Hostplus chief investment officer Sam Sicilia has defended investments in venture capital and other unlisted assets saying cash is the riskiest asset class because it provides no returns.
"It’s not gambling. Gambling is the hope of getting a return, you put your money on number seven in the roulette wheel and you are hoping the ball lands on seven. Hope is not a good investment strategy, the amount of due diligence that goes on before a dollar gets invested in is astronomical," Mr Sicilia said.Hostplus has the highest level of exposure to this asset class compared to any other super fund, with 2 per cent of its total funds invested across more than 30 VC funds.
But he said for a major super fund, a small allocation to VC was prudent as it provided good returns for members and further diversified the portfolio. "I'm looking at other funds and saying – why do you have so little?" He rejected the idea the VC was riskier than other asset classes: "What are your options? Put it in cash an earn zero? Put it in Australian equities or international equities with the volatility we’ve seen recently?"Hostplus advised members in April it had written down assets in response to the uncertainty of the impact of COVID-19.