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% of new investment deals struck by Australian pensions this year have involved alternative money managers, up 31% from last year, according to Rainmaker Information.
Aussie pensions invest about 13% of their funds into alternatives, according to Rainmaker Information data.