Australian Pension Funds Shifting Away From Hedge Funds Amid Regulatory Scrutiny

One of the world’s fastest growing pools of retirement capital in Australia is decreasing its investments in hedge funds amidst mounting regulatory scrutiny on fees and performance. As of March, the average allocation to hedge funds in Australia’s massive pension pot had dropped significantly from the previous year, with some major players like AMP Ltd and Australian Retirement Trust scaling back or eliminating their exposure entirely. The trend seems to be driven by concerns over high fees and lackluster returns, prompting a shift towards other investment options like direct infrastructure. With global investor interest in hedge funds waning due to skyrocketing fees and restricted access to top-performing firms, Australian pension funds are reevaluating their strategies to prioritize transparency, performance, and alignment with long-term goals. Despite challenges in the hedge fund industry, some regions like Abu Dhabi are actively seeking to attract managers, indicating a divergent global landscape for these investment vehicles.