Australian Superannuation Funds Use of Hedge Funds

The assets of Australian Super funds total around $1 trillion and, despite the value of hedge funds in portfolio construction, have less than 3% invested in this asset class.

The University of NSW and the Australian chapter of AIMA conducted a survey in Jan 2006 aimed at examining the attitude of Super funds to hedge fund investing. The respondents to the survey carried funds under management of more than A$145 billion.

The key findings of the study were:

• current allocation of under 3% is expected to rise to over 4% over the next 2-5 years
• the current focus on global strategies is expected to remain - surprisingly only 14% were Australian-based strategies
  
• funds of funds represented 49% of investments, although this is expected to decline in favour of individual funds and multi strategy funds in future
  
• the most popular strategy is long/short equity
• operational and governance issues were most important to those considering investment