Jane Hume and Josh Frydenberg

Institutional investors may no longer have the option to proactively distance themselves from Russia after the government started applying pressure on superannuation funds to divest their Russian assets this week.

In a joint statement on Thursday evening, Treasurer Josh Frydenberg and superannuation minister Jane Hume said the government expects super funds to take steps toward Russian divestment.

“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 statement read.

“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 prudential regulator gave superannuation funds the OK to divest Russian assets, as long as it fit trustee guidelines.

In response to the Government’s statement, APRA stated that it will not take any action where “trustees have considered such divestments in accordance with their duties”.

“Data provided to APRA indicates that superannuation fund holdings of Russian assets are a very small proportion of the $3.5 trillion superannuation asset pool,” APRA noted.

Rexit

Some institutional investment managers took the early lead to distance their organisations from Russia after the invasion commenced on 24 February, but several are playing catch up.

By the end of February, the Future Fund had implemented all sanctions imposed by Australia, the US and EU.

“We have devoted significant resources to compliance and will continue to do so as additional sanctions are announced,” it said in a statement.

“The fund holds around 0.1 per cent of the Fund or around $200 million in companies listed on the Russian stock exchange.”

The Future Fund had no holdings in Russian sovereign debt or other fixed income.

“We will be winding down the remaining exposure (which is not currently subject to divestment sanctions) as market conditions permit.”