Hedge Fund Reader : Hedge Funds in Australia

December 31, 2006

Hedge Funds in Australia

-- By Pushpa Sathish, Staff Writer

I’ve always considered Australia as one of the most laid-back nations in the world – the people there never seem to be in a hurry to do anything; even their speech is a drawl. The same goes for the country’s attitude towards hedge funds. While the rest of the world is trying to regulate the $1.5 trillion industry, the folks down under are happy to just let things stay as they are.

This carefree attitude is an anomaly, because the country has the largest percentage of individual investors, 66 percent when compared to the 44 percent worldwide. But this is because even a minimum of $785 (A$1000) can get you in the doors of a hedge fund.

So are they not at risk just because they stand upside down? No, the Aussie hedge fund industry is fraught with the same risks that come from dealing in short selling and illiquid securities. But the country feels that a disclosure of risks and fees in sales documents is regulation enough.

The driving force behind Australian hedge funds is the Reserve Bank of Australia (RBA), which reports that the industry has experienced a significant growth over the past few years. But will the controls be tightened if there is one big collapse? We’ll just have to wait and watch.

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December 31, 2006 in Emerging Markets | Permalink