Keep calm and keep on investing.
Pension funds and their institutional consultants aren’t losing their heads yet over the possibility of a Grexit, reports Pensions & Investments. Immediate concerns about Greece are minimal, and exposure to the country is limited, often as part of a broader index. The $15.8 billion Illinois State Board of Investment, for example, has just $484,000 in Greek exposure, entirely through the MSCI ACWI ex-U.S. index. The Florida State Board of Administration has $5.5 million of its $181.4 billion total assets in Greece, most of which is “spread across various active portfolios.” Writes P&I:
“It’s easy to lose sight of what a de minimis percentage of the global market Greece plays given the level of attention it is receiving,” William Atwood, executive director of the Illinois State Board of Investment, said. “The population of Greece is 11 million, much smaller than Illinois, and its economy is smaller than Illinois’.”
As for Europe, the approach now is wait-and-see. Firms remain optimistic that U.S. Treasurys will stay strong should more turmoil strike Europe. Realistically, whatever happens with Greece will result in weeks, months, and even years of residual effects on global economies that remain to be seen. The E.U. at least has had some time to prepare for a crisis, and pensions seem to think the governing body can contain any disaster. Greece isn’t even as big as a concern as the Chinese market.
“While the events in Greece are a concern, we are watching the slowdown in Chinese economic growth closely because we believe that trend has a great potential to impact asset prices,” Michael Brakebill, chief investment officer for the $42.3 billion Tennessee Consolidated Retirement System, said.
Photo: Images Money via Flickr.