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By Laila Kearney

March 19 (Reuters) - The California Public Employees' Retirement System board on Monday voted against a proposal to move towards divesting its investments in assault rifle retailers and wholesalers, saying the move would do little to reduce gun violence.

State Treasurer John Chiang urged the board to take the step at a meeting in Sacramento. He was joined by relatives of mass shooting victims and California-based alumni of Florida's Marjory Stoneman Douglas High School where an attack occurred last month.

"If we don't do this, we'll be going against the tide of history," said Chiang, who is also a member of the investment committee and a Democratic gubernatorial candidate. "I urge you to go further."

The CalPERS board investment committee voted 9-3 against Chiang's request.

CalPERS, whose $355.4 billion in assets makes it the largest public pension fund in the United States, divested from firearms manufacturers after the deadly shooting at Newtown, Connecticut's Sandy Hook Elementary School in December 2012.

Following the Oct. 1 attack at a Las Vegas music festival that killed nearly 60 people and injured hundreds more, Chiang directed CalPERS investment officers to review the fund's lingering investments in sellers of firearms and other weapons banned in California.

“I realize much needs to be done to prevent mass killings in our country, but we need to start somewhere," said Robert Velasco, the father of Yvette Velasco, 27, a victim of a mass shooting in San Bernardino, California.

A smaller number of speakers, including a representative of the Corona Police Officers Association, opposed the plan to divest, saying it could jeopardize the sustainability of the fund.

CalPERS had about $850 million in investments in retailers and wholesalers of assault-style rifles at the time of its review. As of Monday's report on its holdings, several of the five top retailers and wholesalers examined by CalPERS, including Dick's Sporting Goods, had ceased selling the firearms in question.

Board member Bill Slaton, who was among the "no" votes, said CalPERS would have more influence over companies it invests in as opposed to ones it divests.

“We have found that engagement is a better alternative for us to be able to accomplish something in this arena,” Slaton said, adding: "We have exactly the same mission that you have with regards to the issue of guns." (Reporting by Laila Kearney in New York; Editing by Daniel Bases and Cynthia Osterman)