With the rising volatility in the Australian and global share markets, sophisticated investors are seeking alternative investment avenues to put their money in to hedge against the volatility currently not only experienced in the share markets but also in the Australian property market – especially that of Sydney.
Although many investors would feel hedge funds would be largely an overseas market product, with a large number of financial institutions and hedge funds being headquartered in Sydney, access to market opportunities are closer than many may realise.
The key benefits of a hedge fund in Sydney rather than investing in one from overseas is the transparency and accountability of having a fund manager based here in Australia, rather than overseas.
It has long been a concern within the investment community about the higher fees, less liquidity, reduced transparency, alignment of interest and effective implementation of hedge funds in general. This is largely due to the fact that funds offered only through a private prospectus, rather than funds such as ETF’s that are traded on the ASX, provide a much higher level of accountability and transparency.
While some funds may provide rules around what financial instruments managers can utilise to realise returns, hedge funds do not. As long as the overarching strategy of a Sydney hedge fund is being adhered to, the fund manager can implement it.
These include taking a leveraged position or borrowing against the pooled funds from investors to increase the position of the fund in the market, it also can mean using more risky products such as derivatives, which can amplify losses should the wrong call be taken.
There is a wide range of benefits for sophisticated investors when it comes to hedge funds when successfully aligning the choice of fund to one’s personal investment strategy. This is large because they have flexibility within the fund to operate more aggressively to pursue the strategy for which the fund was set up to achieve.
While there are nine key fund times including long/short, event driven, macro, distressed securities, emerging markets, long only, short only and fixed- income arbitrage funds, there is a wide variety and diversity in what can be hedged or achieved through the utilisation of Sydney’s hedge fund expertise.
Sydney hedge funds have the added bonus of operating in a time zone that is almost one of the first to open, allowing for deals to be capitalised upon at the close of business in the US while aligning with the opening of Asian markets as well as the EU.
As the wealth level of many people in and around Sydney increases, portfolios can be diversified, loss reduction can be realised, and profits can potentially be made by looking into a Sydney based hedge fund.
As an investor, should you be considering a Sydney-based hedge fund for your investment portfolio, it is paramount you seek independent and expert advice, as like with all financial products, there are risks involved.
With market volatility ahead, property prices in Sydney tanking, taking a position in alternative investments such as a hedge fund based and managed from Sydney may provide the protection and profit your portfolio needs. To find out more get in touch with Walker Capital today.
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