Mark Anderson - Silicon Valley / San Jose Business Journal
As chief investment officer for the nation's largest
public pension fund, Russell Read looks at the big picture.
Not so much the big picture today, but the one in 10 or 20
years.
In that crystal ball, he sees the vital importance of
energy and commodities all over the world. Much of the
existing economy is based on cheap oil. The not-too-distant
future will require alternatives, and the California Public
Employees' Retirement System is big enough to give
alternatives a boost.
Future energy demand will create
entirely new industries -- and fabulous financial returns.
Read is piloting the system to invest in those technologies
and companies.
Read joined CalPERS in June 2006. He hasn't made any
dramatic changes at the pension fund, but pushed for more
ability to invest in emerging markets, commodities and hedge
funds...
There are a host of new technologies and fuel sources that
will play a critical role meeting world energy demand, Read
said, and many of them are clean sources. Market forces will
create compelling long-term investment opportunities for
CalPERS over the coming decade, and the system will play a
constructive and profitable role, Read said.
Everybody wants to save the world, but CalPERS is in a
unique position: With assets of more than $250 billion, it
is big enough to do something about it.
"There are situations where our size can act to our
advantage," Read said. The system can deploy enough
money into a technology to make the difference between it
happening and not happening "and allow us to use our
scale to an advantage. It is essential we find opportunities
where our scale can be used for us and not against us."
Getting new energy technology to the market runs against
scale and competition with existing oil industry and a
subsidized corn ethanol market...
The former hot industries of real estate, information
technology and biotechnology aren't nearly as rich in
potential as energy, Read said. Suddenly there's money
going to research.
"This is significant," he said. "What will
be surprising to investors and to the public will be the
rate of technology change in the energy sector."
Source: CalPERS
