When Julian Robertson last visited Australia he said Australian fund managers are "a breath of fresh air", operating in a ”financial environment far more promising” than what he sees back home in the U.S. At the same time, he was surprised how little institutional money the hedge funds here were running. Over one year has passed since those comments, and our Opalesque 2012 Australia Roundtable held in Melbourne in May gives an in-depth update on this fourth largest pension market and its impressive hedge fund community.
Performance of Australian hedge fund managers in aggregate is very good, outperforming both offshore peers as well as their local benchmarks
Aussie hedge funds are strong performers with astute risk management, but so far, large Australian institutional investors often focused their attention offshore for global absolute return exposure, however currency and hedging costs have been a big drag on performance. Australian asset consultants and large investors have therefore significantly added internal research capabilities directed at alternative investments and started to allocate more to domestic hedge funds.
The asset base of Australia's superannuation funds, where employers have to pay a minimum of 9% of every employee's salary to a registered fund, stands now at around A$ 1.4 trillion and keeps rising. However, 36% of those assets are now managed in selfmanaged superannuation funds or SMSFs. These are essentially individuals who want and are able to manage and be responsible their their own financial retirement and represent the largest single segment of the superannuation industry.
How Aussie hedge funds set up multi channel distributions, expand overseas and deal with fee discussions
Some Australian hedge funds have successfully set up multi-channel distribution to retail, mezzanine, institutional, high net worth and strategically target these SMSFs. In addition, a number of Australian funds have opened offices in Hong Kong or Singapore over the last 12 months. The main motive is to be to closer to the investors from North America and Europe traveling to Asia.
Australian hedge funds successfully market to high net worth individuals and fund of funds, whose primary focus is on performance. The typical hedge fund fee structure in Australia is 1.5% management fee and 20% performance fee. Despite frequent debates over these fees, smart institutional money understands that exceptional talent is in short supply, and are therefore prepared to pay for it. As elevated volatility will be around for a while, Australian and global investors are forced to look at fee-adjusted return and other parameters like volatility-adjusted returns and returns per unit of risk.
Mark Wightman, Head of Alternatives Strategy, SunGard
George Colman, Principal and Portfolio Manager, Optimal Fund Management Australia
Mark Burgess, Principal of Kardinia Capital and Portfolio Manager of the
Bennelong Kardinia Absolute Return Fund
Jarrod Brown, CEO of Bennelong Funds Management
Henk Huitema, Head of Singapore Branch, Eurex Group
Peter Los, Founder, Managing Director and Portfolio Manager of Eye Management
Chris Gosselin, Founder, Australian Fund Monitors
... background and facts about:
How are changes in asset allocations effecting the Australian alternatives managers?
Who is the investor base in Australia and what are they asking of managers?
How does the global regulatory environment impact managers in Australia?
What is the reputation of UCITS funds in Australia?
Why Australian managers are turning their focus to Asia?
What are the benefits of Eurex Clearing's recently introduced Client Asset Protection scheme for hedge funds and CTAs?
The Opalesque Australian Roundtable was sponsored by Eurex, SunGard and Australian Fund Monitors.
The Opalesque Roundtable Series offers unparalleled intelligence on the most important global hedge fund jurisdictions and their players. The Roundtable Series is a free publication from Opalesque and is continually updated. Please scroll down to view the full selection of our Roundtables - covering the globe!