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Martin Tillier

Martin Tillier

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A Big Pension Fund Is Investing Heavily In Clean Energy. What Should You Do?

Earlier this week, one of the largest pension funds in America, the California State Teachers’ Retirement System (CalSTRS) made an announcement that was of particular interest to energy investors. They announced that they would be nearly tripling the amount they have invested, bringing it to around $3.7 Billion. Obviously, that a fund of that size is to step up investment in that sector is good news, but investors should be careful not to read too much into the announcement.

First, let’s look at what they didn’t say. They didn’t, as some coverage of the news has suggested, say that they are divesting themselves of more traditional energy investments. Indeed, Fund CEO Jack Ehnes, in a subsequent interview with NPR, pointed out that two of the fund’s top ten holdings were Exxon Mobil (XOM) and Chevron (CVX) and laid out no plan to sell or even reduce those holdings. I have said before that successful energy investing, like successful investing in general, calls for some diversification. You may feel that renewable energy is the future, but should always keep in mind that that future could be some way away.

Searching through the published holdings of the fund I found that their total invested in the two big oil companies is around $2 Billion. Now obviously that is a substantial sum, but considering that XOM and CVX have a combined market cap of around $650 Billion even if they did divest themselves it would probably have little effect…

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