Colonial to launch multi manager hedge fund
Colonial First State Investment Managers will be expanding its alternative asset management to include multi manager hedge funds by the second half of the year.
According to Colonial chief executive Chris Cuffe, the multi manager hedge fund will offer the retail and wholesale market an opportunity to invest in a non-conventional asset class that "encompasses a greater variety of investment instruments and investment techniques".
Cuffe says that the launch of a multi manager hedge fund is largely in response to research that shows investors increasing their allocation to alternative investments.
"Being a large fund manager, it is logical for Colonial First State to expand its alternative investment operations," he says.
"The multi manager hedge fund is a continuation of a business plan that began in 1999 with the purchase of a 50 per cent share of venture capital company Hambro Grantham, which we increased to 100 per cent ownership in 2000."
Colonial general manager of investments John Pearce says the underlying managers in the fund will be international, as most hedge funds are presently more numerous overseas, especially the United States. However, Pearce points out that Colonial is a supporter of the local markets and expects that Australian managers will be more frequently used as hedge funds take root on local soil.
Pearce says that investors are increasingly drawn to alternative investments such as hedge funds as a result of the current economic climate.
"The lack of correlation with other asset classes is one major attraction to investors. Added to this are the prospects over the next five years of low interest rates, low inflation and the possibility of single digit returns in traditional asset classes," he says.
Cuffe concurs with Pearce on the independence of hedge funds from other asset classes.
"The returns of hedge funds are not correlated to other asset classes. Therefore, Hedge Funds are particularly attractive within a diversified fund," Cuffe says.
The multi manager hedge fund is planned for the second half of 2001. Cuffe says that Colonial is still consulting with researchers in considering possible managers and the timing of its entry into the hedge funds market in Australia.
Recommended for you
Lonsec and SQM Research have highlighted manager selection as a crucial risk for financial advisers when it comes to private market investments, particularly due to the clear performance dispersion.
Macquarie Asset Management has indicated its desire to commit the fast-growing wealth business in Australia by divesting part of its public investment business to Japanese investment bank Nomura.
Australia’s “sophisticated” financial services industry is a magnet for offshore fund managers, according to a global firm.
The latest Morningstar asset manager survey believes ETF providers are likely to retain the market share they have gained from active managers.
