US INVESTORS: CAUTION OR MULISH OBSTINACY?
Timid US money managers and pension fund sponsors who continue to shy away from foreign investment should consider whether their safety-first investment policy conflicts with the best interests of their members.
Non-US assets of American pension funds, which benefited from the upward trend of European and Asian markets and the decline in the dollar, grew from $27 billion at the end of 1985 to $38 billion by mid-1986, according to Intersec Research Corporation.
Despite healthy returns, however, non-US investments will represent only 3% of total US pension fund assets, which top $1 trillion. Indeed, most of this year's growth overseas came from existing holdings, with just $2 billion being new money.
One who moved against the conservative trend and look full advantage of the 1985-86 global bull market is James Martin, investment chief and executive vice president of the $23 billion College Retirement Equities Fund (Cref), the variable annuity arm of the TIAA/Cref pension system for American teachers.
Since taking charge in 1979, Martin has turned Cref into easily the largest American investor in overseas markets. Cref was firmly established in the area of foreign investment before the 1985-1986 global bull market when, during given quarters, as many as 15 stock exchanges in Europe and the Pacific Basin outran the booming US market.