(pictured: Jane Buchan)
Against the backdrop of rising global membership of the Preqin “club” of institutional investors which invest more than US$1 billion in hedge funds, the AIMA annual forum in Sydney will examine whether hedge funds generally are delivering on their promises.
The forum’s program was updated last week and includes the second keynote speaker, Jane Buchan, the chief executive of Californian-based fund-of-funds manager PAAMCO. As previously announced, Cliff Asness, the chief investment officer of AQR, is the headline act.
A recent report from Preqin, a global alternatives research firm, showed that investors who it calls its “$1 billion Club”, now total 238, as of May this year, which is an increase of 11 per cent over the same time last year. The report also noted that more investors had increased their allocations to hedge funds. The total invested by these institutions is US$763 billion – a 4 per cent increase on last year.
The biggest increase has come from public pension funds, rather than corporates, which have invested $208 billion compared with $168 billion in 2014, which is the year CalPERS publicly exited the hedge fund space in a portfolio rationalisation.
According to the Preqin report “This group of investors are of great influence within the hedge fund industry. Their investments have come under scrutiny in recent years, particularly as a result of a handful of high-profile institutions, notably starting with CalPERS in September 2014 and latterly NYCERS in 2016, deciding to cut hedge funds from their portfolios entirely.”
“With factors such as fees, performance and ultimately the value of hedge fund investments often cited as a deciding factor in cutting hedge funds from the holdings of some of these large investors, the question that is often asked is: “is this the start of a mass exit from hedge fund investment among the largest investors in hedge funds?” The answer for now is “No”.
“Although a small number of this group have streamlined or cut their hedge fund investments over the past year, more institutions have entered the ‘$1Billion Club’ for the first time in 2016 and more investors in the group have increased their allocations to hedge funds than withdrawn investment. As a result, there are more investors than ever allocating $1billion or more to hedge funds, with a combined sum of capital that is larger than ever before,” the report said.
Michael Gallagher, AIMA Australia general manager, said the “deliverability” theme would run throughout the forum program, examining the issues from the points of view of investors, gate keepers and fund managers.