These results include the years before and after the GFC. Interestingly, four of the top nine performers were in the equity space (long short and market neutral), three were in global macro/commodities/ futures, and two in multi-strategy. Another 15 funds returned more than 15 per cent a year compounded since inception, out of the 142 funds with track records longer than three years. After recently speaking with superannuation funds and family offices about their future hedge fund allocations, I have found a core group of investors who have had long-term exposures to hedge fund managers.
Their portfolios were well-positioned ahead of the crisis and although the portfolios may have suffered some losses, their hedge fund investments essentially performed as expected. The consistent theme is that these super funds and family offices have portfolio managers who are very experienced hedge fund investors. They use consultants who are well-versed in hedge fund research and that may extend to global hedge fund specialists. I might add that these consultants are making significant headway into Australia with institutional clients.
There are a number of super funds that have said to me that they were overweight equities in 2009 and that they are taking exposure off the table and are replacing that exposure with hedge fund albeit long short equity. Other investors were considering investments before the GFC and pulled back as it hit. They are now re-examining the sector. In other instances there are searches underway for (and you guessed it), simple strategies, limited gearing, transparent, long short equities and credit. In addition, there is strong interest in other assets classes such as water, insurance, and power trading. I don’t think that there are going to be massive allocations over 2010 via Australian super funds and family offices, but the momentum is definitely on the up.