ASIC has published Report 439: Snapshot of the Australian hedge funds sector, which shines a light on the performance and size of the industry.
The report found single-manager hedge funds controlled $83.7 billion as at 30 September 2014, while funds of hedge funds controlled $12.2 billion.
Hedge funds are a relatively small part of the managed funds universe in Australia, with single-manager hedge funds and funds of hedge funds managing 3.5 per cent and 0.5 per cent of total managed funds assets, respectively.
"The Australian hedge funds sector continues to be characterised by many small-sized funds, with managers reporting that more than half of the identified hedge funds have assets under management of less than $50 million," ASIC said.
The commercial data sample used in the ASIC report shows hedge funds' average annual net investment returns have been negative twice since 2004 – in 2008 and 2011.
"In the 12 months to 30 September 2014, the average annual net return for single-manager hedge funds and funds of hedge funds was 4.2 per cent," the report said.
"This was down from the previous year when the sector reported an average return of 14.4 per cent," ASIC said.
The median gross leverage ratio reported by the hedge funds surveyed by ASIC has increased from 1.7 times net asset value (NAV) in 2012 to two times NAV in 2014.
However, ASIC noted that the level of leverage used by Australian hedge funds is comparatively low compared to hedge funds in other jurisdictions.
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