Australia is home to some of the hedge fund industry’s biggest market players in the Asia-Pacific region; Preqin’s Hedge Fund Online tracks 113 fund managers headquartered in Australia, representing 14% of all Asia-Pacific-based fund managers active in the asset class, which manage 21% of the region’s aggregate assets under management (AUM). The majority (57%) of Australia-based fund managers are based in Sydney, representing 85% of the country’s hedge fund AUM. Despite having the second largest share of fund managers (23%), Melbourne holds only 8% of Australia’s total hedge fund AUM.
In terms of geographic preferences, 57% of all Australia-based fund managers solely target their domestic market. Sixty-six percent of fund managers target other Australasian countries, such as New Zealand, in addition to Australia, while three-quarters of all Australia-based fund managers expand their mandate to focus on the wider Asia-Pacific region. A quarter of fund managers implement a diverse mandate, investing in multiple markets around the world. Compared with US-based managers, Australia-based fund managers operate with relatively wider geographic diversity: 88% of all US-based hedge fund managers solely target their domestic market, compared with 57% of Australia-based managers, as previously mentioned.
As seen in the chart above, equity strategies are by far the most utilized strategy among Australia-based fund managers, with the next most preferred strategy – long bias – utilized by 19% of managers. Australia-based managers do not favour non-equity strategies, with managed futures/CTA (12%), macro strategies (10%) and equity market neutral (9%) utilized by only small proportions of the manager population.
Sydney-based Platinum Asset Management, Asia-Pacific’s largest hedge fund manager with AUD 25bn in AUM, specializes in investing in international equities. It currently manages several funds, predominantly utilizing long/short equity, including its AUD 4.56bn Platinum Asia Fund, which generated a net return of 4.40% in May 2016.