Australia’s biggest superannuation fund, the $260bn AustralianSuper, has committed to divesting its Russian assets, after the treasurer, Josh Frydenberg, called for Australian funds to ditch Russian investments.
The fund said that it had already begun selling Russian stocks, and since June last year had reduced its holdings to between $175m and $180m.
Aussie previously held at least $305m worth of Russian assets, including shares in the country’s biggest bank, Sberbank, that were worth almost $140m but are now all but worthless due to sanctions introduced following the invasion of Ukraine last week that have destroyed its European business.
Another large industry fund, the $76bn Hostplus, said it would also sell its remaining Russian assets, which it said were now just $10m, down from $19m earlier in the week.
The moves come after the treasurer and the minister for superannuation, Jane Hume, said on Thursday night that it was their “strong expectation” that Australian super funds would divest from Russia and the prudential regulator indicated it would take no action against funds that did so.
Also on Thursday, Russia was kicked out of a key index that fund managers use to guide their investments after index provider MSCI said the country’s market was “uninvestable”.
Other large funds including Australia’s second biggest, Australian Retirement Trust, Aware, Rest and Cbus, as well as sovereign wealth fund the Future Fund and the New South Wales government fund, committed to dumping Russian assets earlier in the week.
However, selling Russian stocks is much more difficult than usual because the Moscow stock exchange was closed this week and the country’s central bank has banned processing foreign sell orders.
In a statement, Aussie Super said it was “deeply concerned about the events unfolding in Ukraine”.
“AustralianSuper is in full compliance with all relevant sanctions and, in accordance with our portfolio management approach, has been actively managing our exposure to Russian assets to address changing and emerging risks.
“Since June 2021 we have reduced the fund’s exposure to Russian investments by nearly two-thirds from 0.22% to about 0.07% of total assets.
“We will continue winding down the remaining exposure to divest our holdings in Russia as markets permit.”
The chief executive of Hostplus, David Elias, said the fund was “committed to fully divest our remaining direct holdings in Russia”.
“We continue to work with our existing managers across our investment portfolios to achieve this outcome acknowledging that our ability is somewhat hampered by the Russian central bank ordering market brokers to reject foreign clients trying to sell Russian securities,” he said.
“We certainly feel for the Ukrainian people and the terrible situation they’re facing and believe this is the right thing to do.”
On Thursday night, Frydenberg and Hume said that even though super funds had little invested in Russia relative to Australia’s $3.5tn retirement savings pile, “it is important that Australia sends a clear and unequivocal signal that we condemn in the strongest possible terms Russia’s unprovoked and unjustified attack on Ukraine”.
“The actions of Australia’s superannuation funds to divest of Russian assets will complement the range of sanctions imposed by the government to exert pressure on Russia, in alignment with our international partners,” the ministers said in a joint statement.
The Australian Prudential Regulation Authority said it noted the government’s position and “will not be taking any action against trustees who seek to divest Russian assets in this context where trustees have considered such divestments in accordance with their duties”.
The regulator’s statements came after concerns were raised about how rules around funds’ duties to investors would apply to divestments for political reasons.
