After Australia’s treasurer, Josh Frydenberg, urged for Australian funds to abandon Russian investments, Australia’s largest superannuation fund, the $260 billion AustralianSuper, has committed to divesting its Russian holdings.
The fund claimed it had already began selling Russian stocks and had decreased its holdings to between $175 million and $180 million since June of last year.
Aussie had possessed at least $305 million in Russian assets, including about $140 million in shares in Sberbank, the country’s largest bank. However, due to sanctions imposed following the invasion of Ukraine last week, its European business has been devastated.
Another huge industry fund, the $76 billion Hostplus, announced that it would sell its remaining Russian assets, which it said were now worth only $10 million, down from $19 million earlier this week.
The measures come after Treasurer Wayne Swan and Minister for Superannuation Jane Hume declared on Thursday night that they had a “strong expectation” that Australian super funds would divest from Russia, and that the prudential regulator would take no action against funds that did so.
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Russia was also removed off of a key index used by fund managers to direct their investments on Thursday, after index producer MSCI declared the country’s market “uninvestable.”
Earlier this week, other large funds, including Australia’s second largest, Australian Retirement Trust, as well as sovereign wealth funds the Future Fund and the New South Wales government fund, committed to selling Russian holdings.
However, because the Moscow stock exchange was closed this week and the country’s central bank has blocked processing international sell orders, selling Russian stocks is far more difficult than usual.
Aussie Super declared in a statement that it was “very concerned” about the developments in Ukraine.
“AustralianSuper is fully compliant with all relevant sanctions and has been actively managing our exposure to Russian assets in accordance with our portfolio management approach to handle changing and emerging risks,” says the statement.
Even though super funds had little invested in Russia compared to Australia’s $3.5 trillion retirement savings pot, Frydenberg and Hume said on Thursday night that “it is important that Australia sends a clear and unequivocal signal that we condemn Russia’s unprovoked and unjustified attack on Ukraine in the strongest possible terms.”
“The actions of Australia’s superannuation funds to divest Russian assets will support the government’s sanctions on Russia, in line with our international partners,” the ministers said in a joint statement.
The Australian Prudential Regulation Authority said it “would not take any action against trustees who seek to divest Russian assets in this context where trustees have evaluated such divestments in accordance with their duties.”
Concerns were expressed about how regulations governing funds’ obligations to investors would apply to political divestments, prompting the regulator’s statements.
“Since June 2021, we’ve cut the fund’s Russian investment exposure by roughly two-thirds, from 0.22% to around 0.07% of total assets.”
“As markets permit, we will continue to wind down the remaining exposure to divest our interests in Russia.”
Hostplus’s CEO, David Elias, stated that the company was “determined to totally sell our remaining direct holdings in Russia.”
“We continue to engage with our existing managers across our investment portfolios to accomplish this goal,” he said, recognizing that the Russian central bank has ordered market brokers to reject foreign clients attempting to sell Russian assets.
“We sincerely sympathize with the Ukrainian people and the dire circumstances they are in, and we believe this is the proper course of action.”
Even though super funds had little invested in Russia compared to Australia’s $3.5 trillion retirement savings pot, Frydenberg and Hume said on Thursday night that “it is important that Australia sends a clear and unequivocal signal that we condemn Russia’s unprovoked and unjustified attack on Ukraine in the strongest possible terms.”
“The actions of Australia’s superannuation funds to divest Russian assets will support the government’s sanctions on Russia, in line with our international partners,” the ministers said in a joint statement.
The Australian Prudential Regulation Authority said it “would not take any action against trustees who seek to divest Russian assets in this context where trustees have evaluated such divestments in accordance with their duties.”
Concerns were expressed about how regulations governing funds’ obligations to investors would apply to political divestments, prompting the regulator’s statements.
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