Home / AIMA’s big hit: hedge fund managers have their say

(Pictured: Paul Chadwick)

There was some good news – the hedge fund industry is too small to pose a systemic risk – and some bad news – the prospect of a nuclear holocaust is greater than you think.  But the best news was that Australia’s hedge fund industry, under the auspices of AIMA, put on the largest event of its kind last week.

It was standing room only for latecomers throughout the day at the Sydney Hilton, last Tuesday, with about 240 registered attendees for the Alternative Investment Management Association (Australia) Hedge Fund Forum. Paul Chadwick, the AIMA chair, said the event was put on by members for members, with no “middle men”. He was extremely happy with the result.

Andrew Baker, AIMA’s global CEO, based in London, provided the opening address, followed by Phil Tye, the chair of AIMA Hong Kong, which is the biggest chapter in the Asia Pacific region.

In the last few years AIMA has established itself as a genuine lobby group with regulators and governments around the world, representing the interests of hedge fund managers, who are often maligned in the press and by politicians. It has 1350 members, with just under 50 per cent in Europe, 26 per cent in the Americas and 25 per cent in APAC and the Middle East. The Americas, which do not have their own chapter, represents the fastest growing member base. Baker said AIMA believed its members speak for about US$1 trillion in assets under management, which is roughly half the hedge fund universe.

For APAC, Tye said, the members made up about 25 per cent of the global universe. Hong Kong was half of this, followed by Singapore with 20 per cent, Australia 17 per cent, Japan 10 per cent and ‘other’ 3 per cent. Of all the APAC members, locally domiciled firms represent about 36 percentage points and global firms 14 percentage points.

Highlights from the forum included:

• ASIC released the results of a study into whether Australian hedge funds posed a systemic risk to the financial system. With only A$66 billion under management, across 370 hedge funds, and with 90 per cent of investor assets being ‘wholesale’ the regulator decided hedge funds did not currently pose a systemic risk to the Australian economy. Let’s hope ASIC didn’t spend too much money on that study.
• The proposed Investment Manager Regime, for interaction with other countries in the region, does not look like it will work out. It may be that everyone has to go back to the drawing boards, according to the FSC.
• Sir Michael Hintze, the non-assuming founder of London-based hedge fund CQS, and a serious philanthropist, was interviewed by his old university-days friend Paul Chadwick and regaled the audience with various events which had occurred through his life. He was born, in China, of Russian refugee parents, on the day the Korean War ended. They migrated to Australia that year. For the record: Hintze has a reasonably benign view of the world.
• David Plank, MD, Macro Research and Strategy at Deutsche, economist Gerard Minack and Chris Joye, director of YBR Funds Management and a newspaper columnist, were, on average, reasonably positive on the global outlook. Minack, a noted bear, said recoveries are inevitably fragile. Plank said Deutsche was reasonably optimistic. As was Chris Joye, except he threw a spanner in the works by talking about the likelihood of major armed conflict.
• As with all hedge fund conferences, manager fees were raised in various sessions. Bev Durston, former head of alternatIves for the British Airways Pension Fund, asked: “what is alpha? Usually, it’s that bit of the return that can’t be explained”. Michael Winchester, investment strategist at State Super Financial Services, questioned the accepted belief that Australians always concerned themselves more about fees than their overseas counterparts. He said a recent JP Morgan survey shoed that 70 per cent of clients had renegotiated manager fees in the past year, compared with only 11 per cent in the previous year.

Chadwick said that AIMA and the annual conference would look to be more outward-looking next year, building a wider presence in the industry.