'Perfect storm’ creates hedge funds opportunity
A “perfect storm” has created the conditions for investing in hedge funds, according to Future Fund former manager, debt and alternatives, Thomas Good - and retail investors should get in on the action, a roundtable of local and international investors has said.
Good said investors should have a long think about where trailing returns for fixed income investments would be in three years time.
“I don’t think many people realise that it might be a negative number and I would certainly rather put my money in liquid alternatives to try and get those returns,” he said.
Retail usage of alternatives is still quite low following the financial crisis, with indications that it is less than 1 per cent of investor allocations compared to 6 per cent in the US, Select Investment Partners chief investment officer and executive director, Dominic McCormick said.
Good said European investors had also embraced alternatives.
“We’ve (Australia) had great equity returns (so) the need to reach out beyond what you’re comfortable with has been quite low,” he said.
“However, we’ve got something of a perfect storm. We’ve got challenging fixed income markets, we’ve got a declining cash rate ... alternatives offer a different way of getting exposure to markets but also of controlling your market risks.”
McCormick said that as product developers responded to retail demands for greater transparency, liquidity and competitive pricing, investors should take a global perspective on the asset class and consider dynamic allocations of 5-35 per cent. Investors should re-weight alternative portfolios depending on opportunities in other markets, he said.
Recommended for you
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
Amid a growing appetite for alternatives, investment executives have shared questions advisers should consider when selecting a private markets product compared to their listed counterparts.
Chief executive Maria Lykouras is set to exit JBWere as the bank confirms it is “evolving” its operations for high-net-worth clients.
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
