APRA’s eye still on hedge funds
The Australian Prudential Regulation Authority is still concerned over the use of hedge funds by large superannuation investors. The regulator has written to the top 50 super funds asking for details of their investments in alternative investment classes, hedge funds in particular. APRA wants to be reassured that trustees are performing their fiduciary duties with regard to investment and also identify if there's any concentration into one, or a small number, of hedge funds.
APRA rejects claims it has directed super funds not to invest in hedge funds and acknowledges that alternative investments can have a place in portfolios. However, it still has concerns as hedge funds were not designed to accommodate superannuation regulatory and prudential requirements. The Alternative Investment Management Association says it's emphasising the importance to trustees of due diligence on hedge funds to ensure they don't put members' investments at risk.