The Terminator is not the only larger-than-life force striding the streets of Sacramento. The golden state capital's also home to the mighty California state employees' pension fund-CalPERS-and the hand that guides it belongs to Anne Stausboll.

At $240 billion in assets CalPERS acts with clout in the marketplace both as investor and activist. "Our mandate is always to achieve the best returns we can, given acceptable risk levels," she says. "But we strongly believe there's a correlation between good corporate governance and long-term value. We do this with a business purpose."

This is no easy task. The fund's taken plenty of flack for its stances on corporate governance and, more recently, for getting out of tobacco stocks and emerging markets in favor of California businesses and real estate in low-income neighborhoods: the socially responsible, so-called "double bottom line" pressed by former state treasurer Philip Angiledes' office. But since sin stocks are moneymakers, and considering that real estate most everywhere now is in a bad way, and you'll know why Stausboll somewhat delicately agrees that California real estate is the funds' biggest challenge.

But CalPERS is steering through market chaos in other directions. Stausboll points to its most successful investments in inflation-linked assets with four components: commodities, inflation-linked bonds, forestland and infrastructure. Target allocations were set at five percent and CalPERS has $2 billion invested in inflation-linked assets now, with returns coming in between 19 and 22 percent. The last few quarters have seen CalPERS underweight in global equities. The damage has been limited so far to a 2.4-percent loss for the year.

Stausboll still figures it's possible to remain active as shareowners, press for good corporate governance, be an influence, and still make returns. While no-one knows future market fallout from smoking ruins like Fannie and Freddie-"I didn't bring my crystal ball," she quips-Stausboll shows no signs of spooking. CalPERS has $600 million committed to clean technology in the private equity program and $500 million on the public side, looking for positive ways to benefit, not just to limit risk. "We're looking to invest in cutting-edge, clean technologies. We think there might be some alpha there."

Return to the 2008 25 Most Powerful Women in Banking

(c) 2008 U.S. Banker and SourceMedia, Inc. All Rights Reserved. http://www.americanbanker.com/usb.html/ http://www.sourcemedia.com/ >

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.