This week's round table forum organised by the Hedge Fund Association was well attended by a diverse range of fund managers and service providers, although probably less well by investors. A number of speakers gave interesting and relevant presentations, with the overall theme seeming to be standards around hedge fund reporting, structure, fees and transparency, with a particular emphasis on traps in store for the unwary investor.
Much of the forum centered around the UK based, and Northern hemisphere focussed Hedge Fund Standards Board, (HFSB) and the Open Protocol risk aggregation and reporting initiatives (previously known as OPERA). Both the HFSB standards and OPERA seem eminently logical and sensible, although understandably orientated towards the requirements or desires of institutional investors, and as a result the larger funds in which they generally invest.
However the relevance and thrust of both are entirely appropriate and applicable to the Australian absolute return and hedge fund sector, even if by and large most local managers and funds would broadly comply with the main thrusts of the HFSB, perhaps with some greater transparency around fund expenses. Meanwhile if fund managers are serious about attracting inflows from large institutional investors, either at home or abroad, they will in due course have little option but to adopt the reporting transparency of Open Protocol.
Australia's regulatory systems ensure retail investors in hedge funds are pretty well informed, even if ASIC's requirements appear broader than those detailed in HFSB's Standards, which run to 37 pages. Of course there have been a few well, and some not so well, publicised lapses in standards from some managers. However there is only so much the regulator can do before the event, so it would seem to be up to the collective power of investors to take over. As this is easier said than done, service providers, platforms, asset consultants and research houses should take the initiative.
Specific results received this week include the following PERFORMANCE and NEWS UPDATES:
Pengana Asia Special Events (onshore) Fund returned 1.22% over December and 11.55% for the previous twelve months. The Fund's strategy has seen a very volatility of 2.31% as compared to 11.43% (S&P/ASX 200 Acc) for CY2013.
The Cor Capital Fund returned -0.22% during December and 1.69% for the calendar year with a low volatility of 6.83%.
Bennelong Long Short Equity Fund returned -2.32% during January, a difficult market both globally and in Australia, with the twelve month return at 19.07%.
FUND REVIEWS RELEASED THIS WEEK:
AFM's updated Fund Review for Optimal Australia's Absolute Trust December 2013 has been released. The fund is characterised by very low risk with an annualised standard deviation of 3.60% and a Sharpe Ratio since inception of 1.73.
Morphic's Global Opportunities Fund returned 3.85% in December and 42.49% for the previous twelve months with a volatility of 9.10% p.a.
The Aurora Fortitude Absolute Return Fund is characterised by steady returns and very low risk. Since inception (March 2005) the Fund has returned 8.16% pa.
NEXT WEEK on Wednesday 12 February 2014: Investment Administration Conference - Efficiency in a Regulated World. Doltone House, Hyde Park, Sydney. Now in it's 17th year, this is Australia's largest annual event for custody, funds management administration, and technology.
21 February 2014 in Sydney: AIMA's Hedge Fund Regulatory Update provides an update on Hedge Fund regulations including the Investment Manager Regime; ASIC Regulatory Guides 166 and 133 plus more. No charge to attendees.
27-29 March 2014: Superannuation Fund Back Office: 2014 Forum in Sydney convenes those responsible for superannuation member administration and investment operation services. It has been designed to explore emerging efficiencies and best practice in a number of key areas.
If you know of any upcoming hedge fund industry Events, or would like your Event listed in our calendar, please contact us.
And now for something completely different, if you need something to do in Sydney, why not have a look at the Chinese New Year Festival Programme, there are still plenty of events going on this weekend to celebrate Chinese New Year.
On that note, I hope you have a happy and safe weekend.
Best wishes,
Chris
CEO, AUSTRALIAN FUND MONITORS
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Australian Fund Monitors are helping to raise awareness to support research into prevention and cure for cerebral palsy. For more information visit www.cpresearch.org.au or contact me by email.
