New Mexico's state investment officer says pulling roughly $188 million in Musk-controlled company stocks out of the state's $75 billion sovereign wealth fund would be complicated and costly, pushing back on a request from a Las Cruces lawmaker tied to Ukraine's access to Starlink satellite service. The holdings represent about one-quarter of 1% of the massive portfolio that funds schools and public services across the state.
State Sen. Jeff Steinborn, a Democrat representing Las Cruces, sent a letter dated Oct. 22 asking the New Mexico State Investment Council to review and disclose its holdings in companies controlled by Elon Musk, specifically naming SpaceX, Tesla and xAI, according to organmountainnews.com. He asked the council to pull its investments out of those companies until Ukraine has full, unrestricted access to Starlink, citing reports that Musk had intervened in Ukraine's access to SpaceX's satellite communications system. Steinborn also asked the council to review and cease investments tied to Russia.
State Investment Officer Jon Clark responded in a letter sent Monday, Oct. 26, telling Steinborn that the fund's Musk-company investments are small and mostly passive, flowing through index funds rather than being directly selected by fund managers, according to the Santa Fe New Mexican. Clark said excluding particular companies from passive portfolios is possible but may involve higher fees and other expenses, and he said the council has a legal and fiduciary responsibility to optimize risk-adjusted returns for beneficiaries without exception or political consideration. Clark said he would share Steinborn's request with other council members.
Russian Holdings Still Sitting in the Portfolio
The response also addressed a separate, older problem: despite voting to divest from Russian companies in 2022, the council still holds stakes in at least three Russian firms, including oil producers Lukoil and Tatneft and gas producer Novatek. The council paid about $10.9 million for those Russian holdings, which were valued at only about $586,000 as of Sept. 1, per a records-request report cited by the same report.
Council spokesperson Charles Wollmann described the Russian holdings as stranded assets that cannot be sold because of trading restrictions that affected many institutional investors attempting to unload Russian securities in 2022. The council has not made any new or additional investments in Russian securities since adopting its divestment directive, and it says it continues to monitor restrictions and possible disposition options with its managers and custodian. The council estimated, in an internal email from May 2022, that it lost about $16 million on Russian assets combining holdings it managed to sell and those it could not.
The council said it plans to complete the Russian divestment once a lawful and practical opportunity becomes available. Clark also told Steinborn that Ukraine has reported that Starlink services had recently been restored, though he added that the reliability of that access remains a legitimate concern.
Senator Points to Past Divestment Precedents
Steinborn said he was not convinced by the council's response and remained hopeful it would discuss the issue further. He acknowledged the importance of achieving a strong rate of return but argued the situation was extraordinary because lives were being lost, which he said warranted special attention. Steinborn said tax dollars and investment decisions should reflect public values.
The senator's letter pointed to history: the council divested from companies connected to Sudan's government in 2007 over the Darfur genocide and from South African companies amid apartheid in the late 1980s. Clark described those earlier divestments as different instances with their own details and complications, distinct from the current request.
A Fund Approaching $100 Billion
New Mexico's sovereign wealth fund is the nation's second-largest after Alaska's, and it is growing fast. The council's investment holdings report put total managed net assets at $73,388,491,935 as of April 30, up from $70,507,110,598 at the start of that same month, according to the council's own investment holdings report. A July 31 report put assets at roughly $74.6 billion, and the fund's assets grew by $5.8 billion in the most recent fiscal year alone, according to the Santa Fe New Mexican.
That growth has the fund on track to top $100 billion and overtake Alaska's as the nation's largest sovereign wealth fund by 2030, the Santa Fe New Mexican reported. Even so, the council's own FY 2026 Annual Investment Plan cautions that it expects generally lower investment returns than historical levels over its seven- to 10-year outlook, a backdrop that helps explain the council's wariness about anything that could add fees or complexity to its passive holdings. The fund's beneficiaries are mostly New Mexico schoolchildren and families, according to the council.
The council's environmental, social and governance policy, approved in August 2021, states that its core responsibility is to preserve the permanent funds for future generations and grow them at least as fast as inflation. That policy also says its implementation remains subject at all times to applicable law and the fiduciary duties of the State Investment Office and the council, and that ESG considerations are incorporated into proxy voting for both actively managed and passive publicly traded accounts where applicable.
