Rest Super told its 1.8 million mostly Millennial and Gen Z members that cryptocurrency is a good investment as inflation rises, indicating it will invest in digital assets on their behalf, before walking back the commitment and saying it is still just researching the volatile market.
Rest chief investment officer Andrew Lill said the $66 billion retail and hospitality workers’ fund saw cryptocurrencies as a “very interesting and important part of our portfolio going into the future”, seemingly suggesting the fund intended to invest digital tokens.
“I do think that, in an era of inflation, it could be a potentially good place to invest,” Mr Lill said in response to a question from a member at the fund’s annual meeting on Tuesday night.
The Cambridge-educated economist, who was recruited by the industry fund from global research house Morningstar last year, said the fund would invest “carefully and cautiously” in the nascent market.
“It’s still a very volatile investment, so any allocation exposure we make to cryptocurrencies is likely to be part of our diversified portfolio as initially a fairly small allocation that may, over time, build,” he said.
But the CIO also listed a number of perceived benefits of exposing member portfolios to digital assets, describing cryptocurrencies and the underlying blockchain technology as “disruptive” and a potential “stable source of value” compared with fiat currencies controlled by the monetary policies of central banks.
However, a spokesman for the fund issued a subsequent statement, attributed to Mr Lill, which said no firm decision about deploying member money to crypto assets had been made.
“While we are certainly considering cryptocurrencies as a way to diversify our members’ retirement savings, we will not be investing in the immediate future,” the statement said.
“We are currently conducting extensive research into the asset class prior to making any decisions. We are also considering the security and regulatory aspects of investing in this class.”
Asked whether the fund will be investing in crypto at The Australian Financial Review Super & Wealth Summit on Monday, Rest chief executive Vicki Doyle said: “No, not immediately, no.”
“If the risks are very high, you know, you need to really consider that,” she said. “That being said, as it progresses, as an industry we have to keep our eye on what those opportunities are.”
‘Not investible’
It is understood no APRA-regulated super funds currently give members access to crypto markets, but most are believed to be hotly debating the merits of including digital tokens as part of their allocation to alternatives.
Super sector sources said Mr Lill’s comments at the Rest member meeting were the most bullish heard yet by an executive of an APRA-regulated fund.
They stand in contrast to those of Paul Schroder, chief of the $233 billion sector giant AustralianSuper, who categorically ruled out deploying member money to the market.
“We don’t see cryptocurrency as investible for our members,” Mr Schroder told the Summit on Monday.
Although the AustralianSuper chief said he was interested in decentralised finance and blockchain protocols, cryptocurrencies did not meet the fund’s criteria for an investible asset because they do not generate an income stream. He said AustralianSuper does not hold gold in its portfolios for the same reason.
Traditional fund managers are increasingly being expected to take a position on the legitimacy of crypto assets, which are now worth about $US2.6 trillion globally.
US-based behemoth Vanguard, the world’s second-largest asset manager, has derided cryptocurrencies, describing them as more akin to collectables such as baseball cards, rather than a serious asset class. Vanguard is preparing to launch an APRA-regulated super fund in Australia next year, competing with former clients in the $3 trillion super sector.
Joe Longo, chairman of the Australian Securities and Investments Commission, told the Summit on Monday that he would not be a “cheerleader” for cryptocurrencies, describing the demand for digital tokens from retail investors as “extraordinary”.
“It is almost an article of faith that no one should invest in something they don’t understand,” Mr Longo said.“Who among us can say they really understand crypto-assets, and cryptocurrencies?”
But Superannuation Minister Jane Hume told the Summit cryptocurrency investing was not a fad and that Australia should not close itself off to potential crypto-related innovation or economic gains.
Founded as the Retail Employees Superannuation Trust in the late 1980s, Rest had $65.8 billion under management and 1.81 million members at June 30, making it one of the nation’s largest pension funds by customer numbers. Half of its members are under the age of 30 and 60 per cent are female.