The $1.9 billion TWU Superannuation Fund is considering how it will redeploy $70 million redeemed from the Warakirri/Mesirow global hedge fund-of-funds, which it is due to be handed back at the end of this quarter.

The chief investment officer of TWU Super, Andrew Killen, said asset consultant JANA recommended the mandate with the Mesirow-managed, Warakirri-distributed vehicle be terminated for “risk management” reasons, after it was unable to maintain its currency hedge for a fortnight late last year.

Killen said the redeemed cash would be re-invested into alternatives of some stripe, in line with the fund’s continuing policy of passive rebalancing to its strategic asset allocation, and Killen did not rule out a different hedge fund investment.

However he said liquidity remained a concern among many asset classes – for instance, TWU Super was close to investing in a credit opportunities fund late last year, but the would-be vendor abandoned the product because it lacked confidence in its ability to deal in the near-frozen credit markets.

The head of fixed income at Tyndall Investment Management, Roger Bridges, said last week that “issuance of corporate and securitised debt has now completely disappeared in the Australian market and will most likely be replaced by direct bank lending in the short term”.

New opportunities were coming in the form of increasing issues of government debt, and tranches of senior bank debt becoming available on the secondaries market, he said.

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