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Hedge Funds in Australia

Despite many of the hedge funds in Australia enjoying relative anonymity thanks to hedge funds high barriers to entry for most average Australia’s, the Australian Trade Commission in a September 2010 report, estimated that Australian hedge funds had $46.8 billion of assets under management[1].

 Australia's financial services sector is the largest contributor to the national economy, contributing around $140 billion to GDP over the last year[2] there is little slowing down the diversification and size of managed funds, especially hedge funds.

[1] https://www.investors.asn.au/education/other-investments/hedge-funds/

[2] https://fintech.treasury.gov.au/the-strength-of-australias-financial-sector/



With those barriers to entry, hedge funds are only accessible to sophisticated investors, or people earning over $250,000 per year for at least 2 consecutive years or having over $2.5 million in assets. With this in mind, hedge funds in Australia are really only accessible to 1 in 5 Australians, or the highest-earning quintile[1]

It is not just high net worth individuals that have access to hedge funds and the aggressive strategies that they can undertake to drive capital growth for their funds. Institutional investors such as fund managers, superannuation funds, universities, banks and other institutions who own assets or hold in trust for others[2] have access to hedge funds.  

That means in Australia, although you may not have the capacity to be investing in managed funds as an individual, your superannuation may well be as part of a pool of members in your grade/group of superannuation which would most certainly have the capacity required.

Who are hedge funds operating in Australia?  

There are a range of hedge funds in Australia, such as, K2 Asset Management, Platinum Asset Management and Blue Sky, all of which have offered varying results over the years. Some of which have seen exceptional returns, while others have floundered.

According to Morningstar, the best performing Australian equity large cap fund is Bennelong Australian Equities with 26.31% returns, while the worst was Vanguard Australian Shares High Yield with 2.5%.

Meanwhile, in the mid/small capital funds, the Eley Griffiths Group Small companies enjoyed a 32.93% return, while the Australian Ethical Australian Shares returned 8.03[3].  


Why do hedge funds results vary so much?

Hedge funds in Australia saw such varying results in 2018 due to some funds being too heavy on traditional Australian blue-chip stocks, such as Telstra, while others taking gambles on Flight Centre and Reliance Worldwide, which saw huge payoffs over the 12-month period[4].

While hedged funds in Australia may not be within reach for everyone, they most certainly could be part of your superannuation fund. As such it is always good to review your superannuation and understand what it is invested in, to find out if you are involved in any hedge funds and to ensure your investments are performing for you and your individual stage in life and personal investment goals.

If you are considering hedge funds as part of your investment portfolio it is paramount that you seek advice before accepting an offer, to ensure that the goals of the fund match those of your portfolio, and to ensure all due diligence is completed on the fund before commitment.

[1] https://mccrindle.com.au/wp-content/uploads/Australian-Income-and-Wealth-Distribution-Quintiles-2018.pdf

[2] https://www.invesco.com.au/home/frequently-asked-questions/what-is-an-institutional-investor

[3] https://www.morningstar.com.au/funds/article/5-best-and-worst-performing-equity-funds-of-f/169076

[4] https://www.morningstar.com.au/funds/article/5-best-and-worst-performing-equity-funds-of-f/169076


We welcome you to give our team a call to discuss your investment goals and objectives.

You can call Walker Capital Australia on +61 2 8076 2210, and we’ll see how we can help you achieve your investment goals.

For more information on hedge funds, check out our full article:  What is A Hedge Fund? The Essential Information For New Investors