SACRAMENTO, Calif. -- Economically targeted investments are again an issue in the California state treasurer's race.
Democratic candidate Phil Angelides, who championed the cause in his unsuccessful bid for treasurer in 1994, wants the California Public Employees' and the California State Teachers' retirement systems to increase their investments in California.
CalPERS now invests 10.7% of its $140 billion portfolio and CalSTRS 8.9% of its $88 billion fund in California, Mr. Angelides said. But he wants to boost those percentages by two to four percentage points.
CalSTRS has about $1 billion in California real estate, said Patrick Mitchell, chief investment officer. "We occasionally try to track that (in-state investments), but the problem is definitional," he said.
Some investments may be considered in-state because the companies involved have half of their sales in California, not because they are based there, he said.
CalPERS actively tracks its California investments, which total $16.5 billion, a spokesman for the fund estimated. Those investments include real estate, mortgages, corporate bonds and stocks.
Over the past five years, CalPERS has increased international investments to 23% from 14% of its overall portfolio and CalSTRS posted an increase to 19% from 2%, Mr. Angelides said. During the same period, he said, CalPERS' domestic equity portfolio bested its foreign equity portfolio by six percentage points per year and CalSTRS' domestic equity returns outperformed international returns by seven percentage points per year.
CalSTRS' Mr. Mitchell said Mr. Angelides numbers sounded as if they were in the ballpark. The difference in the performance of the funds' U.S. equity and foreign equity benchmarks is about 12%. International equity is the funds' second-best performing asset class, but its returns were half that of the U.S. equity returns, he added.
According to CalPERS, between 1993 and 1997 international stocks increased to 20% from 12% of total assets. Foreign bond investments stayed the same over the same period of time. Domestic equity returns beat international equity returns by 7%.
"This goal-setting will encourage the funds to continually examine solid opportunities in our state's economy, which can yield good returns and create long-term jobs and growth," Mr. Angelides' policy statement reads.
He also calls for the formation of regional investment advisory councils to identify prospective local investments. The councils will be made up of public- and private-sector individuals.
Many managers are unaware of the local opportunities and through the councils Mr. Angelides hopes to help bring fund managers "to think out of the box."
Curt Pringle, the Republican candidate, is opposed to determining social policy with investments, said his campaign manager, Jeff Flint.
"As treasurer, his first and only duty is to make good returns and save principal for retirees," Mr. Flint said.
Mr. Pringle, a state assemblyman and former speaker, helped to defeat a bill calling for the divestiture of Time-Warner Inc. stock; and opposes another divestiture bill calling for the liquidation of tobacco stock.
He would not support any arbitrary percentage of in-state investment either, Mr. Flint said.
Mr. Pringle agrees with his opponent there are plenty of good companies in the state. The state boasts the seventh-largest economy in the world and represents 12% of the nation's gross domestic product.
