Centre County looks to divest Russian assets from retirement fund over Ukraine invasion
In response to Russia’s invasion of Ukraine, Centre County officials have laid the groundwork to divest any investments in Russia from its retirement fund.
The Centre County Retirement board, consisting of commissioners Michael Pipe, Mark Higgins and Steve Dershem, controller Jason Moser and treasurer Colleen Kennedy, voted unanimously Tuesday that it is the will of the board to divest all investments from Russia, Russian owned or Russian controlled assets from the county’s retirement fund.
During Tuesday’s Centre County Commissioners meeting, Pipe said many places across the world have been removing support from Russia.
“We’re seeing that even at the state level, Stacy Garrity, the Pennsylvania treasurer, has divested from Russian held assets, even the Pennsylvania Liquor Control Board is removing all Russian vodkas from the shelves, which again, we really want to stand with Ukraine and support them in any way that we can,” Pipe said.
Higgins said though there’s not much they can do at the Pennsylvania county government level “to make the dictator of Russia and his cronies pay for starting an unnecessary war,” taking the step to divest county funds from companies headquartered in Russia is something they can do.
Moser has had conversations with PFM asset management, which is the county’s portfolio investment consultant, since Russia initiated war with Ukraine, he said during the retirement board meeting. The county’s retirement fund is allocated across various markets. The current weighted total portfolio allocation in Russia is approximately 0.12% of the portfolio, he said, or $182,743. The total portfolio is just under $136 million.
Because of the size of the portfolio, Moser said they’re limited primarily to managers who sell packaged funds. In most of those funds, it’s an all or nothing package. To divest from Russia, Russian owned or controlled assets, they’d need to divest from both of the entire multi-manager fixed income and multi-manager international equity funds first, and then work with PFM to identify managers that do not have exposure to Russia. Currently, that pool is very small and limited, he said.
There’s no exposure to Russia in the county’s domestic equity investment, which is the portfolio’s largest allocation.
PFM’s investment committee will meet twice in March to monitor and discuss topics related to this, among other things, Moser said.
“PFM can make the decision in those two meetings as well to remove Russia from their multi-manager funds. And I’m not saying that they’re going to do that, but it’s certainly a possibility over the next few meetings,” Moser said. In that case, the retirement board wouldn’t have to take any specific action.
Instead of waiting to see what, if any, decisions PFM makes, Pipe said they wanted to do this as quickly as possible. Higgins agreed, saying he doesn’t want to be financing Russia’s war on Ukraine. They’re able to divest, they just need to find a way to remove it without pain from a financial standpoint.
Dershem said he supports divesting, but also cautioned that the board wouldn’t want to sell low. Kennedy countered that and said though they might be divesting and selling below market, if they’re purchasing in another fund, they’re also buying low.
“This is more of a moral thing than a financial thing. I do agree that we don’t want to sell low,” Pipe said.
Moser will meet with PFM and bring the board recommendations for a more finalized vote on Thursday.
Dershem said the board’s action is not against Russian people, but an action against the Russian leadership, “particularly the tyrants and the oligarchy that operate the government of that state.”
