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Alternative Market Briefing

The return of the fund of hedge funds predicted Downunder

Monday, November 18, 2013

Beverly Chandler, Opalesque London:

Damien Hatfield of Triple A Partners has published his latest Australian hedge fund newsletter and finds, finally, a reason to be cheery about the Australian hedge fund industry, and funds of funds in particular.

"2014 could be a standout year for Australian hedge funds" he writes, reporting that since the global financial crisis, Australian hedge fund managers have 'done it tough’. However, there is now something of a recovery in process, Hatfield finds, with some managers achieving good performance and improving AUM. The Bank of Bermuda Asia Hedge Aust L/S Equity Index is up 22% in the last 12 months.

Hatfield writes: "Institutional investors are adding alternatives to the asset allocation and Asset Consultants are building Hedge Fund teams."

As third party marketers, Hatfield has recently seen new potential investors and old investors beefing up their intended and existing allocations to hedge funds.

However, he warns that there still exists a tendency to compare Equity Market performance against the lower volatility performance of a portfolio of hedge funds. "Fund managers can never win. They are doing the right thing by clients, by adding exposures to assets with a low correlation to Equity markets but this can reduce the net return on a portfolio that has a standard allocation to Equities. Non market pr......................

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