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Komfie Manalo, Opalesque Asia:

Investment consultants recommend hedge funds to clients, although they add that "getting them into client portfolios is generally a challenge," said Aongus O'Gorman, Senior Investment Consultant Aongus O'Gorman at Willis Towers Watson in Sydney.

"There is a spectrum of approaches in hedge funds, incorporating skill-based strategies and alternative beta," O'Gorman said at the latest Opalesque Australia Roundtable. "Our clients are generally quite open to considering capturing underlying alternative betas that can be delivered at fees of 50 to 100 basis points. This fits with the market down here, which is very fee focused. Whilst perhaps not as diversifying as the unconstrained skill you should capture from a quality hedge fund, the lower costs are attractive."

He added that in reality there would be no such thing as an "average" hedge fund, but if there was one, it would basically have a reasonably significant exposure to equities alongside an exposure to cash. But such a fund is not going to deliver much in this low return environment, also because the fee level will be too high.

Therefore, from an absolute return perspective, with cash rates close to zero, the expected reward for this complexity is often not sufficient relative to the fees that are being......................

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