Kentucky teachers pension not only fund invested in Russian bank

It’s one of the latest companies to adjust course following war in Ukraine.
Published: Mar. 8, 2022 at 4:31 PM EST
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LOUISVILLE, Ky. (WAVE) - Louisville based Yum! Brands said it’s pausing restaurant developments in Russia and will redirect Russian profits to humanitarian efforts.

It’s one of the latest companies to adjust course following war in Ukraine.

Kentucky’s teachers pension system also sold its holdings in a Russian bank before the invasion.

Retirees tell us they were stunned to learn their pension had any investments in Russia at all.

The Teachers Retirement System publishes a list of what it’s invested in.

Everything from Apple, LG&E, and as of two weeks ago, Sberbank, based in Russia.

About half of Americans own stock, mostly in mutual funds.

Mutual funds pool their investors money into a variety of things. Knowing exactly what, can get difficult.

“Ultimately, it’s going to be really hard to flesh out all the underlying holdings in a fund,” financial advisor Aaron Ulrich said.

Ulrich said most people invest in mutual funds to diversify their investments and avoid the kind of work it requires to tease out what exactly each investment is.

“You’re paying people to research and analyze and make decisions for you so that you don’t have to,” Ulrich said.

Mutual funds disclose their strategy and provide lists of their individual holdings. But if you’re invested in a mutual fund, your money supports their strategy. You can’t pick and choose which investments the mutual fund makes on your behalf.

“You can call up and ask that but they’re not going to listen to you,” Ulrich said.

Kentucky’s Teachers Retirement System invested $15 million in Sberbank back in 2017. It owned 863,000 shares at the end of December, but it no longer does. The retirement system sold off its investment on February 23 for $12 million.

Beau Barnes with TRS sent us this statement:

“This approximate $3 million loss was more than offset by dividend income earned on Sberbank during the investment period, so that TRS actually realized a gain on its Sberbank investment.”

Sberbank’s top mutual funds include very common ones that may be among your 401k options.

For example, American Funds Euro Pacific Growth fund is offered as part of WAVE’s parent company’s 401k options. Among its 408 holdings, it held $582 million worth of Sberbank as of the end of 2021.

Capital Group spokesman Tom Joyce said the company does not comment on its individual holdings.

“Overall, our exposure to Russian securities represents less than 0.1 percent of our total assets under management,” Joyce said. In those portfolios that hold Russian securities, our positions are modest. We have implemented controls in support of the sanctions against Russia.”

You can invest in mutual funds that offer a socially conscious strategy, but those aren’t perfect either, as we live in a global market.

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