Australia Pension Funds Line Up to Cut Unlisted Asset Values
Australia Pension Funds Line Up to Cut Unlisted Asset Values
(Bloomberg) --
Australia’s pension funds have made out-of-cycle cuts to the value of their direct holdings in assets such as airports and toll roads as the spreading coronavirus roils both public and private markets.
IFM Investors Pty reduced the value of some of its Australian infrastructure assets by around 8% on average due to the “changing market conditions,” a spokesman said Tuesday. The fund has stakes in ports and airports across Australia as well as a major toll road in Sydney, and is owned by 27 of the nation’s largest not-for-profit pension funds.
The cut followed AustralianSuper, which also on Tuesday lowered its unlisted holding values by 7.5% to reflect the economic and financial impact from the coronavirus. Cbus is also in the process of lowering some asset values, a spokesman said.
The out-of-cycle revaluations come as Australia’s government implemented its most stringent controls to date to stop the spread of Covid-19, closing pubs and restaurants and urging non-essential travel be canceled as infections soar. Australia’s pension funds revalue their unlisted assets on a quarterly basis.
“In the current unique circumstances, AustralianSuper has moved to revalue its unlisted assets so that members can have an up-to-date picture of their superannuation balances,” Chief Executive Officer Ian Silk said. “The fund will continue to constantly monitor the outlook and ensure valuations remain fair.”
The asset revaluation trimmed 2.2% from AustralianSuper’s default investment option, effective Monday, Silk said.
AustralianSuper is the nation’s largest pension fund with around A$180 billion ($107 billion) in assets under management as of early last month.
Unlisted assets, such as infrastructure, property, private equity and corporate debt, aren’t typically as volatile as listed assets, such as shares. While their values don’t rise as much as equities in periods of robust economic growth, in a downturn, they hold their value better.
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