Superannuation funds have been told they will not face regulatory action if they seek to divest Russian assets, although the shutdown of the Russian stock market makes it difficult for funds to exit quickly. their assets.
The Australian Prudential Regulation Authority (APRA) released a statement and said Russian assets represented a “very small proportion” of total pension assets.
“APRA will not take any action against directors who seek to divest Russian assets in this context where the directors have considered such divestments in accordance with their duties.”
This was backed by the Financial Services Council (FSC) which said it would develop guidance for pension fund administrators and fund managers to help them:
- implement all sanctions imposed on Russia by Australia;
- eliminate new investment in Russian assets by pension funds;
- review their portfolios with a view to reducing exposures to Russian assets that are not currently subject to divestment sanctions when market conditions permit; and
- have the appropriate compliance resources to achieve these objectives.
Several funds, including Australian Retirement Trust, Cbus and Aware Super, had issued statements about their policy regarding Russian assets. Although they are underweight the country in their portfolios, they said the closure of the Moscow Stock Exchange (MICEX), which had lasted four days so far, made it difficult to take action.
Ian Patrick, Chief Investment Officer at Australian Retirement Trust, said: “Australian Retirement Trust instructed its investment managers earlier this week to sell any remaining debt and equity investments and to make no new investments in Russia, in Ukraine or Belarus, which has now entered into conflict alongside Russia.In doing so, investment managers have been tasked with ensuring compliance with all legal requirements imposed by Australian law and other regimes relevant penalties.
“In some cases, this may prove difficult, as some key markets remain closed or difficult to access. We cannot rule out minimal exposure despite our managers’ best efforts; nor can we exclude the likelihood that some of the companies in which Australian Retirement Trust invests may have exposure to assets in the relevant countries. However, we certainly expect these companies to conduct their business in compliance with all relevant sanctions and applicable laws.
Australian Retirement Trust said it had less than 0.2% in its Super Savings account and none in its QSuper account.
A statement from Aware Super said: “We took immediate action to sell our direct exposure to Russian assets in our portfolio last week. We had identified extremely low direct exposure to Russian assets of approximately 0.03% of our funds under management.We have no direct exposure to Ukraine.We also instruct all asset managers we work with to ensure that no new investments in Russia enter our portfolio.
A Cbus spokesperson said: “We are underweight the benchmark in Russia within our emerging markets equity asset class and at the overall fund level we have very limited exposure (around 0 .1% of total assets). This will continue to be reduced where possible and we continue to monitor the situation closely. We do not hold any Russian bonds.”