The Alternative Investment Management Association (AIMA) is set to open an office in mainland China – one of the few global industry associations to do so. Jack Inglis, the AIMA chief executive, who will address the Australian chapter’s annual forum next month, says Asia Pacific represents strong growth prospects for the organisation.
The forum, at Sofitel Sydney Wentworth on September 15 (see website), coincides with the 25th anniversary for AIMA. This will be Inglis’s first trip to Australia since he took the reins as London-based global CEO in February last year.
“This is an incredible milestone for AIMA,” he said from London last week. “I have been in the hedge fund industry for about the same time, so for me, it’s also like a personal anniversary.”
In 1990, there was less than US$40 billion invested in hedge funds in the world; now it’s about US$3 trillion, depending on which estimate you choose and what your definition of ‘hedge fund’ is.
“It’s evolved extensively to be an important asset management segment and a central part of investor thinking,” Inglis said. “It’s made an important contribution to the efficiency of capital markets.”
The type of investor in hedge funds has also changed considerably in the past 25 years, moving from the domain of high and ultra-high net worth individuals to institutional grade for pension funds and endowments, other fiduciary investors and family offices.
Largely because of its history, AIMA’s membership base has most coverage in the UK and Europe. But its best growth prospects are in the US and Asia Pacific. Inglis says the membership figures indicate coverage of about 85 per cent of the UK and European markets, 50 per cent of the US, where most big global hedge fund firms are headquartered, and 75 per cent of Asia Pacific (including Australia).
AIMA opened its regional office in Hong Kong in 1999 and the intention to now open an office on the Chinese mainland is likely to boost the organisation’s growth globally. Because of the volatile nature of the China A shares market, it is a fertile hunting ground for hedge fund managers. But complex and sometimes strict regulations make trading strategies difficult. China has embarked, however, on a path of liberalization of its capital markets and aims to boost foreign investment. AIMA’s assistance for members through best-practice guides and discussions with regulators will no doubt be sought after.
Inglis said that generally AIMA’s focus in the future would be to assist policy makers to make sure that the additional regulations introduced after the global financial crisis had achieved their aims and assess what have been any unintended consequences.
The organisation’s policy engagement, both globally and locally, has increased considerably since around 2008. “Post-GFC the situation demanded a more active voice from us,” Inglis said. “AIMA has been at the forefront of discussions about new regulations to try to avoid unintended consequences.”
One of the few disappointments of the past 25 years for AIMA, though, is that the reputation among the general public for hedge fund managers and their strategies is still not good and often their actions are misunderstood.
“You would have hoped that 25 years would have been sufficient for the world to become better educated [about hedge funds],” Inglis said. “So, a key part of what we will do is to continue to promote the industry and explain how it works… We hold more than 200 events per year around the world, including hedge fund manager training as well as general education events.”
In Australia, AIMA has this year lifted its communications program, so far holding more events, such as roundtables and panel discussions, than in the whole of last year and gearing up for a record attendance at the annual forum. Craig Stanford, head of alternative investments for global consultant Ibbotson, is the new chair of the education committee at AIMA Australia.
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