Add this to the calculation that California's two major public pension systems face over whether to scale back investments in coal companies: They lost more than $840 million on those investments last fiscal year, according to a report from a Boston-based investment firm.

The California Public Employees Retirement System lost approximately $542 million on coal, a 25 percent decline from the prior year's losses, according to the report from Trillium Asset Management. CalPERS also lost $2.5 billion in oil and gas investments last year.



IPERS investments return 3.96 percent for fiscal year

The Iowa Public Employees Retirement System, which has more than 345,000 members, says its investment portfolio returned 3.96 percent for the 12 months ending June 30, which fell short of its actuarial assumption of a  7.



Alternative investments can be used by defined contribution (DC) plan sponsors to improve diversification, potentially enhance total returns and reduce portfolio volatility, as well as streamline plan investment lineups and combat negative participant investing behaviors, according to speakers at an OppenheimerFunds webinar.

While defined benefit plans have relied on alternatives for decades, DC plan sponsors have been slow to use them. Kathleen Beichart, head of retirement and third-party distribution at OppenheimerFunds, said this has been because DC plan sponsors are worried participants won't understand the investments and there may be a low take up rate by participants or they may over-allocate or to these options. In addition, some plan sponsors are just not excited about adding another investment type to their plans.

But, Paul Temple, senior vice president and head of DCIO sales at OppenheimerFunds, said offering alternatives may help plan sponsors manage their fiduciary responsibilities and increase the probability of participants reaching their long-term goals. "Plan sponsors have a fiduciary responsibility to act prudently and within the best interest of participants," he said. "They have an obligation to diversify investments based on market conditions 'then prevailing.'"

Participants are concerned about suffering bad losses in a down market cycle, and managing that volatility is key to helping participants reach their goals, Temple noted. At the same time investments cannot be too safe or earnings will not outpace inflation. He said adding alternatives addresses these risks.

Temple added that advisers can use this to differentiate themselves from the competition. "Plan sponsors may not be looking into alternatives; they may not be paying attention to them," he said.

NEXT: How alternative investments help



With biotechnology stocks turning in stellar performances on the Nasdaq Global Exchange and digital-health startups commanding huge funding rounds at high valuations, some are talking about a bubble forming in certain areas of medical technology.

But Bryan Roberts of Venrock, who last year logged six successful exits from medical technology investments, doesn't use the word "bubble."

The industry, he said, is moving into a time of "constructive tension," a period of several years where fantastic successes will still be the norm, but will be accompanied by more consolidations and outright failures than were in the past.

While the biotech and digital-health industries may or may not be in a bubble, a number of startups that look promising today could have individual bubble bursts in the days to come, he said.

Mr. Roberts has spent much of this year working with Venrock's current portfolio, he said. He spoke with VentureWire about the latest trends in health technology.

Q:  You were pretty much the most successful medical-tech investor in terms of exits last year, what have you been up to in 2015 so far?

A: I invested in Stride Health, which is like a Zenefits for the part-time workforce. I started a company with David Ebersman, who is the former CFO at Facebook. That company is a behavioral health-care platform called Lyra Health. I also invested in Intarcia Therapeutics, and I just invested in Grand Rounds, which is bringing real value to employers and employees and democratizing the standard of care.

Q: If we're moving into a time of "constructive tension," as you say, how can you tell if a company is going to be one of the winners?

A: I look for the long-term business model. In digital health, people have business plans that show how to go from zero to $10 million or $20 million in revenue. But what comes after that? Where is the plan to get to $250 million? ... One of the big themes underpinning our investment strategy is engagement with consumers. We need to see tangible means to engage the users.

Q: Are there any areas that you stay out of?

A: I stay out of wearables, because we have not seen the persistence of usage. I don't see the ROI over time. In digital health and biotech both, there's a lot of duplication. There are these digital therapy, weight-loss products. In biotech, there are a lot of oncology molecular diagnostics, people doing DNA sequencing of tumors. These are areas where you might see some consolidations, some winners stepping away from the losers. I also avoid companies that want pharma companies as their primary customers. Their data needs ... are too fragmented.

Q: Why are you backing Grand Rounds?

A: This is a company with real value. They match patients with medical experts. It's not about just finding cheaper care, it's about finding the right care the first time. They have the way to engage the users, and they have that near-term and long-term plan. Their [second-opinion service] gets them to $10 or $20 million, and their [doctor performance data] gets them to $250 million. I think one day employers will require [employees to find care through Grand Rounds]. I put Venrock on Grand Rounds, and the CEOs of all of our companies, too. Now I get calls saying, 'It saved my mom's life! It saved my dad's leg!'

Write to Timothy Hay at This email address is being protected from spambots. You need JavaScript enabled to view it.. Follow him on Twitter at @timwhay



Four times a year, the Yuba City City Council hears an update on the citys investments. But this quarter, the report came with a glimmer of hope.

The city purchased investments at a higher rate of return than the investments it sold. Treasurer Spencer Morrison said it was one of the first times this occurred since he assumed the position just after the economy crashed.