Cape Times

Australia seen as important investor target

- Ruth Liew and Mariko Ishikawa

MORE GLOBAL fund managers are setting up shop in Australia, drawn to the nation’s A$2.3 trillion (R22.95trln) pension savings pool and new local investment opportunit­ies.

THL Credit, an alternativ­e credit manager based in Boston, said in September that it hired a director in Australia. New York-based credit hedge fund GoldenTree Asset Management opened an office in Sydney last month after appointing a local managing director. Oaktree Capital Management, which already manages Australian pension money, headed Down Under last year as it also sought local investment­s.

The developmen­ts are part of a broader global trend as low interest rates in North America, Europe and Asia prompt money managers to increasing­ly seek assets they had previously seen as too risky. There are also uniquely Australian factors.

The world’s fourth-largest pension pool is swelling due to mandatory retirement saving rules. Many Aussie funds have little choice but to seek overseas investment­s as well as alternativ­e assets as they outgrow local equity and corporate bond markets.

THL sees the Australian pension market as an opportunit­y, according to Michael Backwell, director of THL Credit in Australia. “Capital markets in Australia are also relatively small compared to a country like the US,” he said. “And that naturally means funds should potentiall­y be invested offshore.”

Australia’s $1.3 trillion stock market is about the same size as 10 years ago, yet pension assets have more than doubled since. Around 41 percent of new investment deals struck by Australian pensions this year have involved alternativ­e money managers, up 31 percent from last year, according to Rainmaker Informatio­n.

Aussie pensions invest about 13 percent of their funds into alternativ­es, according to Rainmaker Informatio­n data. –

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