Institutional investors to head for hedge funds

Australian institutional investors will soon be demanding hedge funds in their investment portfolios, according to AXA global structured products managing director Barry Seeman.

Australian institutional investors will soon be demanding hedge funds in their investment portfolios, according to AXA global structured products managing director Barry Seeman.

Speaking at a Securities Institute seminar in Melbourne this week, Seeman said he expects Australian superannuation funds to follow the trend of pension funds in the United States, which are now rushing to invest in hedge funds.

"Pension funds will be going to hedge funds, there is no doubt in my mind," he said.

"It will come down to what vehicles will you use and how do you as an Australian institutional investor make a decision on which hedge fund, which are primarily US-based operations."

Seeman said there are now over 3,000 hedge funds with assets under management of $400 billion plus.

"The question isn't whether or not you should go into hedge funds, the question is which hedge funds will you ultimately go in to," he said.

Seeman’s tips for choosing the right hedge fund manager include choosing a fund which avoids "blow-ups", which sticks to its strategy and which has a free flow of information with its clients.

"When you invest in a hedge fund, it's not like having a managed fund," he said.

"You have to be in a position where you fully trust the capabilities and organisation of the hedge fund.”