North Dakota Aims to Drop All Investments in Russia | North Dakota News

By JAMES MacPHERSON, Associated Press

BISMARCK, N.D. (AP) — A North Dakota board signaled Thursday it would divest all investments in Russia in the wake of that country’s invasion of Ukraine.

North Dakota’s 12-member State Investment Board, headed by Lt. Gov. Brent Sanford, discussed its future investment strategy in a more than hour-long closed session. Retirement and Investment Office Executive Director Jan Murtha said the board’s guidance would be given to the state’s investment managers before being shared with the public.

North Dakota is among many states where actions were being taken to pull state investments from Russian companies.

North Dakota officials on Monday said the state had just under $16 million in investments “with Russian entity exposure.” On Thursday, the exposure had dropped by more than a third to $10 million due to money managers unloading Russian holdings, along with the decreased value of other investments.

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“We are all appalled at the humanitarian disaster that is happening for this needless war,” Scott Anderson, the state Retirement and Investment Office’s chief investment officer, told the Investment Board. He said the state was breaking ties with Russia entities as quickly as possible, but some state investments were problematic because they are commingled with other funds that have multiple investors.

State officials said of the $10 million in still in Russian investments, $7.8 million is in commingled funds. If Russian investments were pulled immediately, the state would have to divest its entire $950 million investment in the commingled funds, officials said.

The board invests money from the state’s nearly $9 billion oil tax savings account known as the Legacy Fund in a broad range of assets, including stocks, bonds and real estate. The board also supervises the Retirement and Investment Office and oversees state and local government employee pension funds. The board also oversees a separate “rainy day” fund, called the Budget Stabilization Fund, that holds about $750 million.

North Dakota Gov. Doug Burgum’s office said Monday that the nearly $16 million with “Russian entity exposure represented less than one-tenth of 1% of the more than $19 billion “in total assets under management.”

Separately, the governor’s office said the Land Board also had nearly $29 million invested in Russia-based companies as of Monday, which is equal to less than half of 1% of the board’s total investment assets of more than $6 billion.

The five-member Land Board headed by Burgum has not set a meeting to discuss the Russian investments. The panel oversees management of state-owned land and minerals for the benefit of public education. The money benefits higher education institutions and K-12 schools through trusts under the board’s control.

State Treasurer Thomas Beadle sits on both the Land Board and the state Investment Board. He said the Land Board’s Russian investments are dropping, too, but he did not know how much yet.

“We have a lot of the same managers who have taken a lot of the same actions,” Beadle said.

David Flynn, research director at the Institute of Policy and Business Analytics at the University of North Dakota, any move to unload Russian holdings is unlikely to impose a financial burden on Russia, which has already stopped paying interest on certain bonds.

There could be political gain. If enough investors pull their money, it would be another “sign of dissatisfaction” with the invasion, he said.

“The political ramifications would probably be judged to be more important than whatever kinds of financial implications there are,” Flynn said.

The state would likely lose money on the sale, the level of which depends on how the market is doing at that time and who is looking to buy, Flynn said. However, it would be a minor hit because the direct holdings with Russia represent a small part of the overall state investment portfolio.

Russian holdings have always been considered a good investment because the country’s supply of natural gas and oil is a solid insurance policy for covering debt.

“There has always been for the most part a ready market for hydrocarbons,” Flynn said.

Associated Press writer Dave Kolpack in Fargo contributed to this report.

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