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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowThe Indiana Deferred Compensation Committee has voted to eliminate public retirement assets from two outside investment funds as part of the state’s effort to divest from Chinese entities and funds prioritizing environmental, social and governance practices, State Comptroller Elise Nieshalla’s office announced Tuesday.
The committee, which oversees the investment options for state employees’ deferred compensation plan, voted Aug. 15 at its quarterly meeting to move its money stowed in the funds.
State dollars will be transferred from the Vanguard FTSE Social Index to the State Street S&P 500 Index Fund and from the American Funds EuroPacific Growth Fund to the Fidelity Diversified International Fund.
The Vanguard fund was focused on ESG investments and the American Funds fund had 4% exposure to Chinese entities, Nieshalla said.
“These are positive steps to align public employees’ deferred compensation investments with the state laws governing our pensions,” Nieshalla said in written remarks. “Protecting our investments from national security concerns and upholding fiduciary duty will always be top priorities.”
Treasurer Daniel Elliott also commended the decision in an X post, saying it was to “make sure that Hoosier workers are always protected.”
Participants will be notified of the changes later this year and have the ability to make investment election changes before the movement of assets.
Two 2023 state laws paved the way for the investing decisions.
House Enrolled Act 1008 bars the influencing of “any social or environmental policy or attempting to influence the governance of any corporation for nonfinancial purposes” in the investment system’s $45 billion in assets.
Meanwhile, Senate Bill 268 requires the public retirement system to divest from its China-related holdings due to “the risk to the security and welfare” to the country.
In August, the Indiana Public Retirement System, or INPRS, cut $1.2 billion worth of investments in Chinese entities.
State officials are also actively vetting the INPRS portfolio of asset managers to weed out those using ESG investing practices. Elliott announced June 21 that officials had flagged the first company based on the review: New York City-based BlackRock, the world’s largest asset manager.
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One would hope the State would choose investments based on performance, and the best interest of Indiana citizens.
But then again, Republicans.
1yr: Vanguard +24.48% / State Street +10.96%
5 yr: Vanguard +87.15% / State Street +15.21%
I agree with with your statement that Performance should drive investment decision but I believe State Street numbers you shared are flawed.
Given that the State Street fund is an S&P 500 index, your numbers jumped out to me as I know the S&P 500 index has performed better than what you show. Did you get them from Google by chance? I started there and see some weird drop off last December that is out of line with the index it tracks. I looked at the same fund on a brokerage website and it shows something different. Could be an issue with class shares but is mostly likely an issue with how Google is displaying the data.
In summary, the State Street fund is with a 1% range of the Vanguard fund on a 1 year-basis and 4% on a 5 years basis so the performance variance is much less than what you are presenting.
“Protecting our investments from national security concerns and upholding fiduciary duty will always be top priorities.”
You can only have one top priority. It’s clear that the state of Indiana has decided the fiduciary duty to pensionholders is secondary.
Time to take the Indiana legislature and Treasurer to court as they fail their FIDUCIARY responsibilities! How dare they put their pitiful political ideals before what is best for Hoosier taxpayers and state employees. This is just one example of what happens when one political party has a super majority, and they step over the boundaries of what’s best for Hoosiers vs what’s best for political careers.
What’s stopping you from filing the lawsuit?