It's taken several weeks to work through the negotiating process, but the Governor's bill on investments in China, HB1352, has now been amended with the language we have been discussing with them. As amended, the bill would prohibit ATRS and the state's other retirement systems from making investments in Chinese companies in the future, and it would require us to divest from publicly-traded securities of Chinese companies that we currently own.

The main changes that we asked for, and that are included in the amendment, were to provide exemptions for our current private equity, real estate, and similar investments in China. We don't have many in our current portfolio, but these private investments are typically structured in a way that it is difficult to just pull out from them. If we had been forced to divest these assets, ATRS could have incurred significant losses on those investments. But fortunately the Governor and the bill's sponsors agreed to language that would protect against these losses.

Assuming the bill passes, we will begin the process of selling any publicly-traded securities we have in Chinese companies. We will also adjust our index funds and other similar investments to exclude China. These publicly-traded investments represent about 1% of the total ATRS portfolio. We will also ensure that our future private equity and real estate investments include contractual language that excludes future investments in Chinese companies.

I do not believe that we will incur any material losses or other negative impacts from these changes. And based on my conversations with the directors of the state's other retirement systems, I believe they have the same opinion. I do not expect any opposition to HB1352 when it is presented in committee. I do expect, however, that there will be one more amendment filed, this one with a minor correction that will be to our benefit.

In other legislation, HB1347 regarding beneficiary payments to Special Needs Trust has passed the House and will be considered by the Senate next week. And HB1365, which would remove the requirement that ATRS and other boards and commissions have minority members, passed the House and is now pending in the Senate State Agencies Committee.

If you have questions about how a bill may impact ATRS, or if you are concerned about something ATRS is proposing, please reach out to me at the email address or phone number below.

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Mark White
ATRS Executive Director
MarkW@artrs.gov
Office: (501) 621-8853
Cell: (501) 541-2057