The current edition of “Barrons” carried an interview with Joe Dear, the head of Calpers (California Public Employees’ Retirement System), the largest public pension in the United States. Calpers behavior is often an important bellweather, as both the size and activist bent of the fund has made it an industry leader. I may be making too much of this, but if I were a participant in the plan, I’d certainly want clarification of this comment from Dear:
Whether venture capital really helps in a portfolio of our size is an open question. The one mitigating factor is, because the California pension fund is in the home of the high-technology industry, you want to be making moves that, after we consider the investment return, also help the state with respect to the growth of the economy here.
Does Dear believe it is the pension fund’s responsibility to subsidize the venture capital industry even if not fully justified on the investment merits? Does he believe that Calpers has a special responsibility to support California businesses?
It’s a curious comment, and perhaps one made without much thought. However, it makes one wonder whether an element of politics has entered the investment management of the fund. Our financial crisis has taught us that the ethic of fiduciary responsibility has eroded in many areas — let’s hope not in the pension arena.