Retirement
Superannuation must choose between ‘patriotism and profits
As the trade war continues to drag on, investors are becoming more concerned with whether their investments should be used to fund companies that could be against national interest, a fund manager has suggested.
Superannuation must choose between ‘patriotism and profits
As the trade war continues to drag on, investors are becoming more concerned with whether their investments should be used to fund companies that could be against national interest, a fund manager has suggested.
In a presentation during the UBS Australasia Conference 2019, the founder and managing partner for Aitken Advisors, James Aitken, outlined why there’s increasing discussion around Chinese assets, as fund managers are investing heavily into China.
“The point that senator [Marco] Rubio and others are making: is it appropriate that a growing proportion of American and Western savings are being automatically allocated to companies that might not necessarily be our friends?” Mr Aitken noted.
Part of China’s rebalancing and deleveraging strategy involves tremendous amounts of foreign allocation to provide a soft landing, according to Mr Aitken.
Mr Aitken noted that while Congress in the United States might not be able to stop investment into China, its current narrative around a Chinese enemy could sway pension funds away from buying Chinese assets.
“Many elements of this discussion are quickly becoming: are you with us or against us?” Mr Aitken said.
The fund manager highlighted the potential for Australian superannuation funds to follow as investors question what their money is being used for.
“There will be more and more questions about whether it’s appropriate for Australian superannuation funds to allocate to a Vanguard strategy or whoever it happens to be. Is it appropriate when there’s domestic national security concerns about certain aspect of CCP behaviour that Australian saviours are potentially underwriting stuff that could be used against us?” Mr Aitken said.
On the other side, some of the juiciest tickets in the world come from Beijing, the fund manager continued.
“You have these enormous mandates being offered from Beijing, clips of $5 million to $10 million with extremely generous fees,” Mr Aitken said.
He believes global funds into China will continue due to this, as there is nothing that anyone can stop it other than create noise.
“In terms of the money coming out, as we’ve seen over the past 18 months, there’s more questions being asked: is it appropriate that Chinese firm buys that asset in Germany, France, Canada or even Australia?” Mr Aitken continued.
The fund manager said that while investors are happy to take Chinese money, including in situations such as the selling of Bellamy’s to a Chinese company, ultimately investors through pension funds will have to choose between “patriotism and profits”.
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