NSW Local Government Superannuation Scheme, Sydney, hired three hedge funds as it implements a direct hedge fund program after pulling A$450 million from hedge fund-of-funds manager Chifley last year.
The A$5.5 billion (US$5.08 billion) LGSS awarded A$28 million mandates to Attunga Capital, H3 Global Advisors and Winton Capital Management, marking the fund’s re-entry into the hedge fund market.
Craig Turnbull, chief investment officer at LGSS, said the fund sought defensive, liquid strategies that supported significant short positions to serve as the foundation of its new hedge fund program.
“They had to be liquid,” Mr. Turnbull said, explaining that the time taken for its HFoF investment to be redeemed “cut down our options and ability to take advantage of opportunities. This confirmed to us that HFoFs weren’t right.”
For LGSS, Attunga runs an energy trading strategy in the “relatively immature” Australian energy market, and can invest a small proportion of its mandate offshore. “While they can be long and short, a big part of their strategy is taking advantage of spikes in the energy price,” Mr. Turnbull said.
H3 was appointed to manage a trend-following strategy aiming to exploit changes in market direction, and is very similar to momentum investing, while Winton, a commodity trading adviser, makes bets in global interest rate, commodity and stock markets.
A fourth mandate, awarded to a single-manager, multistrategy fund, will be confirmed in coming weeks, Mr. Turnbull said.
Harry Liem, a hedge fund specialist with Mercer, LGSS' primary asset consultant, assisted.
Simon Mumme is a reporter with Investment magazine in Sydney.