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July 10, 2003 at 08:00 PM
SYDNEY, Australia (HedgeWorld.com)–Australian superannuation trustees have allocated A$1.25 billion (US$ 830 million) in hedge funds, according to a survey completed by the Australian Prudential Regulation Authority, the regulator of that country’s financial services industry.
Although that amount may seem low, the survey only represents 28% of the total assets managed by the superannuation industry, according to APRA. A total of 200 funds reported back to the regulator, and 15% said they had made hedge fund investments.
APRA viewed the results as an indication that trustees in general haven’t placed significant portions of assets in hedge fund investments to date. That may come as a relief to the regulatory agency, since earlier this year, APRA warned trustees to beware of hedge funds and described hedge funds as high-risk vehicles with the potential to detract from the investment strategy of the superannuation fund and even place the fund members’ assets at risk.
The survey also revealed that on average hedge funds make up only just over 4% of trustees’ portfolios. Only a small proportion of those using hedge funds reported allocations of more than 10% of their superannuation portfolios.
Overall, most of the hedge fund investments are split between two hedge fund managers, with more than 50% having used a hedge fund of funds manager instead of investing directly in hedge funds. Also the universe of hedge fund and funds of funds managers remains small in Australia, with the 200 superannuation funds surveyed only using 48 different funds.
