A huge public pension fund faces an agonizing decision: Should it reinvest in tobacco?
Sixteen years ago, CalPERS, the nation’s largest public pension fund, vaulted to the forefront of the social investing movement by voting to dump its $671 million in tobacco stocks.
Judged strictly by investment return, the decision turned out to be a loser. Now the California Public Employees’ Retirement System is considering jumping back into tobacco. Next to the question of whether that’s morally the right thing to do, the biggest issue may be: Would its timing be even worse now?
Tobacco stocks have been on a tear in recent years, a development that has some investment managers salivating; but just as the fund may have sold the stocks just before they started gaining, they could be buying just before the sector runs out of steam.
The CalPERS board will ponder a return to tobacco investing at a meeting Monday, armed with a staff analysis recommending an end to all restrictions on the investments and taking steps to add tobacco companies to the system’s portfolio.