The California Public Employees’ Retirement System (Calpers) is the world’s largest pension fund. It is also a famously fussy investor. The people who manage the $239 billion in this fund stayed away from emerging markets till recently, citing everything from bad corporate governance to political instability.
Calpers announced on Tuesday that it now has around $5.2 billon invested in emerging markets. A fifth of this money has come into Indian equities—a small but important investment.
While sceptics argue that Calpers has lowered its high standards so that it can ride the emerging markets’ train, there is a positive message as well. Only seven of the 27 emerging market economies tracked by Calpers did not qualify for its money. This list includes both China and Pakistan. In contrast, Calpers’ billion-dollar Indian bets are a vote of confidence in our standards of governance and regulation.