Watermelon Investing

“Management fees would increase under each of these three divestment scenarios because VPIC commingled funds, where the bulk of VPIC’s fossil fuel were held, would have to be restructured into materially higher-cost SMA [Separately Managed Accounts] funds.”

In the previous posting one can see the loss of Return on Investment (ROI) can quickly become (RoI) Return of Investment.

From the literate pens at:
watchdog-logo-mike

Divestment report: Climate politics hurts pension fund returns

A study conducted for the Vermont Pension Investment Committee gives fresh ammunition to opponents of divestment from oil and gas in state pension funds.

The 63-page report, conducted by independent consulting firm Pension Consulting Alliance, finds that injecting climate change politics into state worker retirement funds harms fund performance and does nothing for the environment.

Last year, Gov. Peter Shumlin pushed for VPIC to divest Vermont’s state pension fund of Exxon Mobil and 200 other energy stocks. That agenda was strongly opposed by Treasurer Beth Pearce and  VPIC Chair Thomas Golonka.

The report highlights five key concerns about divestment, the first being that divestment imposes high costs and fees.

As of June 30, 2016, about 3.6 percent of Vermont’s $3.74 billion pension fund was invested in fossil fuels. Pearce’s office reported in 2014 that the costs to divest would be $134 million, including an initial $8.5 million and another $10 million in lost returns annually.

“The largest measurable explicit costs of divestment to VPIC would be ongoing increased management fees,” the report states. [snip]

Divestment in Vermont has powerful supporters and opponents.

Support for divestment is championed by 350.org, the Vermont Public Interest Research Group, and Shumlin, among others. Groups lined up against divestment include the Vermont Troopers’ Association, Vermont Retired State Employees Association, Vermont League of Cities and Towns and Vermont State Employees Association.

The authors note that divestment from fossil fuels is “a sparsely used strategy among U.S. public pension plans,” and recommends against the strategy: “We believe that VPIC’s significant proxy voting and engagement efforts on climate risk issues at fossil fuel companies, including ExxonMobil, and investment strategies other than divestment, are better suited than divestment for VPIC to manage risks and opportunities posed by climate change within its role as fiduciary of a U.S. public pension fund.”

These individuals, for the most part are socialists, with no background in economics unless it is in re-distributive Progressive policies of “What’s mine is mine and what’s yours is mine” governance.

Then they also believe this:
bus-rider

This kind of stupidity can’t produce a long life.

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