CalPERS’ Emerging Equity in the Markets Principles Harvard Case Solution & Analysis

The California Public Employees' Retirement System (CaIPERS)-the biggest public pension fund in the U.S.-had assumed a fresh principles-based technique to investing in emergent market equities in the November of year 2007. Precedently, CalPERS internal and external money managers were restricted from investing in particular developing countries because the nations did not satisfy certain standards for political stability, human rights, market regulation, etc. The new principles-based approach would allow CalPERS money managers to invest in companies that were fiscally attractive and competitively positioned provided their company practices were sound from an environmental, societal, & government (ESG) perspective irrespective of where they were located. CalPERS had expected to improve its investment returns, by permitting investment in these types of companies regardless of where they operated.

It is a great time to review the implementation procedure and the new principles-based approach changed CaIPERS' emerging market equities portfolios and their yields. The case focuses on one of CalPERS' outside fund managers, Dimensional Fund Advisors, and a service provider to DFA and CalPERS, KLD Research & Analytics. One question facing CalPERS with this new strategy is whether to put money into PetroChina, which had been off limits formerly because of the screening criteria that were used to identify which states qualified for emerging markets investments. The case also raises the dilemma of the difference between "value" and "worth" investing and the future importance of ESG investing.

PUBLICATION DATE: March 08, 2009 PRODUCT #: 409054-PDF-ENG

This is just an excerpt. This case is about ORGANIZATIONAL DEVELOPMENT

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