Hedge fund industry a potential export

Australia’s hedge funds industry may need to step us as a new export vehicle for the country, given the nation’s current account deficits and the fact it cannot rely on the resources boom forever, according to Shadow Minister for Foreign Affairs, Trade and International Security Kevin Rudd.

Speaking at the Australian Hedge Funds Summit, Rudd said that since the launch of the first Australian hedge fund in 1997 the industry had experienced rapid growth, showing it was clearly dynamic despite its critics.

“As of June 2005, the Australian hedge fund industry was valued at $35 billion, with $22 billion invested directly with hedge funds, and a further $13 billion invested in funds of hedge funds,” he said.

“This makes Australia by far the largest hedge fund manager in Asia, with twice the level of funds under management as Hong Kong — the second largest.

“Yet, this is a tiny fraction of a massive and growing global industry.”

Rudd said Australia’s hedge fund success represented just 1.75 per cent of the $2 trillion under management by hedge funds globally, but the nation was well placed to take advantage of this emerging market.

Among the countries he sees suitable for targeting in terms of hedge funds exports are Japan, Hong Kong and Singapore.

“However, it is pension funds in Asia which provide the greatest potential market for Australian hedge fund managers,” Rudd said.

“By 2015, pension funds are expected to grow to $897 billion in Japan, $275 billion in South Korea, $124 billion in Singapore and $112 billion in Hong Kong.

“This growth provides a substantial potential market for the hedge fund industry — as regional fund managers seek to better manage their risk.”

The Shadow Minister also reaffirmed the commitment he made at the Investment and Financial Services Association (IFSA) conference in August that a Labor Government would establish an Australian Funds Management Export Taskforce.