Earlier this month, InvestorDaily reported that Senator Andrew Bragg challenged super funds with 13 questions about their participation in a high-level summit in New York and Washington, hosted by US ambassador Kevin Rudd and New York consul-general Heather Ridout.
Questions pertained to costs of attending, whether a best financial interests duty (BFID) assessment was conducted, any government assistance received, and whether a return on investment (ROI) analysis was undertaken for the summit.
So far, responses provided by four funds have been published by the Senate economics committee - AustralianSuper, Cbus, HESTA and Aware Super.
The question that attracted the most detailed responses was the one pertaining to ROI analyses. While funds didn’t clarify whether an analysis was conducted, they overwhelmingly agreed that the US is a key market for Australia’s superannuation sector, and that firsthand access is vital.
“The US is AustralianSuper’s largest investment market outside of Australia. AustralianSuper has an overseas office located in New York,” Australia’s largest fund said.
“Currently, the fund invests more than US$80 billion of members’ assets in the US market, and this is expected to grow significantly in the future.
“The summit provided AustralianSuper with cost-effective access to information and engagement that will support current and future investment in the US market.”
The summit may, in fact, have been most cost-effective for AustralianSuper, with the fund forking out US$4,000 to attend – a slim figure compared to its peers given the fund’s large physical presence in the US.
HESTA, which spent $17,200 on attendance, emphasised its “significant” portfolio exposure of over $28 billion in the US, describing the summit as a key opportunity to strengthen this position.
“The summit provided HESTA with an ongoing understanding of the rapidly changing investment environment in the US including changes to policy which could impact HESTA’s global portfolio investments,” it said, adding that the expenditure incurred is “reasonably necessary” for the prudent operation of the fund.
The amount HESTA spent on attendance – while in excess of AustralianSuper’s spend – came in well below the $27,260.75 spend by Aware Super.
“Attendance at this summit forms part of our broad US engagement approach,” Aware Super said in its response to Bragg.
“Aware Super’s diversified global investment strategy includes direct and indirect US investments across multiple asset classes.
“This event allowed the CEO to gain timely insights into the rapidly-evolving US investment climate, including potential risks to our current portfolio and future opportunities to create long-term value for our members. These insights are materially relevant to managing our investment portfolio and inform decision making, strategy and engagement,” the fund said.
Cbus avoided specifying a dollar amount in its response to Bragg, instead emphasising that “engaging with governments and advisers provides a deeper understanding of policies and likely policy changes, which is critical to assessing new investment opportunities and the potential impact on existing investments.
“With the change in government and president in the US, it is a particularly pertinent time to undertake this updated analysis.”
The summit in the US was also attended by Treasurer Jim Chalmers who suggested that in exchange for welcoming Australia’s superannuation investments, the country is prepared to supply 36 of the 50 minerals the US deems critical for advanced technology and defence.
“Around half of our exports are inputs into American domestic production processes,” the Treasurer said in a speech delivered at the summit.
“We are already one of America’s top 10 foreign investors. And we have trillions of patient, friendly pension capital ready to invest in the new opportunities that lie before us,” he added.
Australian super funds have become increasingly reliant on the US, with this reliance expected to explode from around US$400 billion to US$1 trillion over the next decade, a report commissioned by IFM Investors said.
The report, published in late February, highlighted opportunities for greater collaboration between Australian pension funds and the US, with investments in US private markets alone potentially exceeding US$240 billion by 2035.
