Hebb: Public Pension Funds and Urban Revitalization


This paper argues that pension funds can earn attractive risk-adjusted rates of return on targeted private equity investments in underserved capital markets. Targeted investing is designed to achieve both a financial and social return. Fiduciary duty requires public sector pension funds to put financial obligations at the forefront of their decision-making. However these funds also have a vested interest in ensuring vibrant, healthy communities that in turn underpin employer contributions to the fund. We examine the California Initiative of the California Public Employees Retirement System (CalPERS) as a model of targeted investment. Though this initiative is in its early stages of development, we draw some implications for best practice in targeted investment from this case study.

Available for download here.