A group of trustees and public commenters pressed CalPERS to perform an individualized risk review of the fund’s largest passive equity holdings, singling out Tesla as a high‑risk holding that merits an immediate staff review.

Director Lisa Middleton and Director Theresa Taylor (and Director Willette during discussion) raised concerns about the concentration, valuation and governance risks associated with very large passive positions. Trustee Willett moved that staff investigate the risks of CalPERS’ Tesla exposure and report back with recommendations, noting public commenters’ concerns about board independence at Tesla, executive compensation and operational headwinds.

Public speakers including Ruth Rudetsky, Edward Hasbrook, Mary Jo Walker and others urged the board to adopt a new policy requiring staff to review at least the 20 largest individual public equity holdings in index allocations periodically. Speakers cited examples and argued that passive indexing does not absolve the board of a duty to examine outsized exposures and unusual governance situations. Several commenters said they believed Tesla’s valuation and governance present material risk that passive indexing has left unexamined.

Staff response and next steps: Trustees instructed staff to prepare a report on Tesla and on the feasibility of an annual or twice‑annual heightened review of the fund’s largest passive holdings. No formal disposition on divestment or sale was made during the meeting.

Ending: The request adds to ongoing debates about how large passive positions should be monitored and how stewardship, proxy voting and active management tools should interact with passive indexing.