Investment consultancy Cambridge Associates has been quietly building up its presence in Asia Pacific, with Australia seeing the creation of a new post recently due to growing interest in hedge funds.
Travis Schoenleber moved in July to Sydney from the firm's headquarters in Boston as head of hedge fund coverage for Australia and New Zealand. Cambridge now has eight investment professionals in Sydney across alternative and traditional assets, and is looking to hire another two with generalist expertise.
Hedge funds are featuring more prominently in Cambridge’s client portfolios in Australia and New Zealand, so it made sense to have an expert on the ground who has expertise of building such exposure and access to managers, said Eugene Snyman, head of the Sydney office.
The rise in demand is coming above all from family offices and non-profit organisations, which do not face the same obstacles as superannuation funds when it comes to hedge fund fees, he noted. Super funds are generally positioned as low-cost providers, so it’s more difficult for them to justify the relatively high payments made to hedge funds.
Asked how much allocations to the asset class have grown in Australia, Snyman said many Cambridge clients there had zero allocation to hedge funds five years ago but now have 5-10%, and some as much as 20%.
Before the move, Schoenleber spent seven years as an investment director in Cambridge’s Boston office. In addition to working with institutions and families across total portfolios, he specialises in constructing and overseeing direct hedge fund and other absolute-return portfolios for his clients.
Before joining Cambridge in 2007, he was an equities analyst at the Employee Retirement Systems of Texas, which runs a $20 billion pension fund.
Schoenleber’s arrival has come as some Australian superannuation providers are looking at raising their portfolio allocations to hedge funds, despite their long-standing aversion to the level of fees charged, as reported.
HostPlus, as A$15 billion ($13.2 billion) fund for the hospitality sector, plans to increase the number of hedge funds in its portfolio with the aim of dampening volatility and reducing correlation risk. The challenge is to find managers that are uber-transparent and willing to cut a deal on fees, noted Sam Sicilia, chief investment officer at HostPlus.
Rest Super is also looking to boost its hedge fund exposure. The retail employees’ retirement fund has two allocations to multi-strategy managers – GMO and UK-based fund-of-funds firm Permal – representing about 5% of the $30 billion fund. Jo Townsend, Rest’s CIO, is ready to expand this lineup.