26/09/24

Australia: Hedge funds deliver world-beating returns

As Reported  on Dailymaverick.co.za today Australia’s annual hedge fund fest, featuring a harbour yacht cruise and rock ‘n’ roll dinner, had some added revelry this week as managers toasted world-beating returns in an otherwise tough time for the industry

The country’s hedge funds in aggregate notched gains of 7.6% in the year to date compared with a 6.5% average return for global hedge funds and 6.1% for Asia-Pacific firms, according to data provider With Intelligence.

“If you’d asked me 10 years ago I would have said it’s better luck than good management but we’re at the point now that the managers who are here have been around a long time,” said Michael Gallagher, managing director of the Alternative Investment Management Association and chair of the Sydney Alternative Investment Week. “There’s a lot of maturity now in our market.”

The returns, though respectable by historical standards, underscore what a tricky time it is for money managers globally. Stock pickers have had to keep up with market-capitalisation-weighted benchmarks, meaning anyone not invested in a few big US tech giants has fallen short.

The S&P 500 has risen 20% this year. That’s a performance only the top five funds in Australia have met or bested, led by Regal Funds Management Pty., which posted 37% returns on two of its funds to the end of August, according to data provider Preqin. Australia’s main equity gauge has risen 7.1% this year.

The hedge fund conference ran for the first time in its 12-year history as a week-long event combining seven industry functions including a Sydney Harbour cruise and a charity awards dinner. Attendees spent days exploring money-making strategies as broad as private credit, crypto trading and litigation funding. Wednesday’s main alternatives conference drew 540 registrants, up from between 400 and 450 in prior years, Gallagher said.

“A lot of allocators that are here have come to the realisation that the equity market gravy train just doesn’t keep going up in a straight line, so they’re looking for diversification,” said Gallagher.