Hostplus CIO Sam Sicilia

Some of Australia’s largest superannuation funds are preparing to step in and snap up assets owned by Hostplus, helping the beleaguered industry fund address any liquidity issues, people familiar with the situation said.

This comes as the $50 billion industry fund is said to have told property investor ISPT that it wants to redeem $1.5 billion from their core fund,  as first reported by the Australian Financial Review.

An existing unitholder of the ISPT fund, who declined to be identified because the discussion was private, said they were approached over the weekend about their appetite for participating in an offering of the Hostplus units. An ISPT spokesperson said mechanisms in the fund’s trust deeds enabled investors to sell their units. Over the past few years, more than $1 billion of units had been sold this way.

Some industry funds are said to be concerned about the ability of not just Hostplus but also Rest Super to meet the redemption requests of their members, who mostly work in the hospitality and retail industries that have been hardest hit from the outbreak of the coronavirus. Hostplus and Rest both held more than 40 per cent of illiquid assets in their balanced funds before the market rout.

A spokesperson for Hostplus, which has raised an extra $4 billion to meet liquidity needs, declined to comment. Meanwhile, Rest said it was “currently well placed” to support the government’s early release measures that allow struggling Australians to tap up to $20,000 of their super early over two financial years.

“We stress testing our liquidity position regularly, and are currently comfortable with our financial position to handle a variety of early release scenarios,” a Rest spokesman said. As of February 29, the default core strategy fund had around 50 per cent allocated to cash and shares, he added.

Even so, lower-income workers such as those that work in retail and hospitality, are twice as likely to be out of work from the pandemic compared to high-income earners, according to estimates compiled by the Grattan Institute. It expects between 14 to 26 per cent of workers across Australia to be out of work as a direct result of the government’s shutdown to contain the virus. It also said that more than half of all workers in the hospitality industry could lose their jobs, along with many employed in retail, education and the arts.

As of last week, more than 881,000 people had registered their interest with the Australian Taxation Office to potentially withdraw from their super early under the government’s new rules. The ATO will start sending the successful claims to the relevant superannuation funds this week who then have five working days to transfer the money into individual bank accounts.

Sarah Jones is the deputy editor of Investment Magazine. She previously worked for Bloomberg News in London for more than 12 years covering equity markets and global asset management. Prior to moving to the UK, she worked for Australian Associated Press in Sydney covering economics and monetary policy.
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