HEDGE fund managers have hit back at theAustralian Prudential Regulation Authority(APRA) over concerns voiced by the regulator last week about superannuation funds investing in hedge funds.
The managing director ofHedge Funds of Australia(HFA), Spencer Young, says he welcomes APRA’s interest in hedge funds, but labelled the statement released last week “wildly generalistic” and “headline grabbing”.
“Every point about hedge funds that APRA said should be checked out by trustees is what they should be checking out in any investment,” Young says.
While Young agrees with APRA’s view on single strategy hedge funds that all but the most sophisticated investor should stay away from these funds, he believes that APRA should take a “more reasonable” approach to diversified fund-of-hedge-funds.
Dana Hall, the managing director of US-based hedge fund manager Lighthouse Partners, says APRA’s comments are similar to statements by the Securities and Exchange Commission (SEC) in America.
“I can see they want to protect the mum and dad investors, but they don’t make any distinction between the one-man band who runs a hedge fund out of his garage and serious investment managers who have a diversified portfolio and many years experience,” Hall says.
APRA’s concerns about hedge funds were that they rely heavily on a single strategy, with broad delegations for the use of gearing and derivatives, and on a single individual to execute the investment management process.
HFA recently received the only AA rating invan Eyk Research’s first review of the fund-of-hedge-fund sector.
