Opalesque Roundtable: Australian Superannuation funds start seeding hedge funds while shifting assets from “mega” fundsOpalesque has published a 24 page protocol of a hedge fund Roundtable held in March with local hedge fund managers, institutional investors and prime brokers. The Opalesque Roundtable Series highlights fundamental developments within the global hedge fund industry, a full archive with 48 Roundtable scripts can be accessed here: www.opalesque.com/index.php?act=archiveRT. The current Australia Roundtable can be downloaded here: www.opalesque.com/RT/RoundtableAustralia2011.html.
The Australian hedge fund community is a sophisticated marketplace with tremendous talent. Many of these managers are ex-pats who have worked overseas in New York, London or Asia and have come back home for lifestyle or family reasons. At the moment, around 90 Australian hedge fund managers offer over 240 funds, and 2010 was a good year for them, returning on average 10% against a flat ASX200. Because they are overlooked, sometimes even by the local investors, there are some good opportunities. These funds would certainly be able to raise substantial amounts of assets in the U.S. or Europe with the same quality individuals.
Recently, both international investors and local Australian investors like the large “super funds” have begun to allocate more to Australian hedge funds. This is seen as a major shift and stamp of approval for Aussie managers, given that historically most of the allocations from the larger supers have gone offshore. In addition, Australian high net worth individuals and family offices are starting as well to include more domestic hedge funds in their asset mix.
By now, Australian hedge funds deploy a large range of strategies. Out of the seven hedge funds set up in 2010, only one of them was Australian equity long/short and the others were all either merger arb, global macro or had an Asia-Pacific focus.
Some Australian Superannuation funds shift assets from “mega” hedge funds
The Australian superannuation sector is the fourth largest and fastest growing global pool of pension assets. Employers have to contribute 9% of all wages, salaries, or earned income by law into a registered superannuation fund. Some of the super funds have up to 10% of their assets in hedge funds, and have started to use them to run more of their equity bucket in the hedged format, which could be a trend with large implications going forward.
Some superannuation funds have started shifting assets from large “mega” hedge funds into smaller and emerging managers. And not all of them request a five year track record. For example, the Sunsuper funds was a third month investor in a New York based credit fund and even seeded another credit fund. As a consequence, superfunds report a heavy traffic from offshore hedge funds coming to Australia for marketing over the last 18 months. This Roundtable offers invaluable insights what the “supers” are looking for.
One-third (by value) of all superannuation money is now self managed and held in what is called a Self Managed SuperFund or SMSF. The high net-worth and educated investors want to manage their retirement funds themselves, this pool of money that constitutes an unique opportunity for money raising for Australian hedge funds. With the right set up and distribution, hedge funds can also market to Australian retail through financial planners, which can be “at least as good (educated) as the best people from offshore fund of funds”.
The 2011 Opalesque Australia Roundtable was sponsored by Australian Fund Monitors and took place March 2011 in their Sydney office with:
• Bruce Tomlinson, Portfolio Manager, Sunsuper Superannuation Fund
• Chris Gosselin, Founder, Australian Fund Monitors
• John Corr, Chief Investment Officer, Aurora Funds Management & Founder, Fortitude Capital
• Dereke Seeto, Managing Director, Credit Suisse
• Phil Carden, Portfolio Manager, Supervised High Yield Fund
The Roundtable discussion also highlights:
• How to crack the Australian institutional market
• Asset allocation, manager selection process of a leading superannuation fund and what hedge fund strategy the institution is interested in
• How important is “marketing” for a hedge fund? What is the “right” kind of marketing? Investors warn what types of marketing is a read flag for them...
• How Australian hedge fund managers overcome the “tyranny of distance”
• Why investors in the Supervised High Yield Fund count amongst the most financially literate in all of Australia
• “My bills cannot wait for the market to rally”: why alternatives and hedge funds should be in every portfolio
• Regulatory Update
About the Opalesque Roundtable Series:
The Opalesque Roundtable Series highlights fundamental developments within the global hedge fund industry, a full archive with over 40 Roundtable scripts can be accessed here: www.opalesque.com/index.php?act=archiveRT.
Matthias Knab, founder of Opalesque and internationally recognized expert on hedge funds and alternatives, moderates the Opalesque Roundtables.
In 2003, with the publication of its daily Alternative Market Briefing, Opalesque successfully launched an information revolution in the hedge fund media space: "Opalesque changed the world by bringing transparency where there was opacity and by delivering an accurate professional reporting service." - Nigel Blanchard, Culross. This hybrid financial news service, which combines proprietary industry news stories and filtered third party reports, has been credited by many industry insiders with delivering precise, accurate, and vital information to a notoriously guarded audience.
Each week, Opalesque sends out over 700,000 editions of its seventeen publications to a global readership in over 170 countries. Opalesque is the only daily hedge fund publisher which is actually read by the elite managers themselves (http://www.opalesque.com/op_testimonials.html).
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