NZ investment funds had more than $100 million invested in Russia

Originally published on Stuff, written by Rob Stock.

CHECK TO SEE IF YOUR KIWISAVER IS INVESTED IN RUSSIA

KiwiSaver research charity Mindful Money says New Zealand investment funds including KiwiSaver, ACC and the NZ Super Fund had more than $100 million invested in Russian government bonds and companies.

After analysing fund portfolio data from September, Barry Coates, chief executive of Mindful Money, found hundreds of funds owned more than $100m in Russian investments, though Russian share and bond prices have collapsed following Russia’s invasion of Ukraine.

Before the invasion of Ukraine, the NZ Super Fund’s Russian investments were listed on its website as being worth just under $25m. On Monday their value had dropped to $9m.

“Fund managers should immediately divest from Russian companies, particularly major state-backed enterprises, government bonds and the oil and gas companies that fund much of Russia’s military spending,” Coates said

“This would be a responsible investment position. The New Zealand public should be assured that their funds are not supporting the Russian state at a time of massive suffering for the people of Ukraine,” he said.

Coates has published a list of KiwiSaver schemes with investments in Russia which included ANZ, AMP, ASB, Booster, KiwiWealth, the New Zealand Defence Force, and Westpac, although Westpac announced on Monday that its KiwiSaver scheme would sell its Russian government bonds, and its shares in Sberbank of Russia, which is 50 per cent owned by the Russian government.

New Zealand does not have the laws needed to put sanctions on Russia, but countries like Briain and the United States, and the European Union have put sanctions in place.

KiwiSaver funds and state-owned funds like the NZ Super Fund and ACC were under no legal obligation to sell out of their Russian investments, Coates said.

But they should do so anyway, he said.

“It is not a responsible position for New Zealand funds to be investing in Russian companies or the Russian government. It is important that the New Zealand public’s hard-earned savings are not used to support Russia’s warmongering.”

As well as Russian government bonds, some investment funds in New Zealand own shares in Russia’s largest bank, Sberbank, and the fossil fuel producers Gazprom and Rosneft, Coates said.

Coates said fund managers should have acted sooner to get out of their investments in Russia, which would have saved their investors money as the value of Russian company shares had fallen sharply as pension and sovereign wealth funds began selling them.

“The smart and ethical investment managers have exited from Russian companies long ago when Russia’s aggression towards Ukraine and other was already obvious,” Coates said.

“They will have avoided the huge fall in the value of these companies, and even further declines in the value of companies that are subject to formal sanctions and divestment.”

A NZ Super Fund spokesman said it was assessing the implications of Russia’s actions under its responsible investment policy.

At a press briefing on Monday, Prime Minister Jacinda Ardern said she had no power to direct the NZ Super Fund on what to invest it.

The NZ Super Fund said it had shares in Russian companies from the retail, media, telecommunication, banking and financial services sectors, as well as chemical and mining companies.

The NZ Super Fund owned shares in Russia’s largest bank Sberbank of Russia.

Sberbank is 50 per cent owned by the government of Russia, which has a controlling vote over the company.

Pension funds around the world were beginning to sell out of their Russian investments, BP has announced it would sell its stake in Russian oil company Rosneft, and in Australia the New South Wales Government said it would drop A$75 million (NZ$80m) of Russian assets in one of its state investment funds.

Norway's giant sovereign wealth fund has announced it would sell all its US$2.8 billion (NZ$4.2b) investments in Russia.

All up in your business.