Alternative fixed income manager Highland Capital Management will establish a presence in Australia this year.
The manager, which has about US$24 billion in assets under management, is currently recruiting and hopes to open a representative office in Melbourne by the end of the year.
"We have in Australia a significant base of investors. It makes sense to have a local presence," Highland managing director Paul Adkins said.
Highland has a number of institutional clients and hopes to benefit from the expected growth of the superannuation industry.
Highland expects that as the pool of superannuation money grows and super funds consolidate, these funds will have to allocate more of their money to foreign asset managers.
"[Superannuation savings] are larger than the capacity of your country. You will have to allocate more globally," Adkins said.
Super funds are likely to invest more in credit in the coming years as economies globally will enter a period of slower growth, Adkins said.
"There is a consensus view that credit will outperform equities in a major way," he said.
Highland chief investment officer Mark Okada said returns on senior secured loans could be as high as 7 to 10 per cent per annum.
"We are helping pension funds to create equity like returns in credit," Okada said.
Highland is an alternative investment management firm that has built up a strong reputation in trading collateralised loan obligations (CLOs).
In this type of investing, the manager seeks to generate returns from the spread difference between the value of the underlying portfolio of assets and the money borrowed to finance those investments.
