 0.30 percent of assets invested to 0.08. 



Change to the Fixed
Income Sleeve



Like equities, ESG is a relatively new concept in fixed income products. Bessie Conty is PERA’s Manager of Fixed Income and said that the bond market is less diversified than the equity market for ESG products. She said it was exciting to find the product they did, the <a href="https://www.nuveen.com/mutual-funds/tiaa-cref-social-choice-bond-fund?shareclass=Advisor" target="_blank" rel="noreferrer noopener" aria-label=" (opens in a new tab)">TIAA-CREF Social Choice Bond Fund</a>. 



The SRI Fund had been using a J.P. Morgan Government Bond
fund. Conty said the fund didn’t have exposure to corporate bonds. The new fund
does, bringing with it an increased potential return profile.



The TIAA-CREF fund focuses on bonds that can show ESG achievements in their industries. <a href="https://documents.nuveen.com/Documents/Nuveen/Default.aspx?uniqueId=a1a3498b-5238-4226-824e-92e2cd2f830f" target="_blank" rel="noreferrer noopener" label=" (opens in a new tab)" class="broken_link">TIAA-CREF states</a> that the TIAA-CREF fund has helped: 



<ul><li>Avoid 69.5 million tons of CO2-equivalent
emissions</li><li>Reduce 71,000 tons of air pollutants</li><li>Save 5.6 million megawatt hours of energy </li><li>Add 74,000 megawatts of renewable energy
capacity</li><li>Build 48 LEED-certified buildings</li></ul>



Sustainable Investing
and PERAPlus



As Liptak mentioned, some investors may wish to target even
more specific ESG factors, or make investment decisions based on some other
metric that isn’t represented in PERAdvantage Fund options. Liptak said the TD
Ameritrade brokerage window presents the opportunity for PERA members to invest
according to their specific preferences. This window allows members to choose
among thousands of investments offered on TD Ameritrade’s trading platform. 



But those who wish to invest in ESG funds might find the SRI Fund meets their needs. The fund’s annual cost to investors is 0.26 percent of assets invested, below the <a href="https://www.wsj.com/articles/falling-fees-boost-appeal-of-sustainable-etfs-11554642000" target="_blank" rel="noreferrer noopener" aria-label=" (opens in a new tab)">industry average</a> of 0.35 percent. At the end of 2018, PERA members had about $23 million invested in the fund.

PERA Updates Socially Responsible Investment Fund

Tara
Stacy was recently named as the Director of Investment Stewardship. Tara has
been with PERA since 2017. We talked to Tara about her new role and share the
highlights with PERA on the Issues readers below.


<div class="wp-block-image">
<figure class="alignleft"><img decoding="async" src="https://www.copera.org/interview-with-peras-new-director-of-investment-stewardship"investment stewardship" class="wp-image-2564"/><figcaption class="wp-element-caption">Tara Stacy, PERA’s Director of Investment Stewardship</figcaption></figure></div>


PERA on the Issues: How long have you been in your new job as Director of Investment
Stewardship? Is this a new position at PERA?



Tara Stacy:
Director of Investment Stewardship is a new position
at PERA. I’m a few weeks into my new post, but I’ve been with PERA for two
years now. I started here as an analyst in the Chief Investment Officer’s (CIO)
Office of Investment Administration. This new role developed organically from
some of the work I did in that capacity, so I am excited to continue leading
PERA’s progress in investment stewardship. 



PERA on the Issues: What is your background in this area? 



Tara Stacy:
Prior to joining the PERA investment team, I was at a
private, buy-side investment firm here in Denver for eight years. I was an
equity trader, trading stocks and currencies in global markets. Before that, I
was a portfolio administrator for institutional client accounts at the same
firm. That included clients with environmental, social, and governance (ESG)
related portfolio guidelines. So in trading and in administration, I was implementing
ESG mandates and looking at how investment performance was impacted by those
considerations. 



Since joining PERA, I’ve been involved with managing
adherence to PERA’s investment policies and statutory divestment mandates, as
well as research and analysis relevant to the performance of PERA’s
investments. Over the past few years, that work has become more focused on using
my experience as PERA’s investors and management recognized the need to
formalize and strengthen our approach to investment stewardship. In 2018, PERA
released its first Investment Stewardship Report in answer to growing interest
in sustainable investing themes among our peers in the industry and among our
stakeholders. From there, the question became, ‘how can we build on this and
make our investment stewardship something that is even more financially meaningful
to PERA’s investment portfolio, and thus more meaningful to PERA members and
beneficiaries?’ My work is about answering that question.



PERA on the Issues: What does your typical day look like?



Tara Stacy:&nbsp;I have yet to see a typical day! My focus right now is on further developing PERA’s investment stewardship initiatives. That might involve strategizing with PERA’s CIO, sharing best practices in the industry, advising PERA’s executive management on related matters, evaluating our investment exposures to sustainability factors, driving PERA’s engagement with stakeholders around our stewardship or conducting research on sustainable investing trends and related risks and opportunities.



