Florida Rep. Matt Gaetz renewed the call for dumping Diversity, Equity, And Inclusion (DEI) after questioning CalPERS’s interim Chief Investment Officer.
CalPERS (California Public Employees’ Retirement System) serves more than 2 million members in its retirement system, over 1.5 million members in its health program, and has a massive $500 billion in assets.
CalPERS also has a comprehensive Diversity, Equity, and Inclusion (DEI) agenda to “foster a diverse and inclusive workplace and promote equitable practices in its investments and operations.”
But is it working?
Florida Rep. Matt Gaetz grilled CalPERS Interim Chief Investment Officer Dan Bienvenue on the organization’s DEI agenda and pointed out a report generated by CalPERS themselves.
“CalPERS has a DEI agenda, right?” asked Gaetz.
“CalPERS is all about generating returns to pay benefits, and every topic that we approach is through that lens,” replied Bienvenue.
“Well, does DEI improve the returns to your investors?” Gaetz shot back.
“I think part of good governance of a company is having diverse perspectives brought to bear as they manage that company,” said Bienvenue.
Gaetz’s line of questioning moved to data showing that DEI practices benefit investors and CalPERS beneficiaries.
“What is the evidence that you rely on for the belief that the DEI agenda will produce better returns? Is there any study report analysis?” asked Gaetz.
Bienvenue stated, “I probably read five or six or eight of them a day,” but was unable to name one that supported the practice.
Read: Florida Rep. Matt Gaetz Champions GOP Effort To Eradicate DEI At US Military Academies
“I found a study that actually CalPERS did. It’s entitled Emerging Diverse Manager Data Report, and I’m citing from the sixth page of the report where it says, since Inception, current diverse managers. Generally underperformed non-diverse managers in the asset class in the policy Benchmark. Are you familiar with this report?” Gaetz asked.
The CalPERS report Gaetz was referring to spells out under the Absolute Return Strategies (ARS) that since inception, current diverse managers generally underperformed non-diverse managers in the asset class and the policy benchmark.
Also, according to the report, on an inception to date basis, the Global Equity Emerging Manager program underperformed its benchmark by 129 basis points.
This was driven by the significant underperformance of the Manager Development Program, which has a 6/30/12 NAV of $1.3 billion in capital. Three smaller Global Equity emerging manager fund of funds met or exceeded their benchmarks.
Read: University Of North Carolina System Reportedly Shelled $70 Million On DEI-Related Staffers
The report states that of the current Global Equity diverse managers, 12 outperformed and 6 underperformed their benchmarks on a ‘since inception basis.’
“The Interim Chief Investment Officer of @CalPERS wants more “diverse perspectives” and DEI hires at his company,” said Gaetz on X. “But CalPERS’s OWN REPORT says their DEI hires are underperforming the non-DEI hires!”
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