A survey by AIMA Australia reveals that almost 70% of superfunds – Australia’s pension funds – intend to increase allocations to hedge funds by nearly 90% over the next two to five years. AIMA surveyed superfunds with more than $100 billion in combined assets.
AIMA Australia chairman Kim Ivey says that the levels of confidence about hedge funds among superfunds have remained consistent despite concerted criticism levelled at them in Australia which has served to make the market more volatile and less well informed.
"These survey results reflect a positive confirmation of the institutional market’s perception of hedge funds," Ivey says. "We believe that with more understanding of this sector and greater operational transparency, confidence will continue to increase among all institutional investors, not just superfunds."
Superfunds still favour hedge fund products offered by institutional managers over boutique managers, however.
Funds of hedge funds remain the dominant source of hedge fund allocation, illustrating the relative immaturity of the sector in Australia compared with the US or Europe. But AIMA says this is changing, and the present 61% allocation to funds of hedge funds is expected to drop to nearly 50% over the next two to five years, as superfunds reallocate assets to single-strategy and multi-strategy managers.
