Australian superannuation funds have slightly increased their average allocation to hedge funds to 3% of total plan assets in 2010 from an average 2.5% in 2008, according to the biennial survey conducted by the Australian School of Business at University of New South Wales on behalf of the Australian chapter of the Alternative Investment Management Association.
The survey of superannuation funds with about A$100 billion (US$89.7 billion) in combined assets was conducted in January and found that chief investment officers likely will further increase their hedge fund allocations to 3.6% by the end of 2012,
A strong move to direct investment in hedge funds from funds of funds is likely to continue, according to the survey. The percentage of superannuation funds investing in hedge funds of funds dropped to 38% in 2010, from 60% in 2008, and is expected to fall to 14% in 2012.
The number of super funds investing in multistrategy hedge funds dropped slightly to 11% in 2010, from 12% in 2008, while investment in single-strategy hedge funds jumped to 47% in 2010 , from 21%.
The funds overwhelmingly prefer U.S.-based hedge fund managers. About 78% of hedge fund managers used by the institutions surveyed were American, 20% were Australian and just 2% were U.K. or European.