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Australia is home to six members of the AFI 500 hedge fund ranking, several major allocators — and a talent war, which has erupted in recent years as the platforms set up shop in Sydney.
The best known industry name of the six, Regal Funds Management, was set up in 2004 by former De Putron Funds Management PM Phil King. It started in long/short equity but now runs its $18bn across a range of strategies.
Other large Sydney-headquartered players include Antipodes and Platinum Asset Management (members can access the entire list).
Platforms arrive
Large multi-strategy players have been making headlines with office moves in recent times, with Point72 doubling headcount at its Sydney office in recent months and Qube, the London-based $28bn quant-focused multi-strat, choosing the city for its eleventh global office last year.
Steve Cohen’s firm opened its Sydney office in 2017 as a hub for its global macro business. It now has five offices and more than 350 staff across the region, with Sydney joining Taipei, Tokyo, Singapore and the regional HQ in Hong Kong.
After doubling headcount in Sydney to 20 in the past year, Point72 has capacity to do so again, according to head of Asia-Pacific, Marc Desmidt.
The reason? “It’s absolutely a play on talent. We certainly want to be in locations where talent wants to be,” he told Australian Financial Review. “Talent equals revenue. We’re recruiting people who are going to drive the top line.”
For any quant hires, they will be competing with Qube, one of the world’s fastest growing hedge fund managers since starting in 2018.
Qube is based on level 24 of the office tower at Aurora Place overlooking Sydney harbour. The office includes a glass-walled server room and a “maker space” featuring a Lego station.
Active allocators
Two members of AFI’s Power25 ranking of influential hedge fund allocators call Australia home: Future Fund and Queensland Investment Corporation.
Future, the Australian sovereign wealth fund, hailed the impact of hedge funds for boosting investment returns, making 9.1% in the 12 months to mid-2024.
“In a year where equities were the only strongly performing traditional asset class, many of our positions, and in particular our hedge fund portfolio, really delivered.” It managed $229.7bn at the end of Q3.
Queensland Investment Corporation, a long-term backer of alternatives, is looking to double down on hedge funds after its liquid alternatives portfolio drove strong returns in its most recent financial year.
“We have certainly been growing our exposures to hedge funds, and we intend to continue,” CIO Allison Hill told Investment Magazine in October.
“We’re very much focused on net returns, and fees absolutely matter, but if we can get a non-correlated source of return that we believe on a risk-adjusted basis makes sense for portfolio, that’s really valuable to us.”
But some allocators have been going in the opposite direction. The average allocation in hedge funds was 0.6% of growth investment options across Australia’s pooled pension pots last March, down from 2.5% in mid-2020, according to research by Chant West.
If anyone is in any doubt of Australia’s hedge fund pedigree, don’t forget it is the homeland of famed macro trader Greg Coffey, the “Wizard of Oz”, who now leads Kirkoswald Capital in New York.
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