Of course I also spend a decent amount of time with our
investment teams, implementing investment stewardship initiatives, sharing
research and ideas with analysts and portfolio managers and meeting with
management teams of the companies in which we invest to talk about the ways
they’re considering or incorporating sustainability into their business models and
how that affects their profitability.



PERA on the Issues: PERA’s approach to investment stewardship encompasses many facets.
What are the top priorities you’re focused on?



Tara Stacy: There is a lot of complexity and nuance to
stewardship, with no single approach to suit all investors. There are so many
pieces in the mosaic of information investors must consider in meeting their
objectives. But when you step back and look at the big picture from PERA’s perspective,
it’s all about seeking financial sustainability. We have to maintain that
vision, and I’m focused on continuing to develop four foundational practices to
uphold that objective:



<ul>
<li>Protect
assets through cost savings and cost consciousness&nbsp; 
<ul>
<li>Integrate
relevant factors into investment decisions </li>



<li>Advocate
for robust markets as a long-term institutional investor</li>



<li>Evaluate
exposure in portfolios to identify value drivers</li>
</ul>
</li>
</ul>



PERA on the Issues: How does what you’re doing benefit the PERA membership?



Tara Stacy:
Financial sustainability is necessarily our primary
focus as fiduciaries to PERA’s members and retirees. We have to manage PERA’s
investments to protect the financial sustainability of the Fund for their sole
benefit. So we have a responsibility to make investment decisions based on all
relevant factors that impact the risk-return profile of PERA’s portfolio. By
further developing our investment stewardship, we are strengthening PERA’s
commitment to the retirement security of our membership. We’re still in the
germination stages with our formal investment stewardship program, but that
focus on financial sustainability for PERA’s membership continues to drive our
investments and my work.



PERA on the Issues: Any thing you’d like the PERA on the Issues readers to know
about you?



Tara Stacy: I’m honored and excited to continue serving PERA’s
members and retirees in this new capacity. 



Read
PERA’s 2019 <a href="https://content.copera.org/burritos-boardrooms-and-ballots-the-story-of-one-shareholder-proposal/">Investment Stewardship Report</a> and see the <a href="https://www.copera.org/investment-stewardship-protecting-assets-by-watching-costs" class="broken_link">Investment Stewardship infographic</a>.

Interview with PERA’s New Director of Investment Stewardship

Earlier this <a href="https://www.copera.org/investment-stewardship-protecting-assets-by-watching-costs" class="broken_link">summer</a>, Colorado PERA
released its 2019 <a href="https://content.copera.org/investment-stewardship-protecting-assets-by-watching-costs/">Investment Stewardship Report</a>, which demonstrates how PERA’s investment program pursues the
plan’s long-term financial sustainability.



PERA’s approach to sound investment
stewardship includes protecting members’ assets through cost-conscious
investment management. This, in turn, protects the long-term value of the PERA
portfolio, benefitting members and retirees. Knowing that many PERA members
will retire decades, even a generation into the future, PERA adheres to a
financial stewardship approach that limits costs today, preserving the value of
its assets for years into the future.



Investing sustainably for the
long-term: PERA’s investment portfolio must meet
the perpetual needs of its membership. With this long-term investment horizon,
the portfolio must be sustainable, requiring a broad and diverse range of
assets in different classes, markets, and sectors. And PERA must navigate excess
volatility created in the markets by investors who react to short-term signals.
One way to achieve this is by seeking companies with strategies built for
longevity. These are high quality firms that adapt their business models to
meet the expectations of stakeholders, including investors. In the long run,
this focus is intended to boost PERA’s investment performance and contribute to
its sustainability.



Managing assets internally: PERA staff manage more than 60 percent of total fund assets
internally, at a cost of less than 0.06 percent of those assets. Managing public equity and public fixed
income investments in-house saves an estimated $45 million per year over the
expected cost of outsourcing to other investment managers. PERA also selectively
partners with external experts who add value and help PERA to earn better
risk-adjusted returns at lower overall costs. Whenever possible, PERA
negotiates with those external partners for lower management fees as well.



Unbundling equity research and
transaction costs: As an
institutional investor, PERA is also concerned with research and transaction
costs, which have implications for large and small investors alike. As
discussed in previous <a href="https://www.copera.org/investment-stewardship-protecting-assets-by-watching-costs" class="broken_link">PERA on the Issues posts</a>, staff have
repeatedly called for increased pricing transparency through clear guidance
that would allow U.S. investors to pay directly for research, rather than
receiving research as part of a bundle of services paid for by equity trading
commissions. This is one part of PERA’s ongoing advocacy for fair markets and
fair costs.



Lowering 401(k), 457, and Defined Contribution
plan fees: For members who choose to participate in PERA’s 401(k) plan, the all-in costs have dropped by 68 percent
since 2011. This includes a reduction of the administration fees from 0.50
percent of assets in 1995 to 0.03 percent of assets in 2018, which also extends
to PERA’s 457 and Defined Contribution plans. These lower investment costs should
encourage PERA members to participate by allowing them
to retain more of their retirement savings, while increasing efficient plan
management.



