People walk past a currency exchange office screen displaying the exchange rates of U.S. Dollar and Euro to Russian Rubles in Moscow's downtown, Russia, Monday, Feb. 28, 2022. Credit: Pavel Golovkin / AP

AUGUSTA, Maine — Maine’s state employee pension system wants to ditch Russian investments that are effectively worthless after the invasion of Ukraine, but it cannot right now.

State pension systems are balancing a volatile market entering the second week of Russian leader Vladimir Putin’s invasion with a desire to divest from the country. Russia blocked brokers from selling securities owned by foreign investors this week in response to withering sanctions from the U.S. and allies that tanked the Russian economy almost overnight.

The Maine holdings — valued just below $19 million at the end of January and spread across 22 different investments — amounted to roughly a one-thousandth of the $19.3 billion managed by the Maine Public Employee Retirement System. The total fund is down about 1 percent since late February due to wider economic strife spilling out of the conflict.

The majority of the holdings are in three companies: two energy giants, the state-owned Gazprom and the private Lukoil, and Sberbank, the country’s largest bank. The holdings are basically worthless since the ruble has bottomed out, said James Bennett, chief investment officer of Maine’s retirement system. But he said it should only be a small problem.

“[$18 million] is a lot of money, but not so much in the bigger scheme of things,” Bennett said. “We are watching the situation closely.”

The wider dip in Maine’s fund is partly due to the state’s non-US public equity holdings being tied to a large foreign stock market index that dropped Russian stocks two days ago. Russia made up about 1 percent of the countries Maine was invested in through that index. That particular move still had relatively little effect because stocks had already tanked.

U.S. pension systems are not closely linked to Russia. Kentucky sold Sberbank shares of just before the invasion and took a relatively modest loss, according to the Louisville Courier Journal. California had roughly the same share of its plan invested in Russia as Maine did, The Los Angeles Times reported. Missouri’s fund had about $18.6 million in investments that plunged to $1.6 million this week, the Missouri Independent reported. 

The 1 percent decrease is not unusual, Bennett said, as the Maine system’s value changes throughout the year. But there are options if things get worse. Other stocks are also affected by the market’s swings, and some stocks are more vulnerable  than others. 

Bennett said the state is consistently making new investments and selling them, so it has the option of rebalancing. But foreign conflicts are one of the reasons why Maine has a diverse portfolio, Bennett said.

“If we had all of our money in Russian stocks, we’d be in huge trouble,” he said.