Hedge funds making a conservative return
Despite hedge funds' average net annual return at 15.6 per cent, a 13.5 per cent increase since 2010, the rate of growth seems to be conservative, according to Australian Securities and Investments Commission (ASIC) data.
After the global financial crisis investors avoided hedge funds but returns gained rapid growth between 2010 and 2012 with returns at 2.1 per cent and 7.8 per cent respectively.
ASIC's 2014 hedge fund survey found that hedge funds only manage four per cent of all Australian managed fund assets.
Out of the country's $2,407 billion managed funds industry, single manager hedge funds accounted for $83.7 billion, and funds of hedge funds $12.2 billion. More than half of these hedge funds hold less than $50 million each.
The survey also found that retail director investors accounted for 17 per cent of investors by net asset value, and 49 per cent through an investor directed portfolio services (IDPS). In 2012, the retail direct investors accounted for 9.7 per cent, and IDPS 2.1 per cent.
ASIC said this change was on the back of managers' lack of detailed information about the investor types, and changes to how managers classify investors.
Listed equities were found to have the greatest exposures with net investments valued at more than $26.3 billion, followed by cash at $5.7 billion.
ASIC also noted that since 2012 the largest geographic exposure is no longer Australia, but North America with 29 per cent of net asset value. This was followed by Asia-Pacific (ex-Australia) at 26 per cent, and Australia at 25 per cent.
Recommended for you
Almost 70 per cent of asset managers are planning to control costs via product rationalisation, according to a global survey by Northern Trust, as they seek to offer clients a best-in-class experience.
Fund managers should work collaboratively with data providers to minimise greenwashing risks in their products as a positive ESG score can be a “gamechanger” for a fund’s demand with advisers.
Asset manager Janus Henderson has made two acquisitions in the ETFs and emerging markets space as it takes strategic steps to meet client needs.
Self-reporting issues to ASIC could lead to a reduced charge for a fund manager but it may not exempt them from enforcement action altogether, according to ASIC chair Joe Longo.