So that is a screen that takes a product out.
“But also the platform doesn’t want a fund that sits on the platform with $200K in it, so in their own commercial interest – completely right – they want to see demand. So it becomes quite circular.
“Technically, we are compatible with platforms. We now need to go out and find those financial planners who have an appetite…and they then have to go back to their dealer group research to get their third party research.”
Ivey says a general lack of coverage of the alternative investment space is a hindrance to more widespread take-up of hedge funds.
“There’s certainly not enough hedge fund managers and coverage of hedge fund strategies from those researchers to really cover the industry,” Ivey says.
“They have been on a steep learning curve for some time. I remember talking to managers five or six years ago, and they were complaining to me, at the industry body, that they were getting knocked back by ratings agencies saying they already had two hedge fund managers and they didn’t need a third one – some of them only had one – and they didn’t need a third one at this time to research. That certainly is part of the problem.”
On September 13, AIMA is staging the Australian Hedge Fund Forum 2011 in Sydney, which aims to “discuss the direction and opportunities surfacing in Australia, Asia and beyond, as alternatives regain their footing with investors post-crisis”.
Attendance is free for financial planners.
Ivey says that in planning the conference he spoke to a wide range of alternative managers to gauge how their businesses were tracking.
“Interestingly enough, they were seeing much more interest, they said, from planners and from family offices,” he says.
“So I asked them why was that was occurring, do they think – it wasn’t just the smart marketing aspects, I am sure – and I think it has to do with a desire…now that we’ve had 18 months or two years, nearly, of good market beta-related type returns, to…try to diversify portfolios.
“It’s not just hedge funds; it’s other sources of alternative investments.
“So we are seeing planners and high-net-worth family offices starting to come back and look at hedge funds. That’s a demand issue, but I think managers have certainly tightened up their governance, they have improved their governance, the terms of the offering, the transparency, and that has made it easier for investors here in Australia to understand.
“Overlaying this, of course, is the regulators, and the regulators are taking a heightened interest and I think that’s prudent; so we are seeing a lot more interest paid to hedge funds by both ASIC and APRA.”
