Fronting the standing committee on economics, ethical retail fund Future Super copped a bipartisan savaging as it tried to defend the fact that 63 per cent of the fund was allocated to two BetaShares ETFs despite marketing itself as an impact investor.
“We are in effect active managers of those ETFs by way of continuously assessing the underlying assets that are a part of those ETFs. They have to continuously meet our screen. So that means it’s not a passive investment, it’s an active investment,” said Future Super special adviser Fahmi Hosain.
Standing committee chair Tim Wilson questioned why one of the ETFs had no exposure to renewable energy but was invested in Cleanaway, which has been repeatedly fined by the Environmental Protection Agency. Mr Hosain defended the admission by saying that Future Super did have investments in renewable energy – outside the ETF.
“To be frank, it seems to me that consumers are being misled by your activities around how investment decisions are being made and what is promised and advertised,” Mr Wilson said.
“I get the point that it isn’t just in single ETFs, but it doesn’t change the fact that there are serious issues around what’s happening within those ETFs or whether there is full exposure to entities you claim you aren’t investing in. Aren’t consumers being misled?”
Standing committee deputy chair Andrew Leigh echoed Mr Wilson’s point, questioning why “promoters” like Future Super and an associated fund, Verve Super – which markets itself as a super fund for women – had significant crossover in their investment allocations.
“It smells to me that you have set up a model that is reminiscent of some of the more problematic practices that we saw in the banking royal commission. We’ve heard about the particular marketing fees that are being charged by promoters that are selling a pretty similar product…I see very little difference in the actual investment strategies of these funds,” Mr Leigh said.
“It looks to me that promoters are just dragging in different subsets of the market to then invest them in exactly the same product.”
Mr Wilson also reprimanded representatives from the funds’ trustee, Diversa, for failing to appear before the committee on several occasions.
