CalPERS investment in Chinese stocks has decreased in recent years, said Marcie Frost, CEO of the $401.7 billion pension fund, in response to a federal lawmaker's request that California's governor investigate CalPERS' CIO for allegedly investing more pension fund capital into Chinese companies.
CalPERS' investments in Chinese public equity have fallen to just over 1% of the fund, Ms. Frost said in Thursday a written statement. "These are passive investments made through leading independent index providers. Institutional investors and public pension funds across America use index providers," she said.
On Wednesday, U.S. Rep. Jim Banks, R-Ind., who sits on the House Armed Services Committee, said in a statement that "China knows that it won't get concessions from this administration, so it has pivoted to exploiting state and local governments," and that it "found success in California" because of the CIO's ties to China.
"CalPERS has been funneling retired public servants' savings to companies that abuse human rights and supply the Chinese military. And it has done so at the behest of its CIO, Yu "Ben" Meng, a man enlisted in China's Thousand Talents Program — which has been described by the FBI as one of China's 'non-traditional espionage' programs," Mr. Banks said. "This poses a national security risk to every region of the United States. I hope Gov. Newsom appreciates the gravity of the situation and speedily launches an investigation into Yu 'Ben' Meng and CalPERS," he said.
Officials for Mr. Banks and California Gov. Gavin Newsom could not immediately reached.
Ms. Frost said the fund stands fully behind Mr. Meng.
"CalPERS Chief Investment Officer Ben Meng, Ph.D., is a globally respected financial expert and a proud citizen of the United States. His commitment to California's public servants is extraordinary and his integrity above reproach, Ms. Frost said Thursday in a separate written statement.
CalPERS had $195.5 billion invested in public equities as of Oct. 31. CalPERS does not have geographic allocations in its public equity portfolio or its total fund, CalPERS' investment policies show. Currently, $72 million of CalPERS' $112.4 billion fixed-income portfolio is invested in China.
"The California Public Employees' Retirement System, like state pension funds across America, relies on global investments to generate a 7% return that is needed to provide retirement security to our members, including firefighters, police officers, school employees, nurses, engineers and judges," Ms. Frost said. "We have a fiduciary responsibility to our members and invest accordingly."
Staff writer Hazel Bradford contributed to this story.
