CalSTRS’ total portfolio risk would not be significantly increased by selling off tobacco stocks, but it is ‘‘difficult, if not impossible,’’ to say whether tobacco divestment would hurt or help future returns, according to a Pension Consulting Alliance study to be presented tomorrow at a CalSTRS investment committee meeting.
The transition cost of divesting the $109 billion Sacramento-based California State Teachers’ Retirement System’s tobacco holdings, valued at $330.9 million at year-end, is estimated at $4.355 million, according to a BARRA RogersCasey study.
If divestment is approved, key issues to resolve would be how to monitor the board’s outlook on tobacco, how to ensure accountability, and who will measure investment performance, the PCA study said. In addition, the board would be delegating investment and divestment decisions to its outside managers.
Another major concern over adjusting benchmarks in an ad hoc manner is that it ‘‘may set a precedent for further divestment decisions,’’ the study said.
