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Regional Australian Hedge Funds

Todays Date: January 21, 2019

An investment fund open to a limited range of investors who undertake a wide range of investments and trading activities other than the traditional forms of investments is defined as the Hedge Fund. Every Hedge Fund usually comprises of its own unique investment strategies and caters to a broad range of investments including shares, commodities and debts.

Australia being one of the largest financial markets in the world has a highly competitive environment with an open and transparent business system possessing skilled and multilingual workforce has emerged as a strong competitor for the other major G7 countries. The nation boasts of an uninterrupted economic expansion at a rate well over the world average for the past 15 years.

With the Australian dollar being the sixth most actively traded currency in the world, right now the economy is being bolstered by an increasing number of firms locating their Asian time zone foreign exchange business in the country.

The Hedge Fund industry of Australia accounts to a total of $46.6 billion US dollars and has grown rapidly to become the largest in Asia. More assets are being controlled by the Hedge Fund managers in Australia when compared with the managers of Hong Kong and Singapore put together. This demonstrates the international fund management capabilities of the Australian Hedge Fund industry. This huge success can be attributed to the fact that the country is blessed with an access to a highly skilled, experienced and talented pool of workforce, sophisticated managed funds and an investment banking community. Another important aspect of the Australian Hedge Fund industry is the presence of strong service providers managing the risk assessments, unit pricings and other operational procedures within the sound governance structure that underpins the financial services industry of Australia.

The industry which covers both the regional as well as the global markets is growing at a rapid pace and the assets under management have tripled in the past 2 years. There are a total of 66 Hedge Fund managers in Australia which offers an extensive variety of strategies including event driven, relative-value, long/short, arbitrage, fixed income/credit, derivatives and futures. There are a total of 129 Hedge Fund products in Australia way ahead of the 92 in Singapore and 61 in Japan. A total of 12 Hedge Fund incubators are there which in addition to start up management and administrative services, offers seed capital too. Amazingly the Hedge Fund launches in Australia have low start-up and annual running costs. The annual recurring cost in Australia is also low compared to the other centers in Asia. The various investors in this particular industry are the Australian pension fund investors, high net-worth individuals and the retail investors. The service providers are the various prime brokers which includes the Citigroup, ABN AMRO, ANZ investment bank, Barclays Capital, JP Morgan to name a few.

With some recent taxation changes like the removal of ‘management of funds’ from the ‘blacklist’ of non-eligible business activities, increment in the Foreign Investment Fund balanced portfolio exemption threshold from 5% to 10% the growth of the Australian Hedge Fund industry is surely going to be pitch forked.

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