Former BT head of Australian equities, Rohan Hedley, is in the process of returning $25 million to investors from a US-denominated fund his Hayberry Investments boutique has decided to close.
Hedley said that the rising interest rate differential between Australia and the US meant that the hedge over the fund, a US$-denominated version of Hayberry’s flagship long/short Australian equity fund, had become too expensive to maintain. “;Australian interest rates are heading towards 7.5, perhaps 8 per cent and you’ve got US rates projected to go to 2.25 per cent, so we’d be looking at around 5 per cent to maintain that hedge. Add that to the fund’s MER and you’ve got a 7 per cent hurdle for investors,”; Hedley said. “;I could have left the fund there and squeezed it for its last drop of fees, but I’ve got a good base of clients so I prefer to be up-front with them about what’s happening.”; Hayberry’s long/short fund had a tough time during the long bull market, given its beta of 0.15, but has recently poked its nose ahead of its ASX 300 benchmark for the first time. It lost 2.34 per cent in January while the market lost 11 per cent, and in the five years since inception has delivered 19.75 per cent compounding after management fees (but before performance fees) against 18.72 per cent for the ASX 300. Hedley would not reveal Hayberry’s FUM apart from that in the US$ trust.
There is one investment area where Insignia’s $180 billion super arm has not lost money for the past 17 years, which is what it calls the insurance-related investments. The alternatives strategy is gaining popularity among asset owners due to its diversification benefit, but Insignia’s super and asset management investment chief Dan Farmer warns it is a space where investors can suffer if they “stumble in without doing the homework”.
Darcy SongJanuary 23, 2025