Protecting members’ assets by watching
costs is a critical component of PERA’s investment stewardship philosophy. More
on PERA’s four-part stewardship approach is available <a href="https://www.copera.org/investment-stewardship-protecting-assets-by-watching-costs" class="broken_link">here</a>.

Investment Stewardship: Protecting Assets by Watching Costs

The word “sustainability” is often used to define something environmental. Colorado PERA’s investment professionals see sustainability as a component of investment stewardship, encompassing another important component used when investing nearly $49 billion on behalf of PERA’s membership.



In June 2018, PERA’s investment team released the <a href="https://peraontheissues.com/wp-content/uploads/2018/08/Stewardship-Report_Final.pdf" target="_blank" rel="noreferrer noopener">Colorado PERA Stewardship Report</a>, a comprehensive look at all the ways PERA incorporates the principles of ESG (environmental, social, and governance) stewardship to select, evaluate, and improve the PERA investment portfolio and strengthen the retirement fund.



In addition to environmental issues, the concept of global sustainability can encompass labor rights, executive oversight and corporate culture, and social impact, among many others. By examining how PERA’s investments may be exposed to these categories, PERA tries to identify which investments will provide the strongest long-term results for the fund, and thus for PERA’s members and retirees. “We don’t look one or two years down the road; we look 15 or 20 years, and concentrate on the long-term viability of a company’s business model” said Jared Goodman, a PERA senior equity portfolio manager. “We want to make sure our investments’ sustainability practices will drive strong long-term returns,” he added.



Making more sustainable and responsible investments has become a primary focus and concern for investors and investees alike in recent years. The number of sustainability-aligned investment strategies <a href="https://www.ussif.org/files/Trends/US%20SIF%202016%20Trends%20Overview.pdf" target="_blank" rel="noreferrer noopener">increased 14 times over between 1995 and 2016</a> as more consumers, corporate executives, and investors demanded them.



Organizations that deploy sustainability practices demonstrate considerable long-term productivity and resiliency. Consider the manufacturing firm that buys new equipment to meet its customers’ demand, produce lower carbon emissions, and provide a safer working environment for its employees. This firm is doing its part to protect air and water quality (and avoiding potential fines for environmental negligence) and increasing its workers’ safety and efficiency, all while enjoying the competitive edge the new equipment provides. Similarly, so-called “green” buildings have higher occupancy rates and lower energy costs, making them potentially strong long-term real estate investments.



Another way PERA’s investment stewardship focus helps improve performance is via corporate governance. The most direct way to do this is by influencing organizations, via engagement with their management and boards, to be more proactive in their ESG practices. Given that <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2222608" target="_blank" rel="noreferrer noopener">corporate fraud is estimated to cost the U.S. economy between $180 billion and $360 billion per year</a>, there is ample need to ensure that corporate leadership is always acting in the best interests of its investors. By insisting on fair market practices, alignment between companies and their investors, and robust disclosure procedures, PERA can help promote changes and improve oversight in ways that can make these investments more successful in the long run. “We’ve always stressed corporate stewardship as part of our investment activities because it’s a sound strategy,” said Tara Stacy, a PERA investment compliance and performance analyst and a co-author of the Stewardship report. “This helps us get and stay ahead of the curve as these issues are increasingly highlighted,” she concluded.



For PERA, one more key piece of the stewardship puzzle is the contribution made to the state’s economy. In 2012, PERA introduced the <a href="https://content.copera.org/the-virtuous-circle-of-investment-stewardship/" target="_blank" rel="noreferrer noopener">Colorado Mile High Fund</a>, which provides millions of dollars in investment opportunities for organizations that have a nexus to the Centennial State. (The entire PERA fund currently has more than $515 million invested in the state.) Colorado Mile High Fund investments are primarily private equity and venture capital investments, and they have produced encouraging results. As of December 31, 2017, PERA has sold three of six Colorado Mile High Fund investments since inception of the Fund, helping to achieve further gains for the total portfolio.



PERA will continue to evaluate opportunities for financial sustainability through the recognition of the importance investment stewardship makes to the goal of seeking the best risk-adjusted returns for the long-term sustainability of the Fund and the members PERA serves.



For further reading:



<a href="https://peraontheissues.com/wp-content/uploads/2018/08/Stewardship-Report_Final.pdf" target="_blank" rel="noreferrer noopener">Colorado PERA Stewardship Report</a>



<a href="https://peraontheissues.com/wp-content/uploads/2018/08/Investment-Stewardship6_18.pdf" target="_blank" rel="noreferrer noopener">Investment Stewardship Fact Sheet</a>

Tag Archives:

PERAdvantage SRI Fund: A Sustainable Investing Option for 401(k), 457 and DC Plan Participants

Recently Introduced Divestment Bill Would Affect PERA Investments

PERA Updates Socially Responsible Investment Fund

Interview with PERA’s New Director of Investment Stewardship

Investment Stewardship: Protecting Assets by Watching Costs

The virtuous circle of investment stewardship

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