Some of the world’s largest pension funds have stopped trading shares of embattled financial institutions.
The Texas Retirement System, the California Public Employees’ Retirement System and Dutch pension fund APG all announced they would pullback shares from financial companies facing “downward pressure” on their stock prices. TRS and CalPERS named State Street, Washington Mutual, Morgan Stanley, Goldman Sachs and Wachovia, and said other stocks in their portfolios would remain unaffected. In its announce this past Friday, APG did not disclose how many banks or which ones would be affected by the move. APG manages nearly 230 billion.
“We want to do our part and help mitigate the current instability of the market and any potential adverse short-selling impact on these important financial institutions. Our Securities Lending Program otherwise will remain the same,” says Anne Stausboll, Chief Investment Officer, Interim CalPERS.
“We will continue to monitor the situation and remain in close communication with agents and our borrowing counterparts. We anticipate lifting these loan restrictions once the market volatility abates,” Stausboll says.
Ronnie Jung, TRS executive director, echoes Stausboll’s statements, saying he will monitor the markets closely and lift the ban when conditions change.
“However, at this time, we want to reassure our members that we are monitoring all financial and investment activities closely and are taking whatever steps we feel are needed to best serve the interests of the fund and our members,” Jung says.
TRS manages more than $100 billion as part of the pension funds for more than 1.2 million employees in public and higher education.
Other American pension funds have followed suit, either halting portions of their securities lending program or targeting specific companies that have been hit the hardest in the past weeks’ troubles.
But other European pension funds, such as Dutch Zorg en Weltzijn and Swiss Publica, have promised to continue securities lending, despite the volatility in the market and recent bans on short selling.