Australian instos looking in-house on alternatives
Some of Australia’s major institutions, including superannuation funds, are increasingly going their own way with respect to alternative investments.
That is one of the assessments to emerge from the latest hedge fund-specific Opalesque Australia Roundtable, which was told by Credit Suisse Prime Services team leader Dereke Seeto that a new trend was emerging and that “a lot more of the larger institutions are considering rolling out some of their own business lines or units as alternative investment products, as opposed to investing direct into third party external funds or into funds of funds”.
“Investors seem to have a preference for direct investments and are bypassing the funds of funds,” he said. “We see the same dynamics being considered within the super funds, slowly building out teams from their investment committees with the aim of investing direct.”
Seeto told the roundtable that another change was that super funds were also allocating to local hedge funds, which represented a major shift given that historically most of the allocations from the larger supers have gone offshore.
However he said the local hedge fund industry still had to deal with the situation that the average Australian hedge fund was relatively small, compared to those being run out of places like the US or some parts in Europe.
“Given the costs now associated with assessing an overall fund, overseas investors tend to not come to Australia if the fund’s size is restrictive or does not correspond to their institutional requirements,” Seeto said.
AUTHOR
Mike Taylor
Recommended for you
The new financial year has got off to a strong start in adviser gains, helped by new entrants, after heavy losses sustained in June.
Michael McCorry, chief investment officer at BlackRock Australia, has detailed how investors are reconsidering their 60/40 portfolios as macro uncertainty highlight the benefits of liquid alternatives.
Having reset its market focus to high-net-worth advisers, Praemium’s administration solution has been selected by Bell Potter in a deal that increases the platform's funds under administration by $6 billion.
High transition rates from financial advisers have helped Netwealth’s funds under administration rise by $3.7 billion in the fourth quarter of FY25.
