Australian hedge funds blessed with healthy retail inflows & international interest
The Australian hedge fund industry is enjoying renewed interest from international investors and healthy inflows from retail, which in Australia includes high net worth and self-managed superannuations, the fastest growing part of the Australian financial market. Based on a historically strong equity culture, the self-managed superannuation investor takes personally charge managing his pension assets, mainly because he or she is unhappy with the advice they got or the offerings of the institutional super funds.
Superannuation assets set to double in seven years to $3tln
According to Deloitte, over the last six to 12 months retail investors have expressed more interest in hedge funds than in the previous five years combined. With compulsory superannuation of all employee salaries set to increase from 9% to 12% by 2019, Deloitte forecasts that these uplifts will increase the superannuation industry from $1.6tln today to over $3tln already by 2020. There are even calls for further increases as high as 15%. As a consequence, this towering pool of pension assets has also attracted interest from U.K. and U.S. Fund managers looking to establish businesses in Australia.
Australia is a center of excellence for funds management. In the last three to four years, five times more funds were established in Australia than shut down. Overall 23.5% of Australian hedge funds - nearly one in four - had positive returns in 2008. John Corr’s fund for instance didn’t have a negative month in 2008.
What also helped the industry gather assets is the fact that Australian interest rates have come down. The Australian commercial banks have basically re-capitalized, and rates on term deposits that were 4.5% through to 6% are now yielding only around 2.5% to 4%, and investors have started to look for low risk alternatives, including hedge funds and alternative investments.
The Opalesque 2013 Australia Roundtable was sponsored by Eurex and Australian Fund Monitors and took place May 2nd 2013 with:
Robert Robert Graham-Smith, Portfolio Manager, Perpetual Investments
Chris Gosselin, CEO, Australian Fund Monitors
Declan O’Callaghan, Partner, Deloitte
John Corr, CIO, Aurora Fortitude
Monik Kotecha, CIO & CEO, Insync Funds Managers
Simon Shields, Joint MD, Monash Investors
Russel Pillemer, CEO, Pengana
The group discussion explored the following themes:
Why do Australian managers outperform?
Using retail financial advisors and dealer groups to place hedge funds
The attractiveness and how to approach the Australian high net worth sector
Secondary placements and IPOs are picking up in the Australian market
Listed hybrids and global resources equities
Event-driven strategies and special situations such as spin-offs, divestitures and corporate reorganizations as well as some activist driven strategies
Opportunities created by banks retreating from traditional activities
How demographics influence investor behavior
Unorthodox capital sources for Australian start-up managers
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