APRA softens stance but remains adamant

TheAustralian Prudential Regulation Authority(APRA) has moved to clarify its attitude towards hedge fund investing after comments it made in March alarmed investors and led to industry criticism.

The peak regulator, after liasing with the Alternative Investment Management Association (AIMA) Australia, has softened its stance but maintained a stoic position on the diligence required when investing in such vehicles.

“Despite either ill-informed or deliberately deceptive comments coming from some members of the hedge fund industry, APRA did not say that trustees should not invest superannuation monies into hedge funds,” APRA general manager specialised institutions Wayne Byres told an Australian Institute of Superannuation Trustees function recently.

“What APRA did stress is that investment decisions need to be informed. Trustees must be able to demonstrate that they have performed the fiduciary duties that are imposed on them to act in their members’ best interests. They cannot demonstrate this if they are making investments without important relevant information.”

Therefore APRA is requesting a number of super funds provide it with information detailing the level of alternative investment assets held.

AIMA Australia regulatory committee chairman Kim Ivey says it has been working closely with APRA over the past few weeks to facilitate greater education levels on both sides over what the other party is trying to achieve.

“It’s really about clarity, and if there is onus or heightened responsibility, it is between the superannuation fund and the regulator. That’s where the demand for greater transparency and due diligence lies.”