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From Precy Dumlao, Opalesque Asia:

Participants in the latest Opalesque Australia Roundtable (report here) reached a consensus that consultants enjoy a big influence in Australia's hedge fund industry but that conflicts of interest can mean that these relationships do not always benefit investors.

Chris Gosselin, founder of Australian Fund Monitors said that the huge influence of consultants affects not only local managers, but also offshore fund managers who want to raise capital in Australia.

The biggest hurdle for hedge funds is that many consultants will not even track or perform due diligence on funds that do not have at least one billion dollars capacity. For consultants, a manager that has an asset intake limited by strategy constraints would reach capacity quickly and need to be taken off their recommended list.

"This creates a potential conflict of interest, and is not necessarily in the best interest of the investor," Gosselin said.

Heavy reliance on consultants Australian investors often prefer to rely on consultants. Hedge fund managers can try and draw the attention of such consultants, and many would happily extend the levels of transparency required for these consultants to do in-depth due diligence on their funds. However, the discussions during the Roundtable provided a clear view as to the......................

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