“There’s strong institutional recognition of the quality of talent coming out of Australian banks and asset managers”

As a follow-up to the recently held Melbourne Hedge Funds Club evening, Stefan Nilsson had a chat with IG Prime’s Andrew Wood in Sydney.

What trends are you currently seeing in the Australian alternative investment industry?

The Australian alternative investment landscape is experiencing significant globalisation and sophistication. We’re seeing local managers increasingly accessing international markets and asset classes, moving beyond traditional domestic strategies. There’s also been notable growth in emerging hedge fund managers who are launching with global mandates from day one, rather than starting locally and expanding later. This reflects both the maturation of Australian talent and the reality that technology has eliminated many traditional barriers to global market access. For prime brokers like us, this means Australian managers now expect the same level of international connectivity and execution capabilities as their counterparts in New York or London.

When it comes to prime brokerage services, what are the key needs and wants of your Australian clients and prospects?

Our clients prioritise two critical areas: seamless technology integration and strong counterparty credentials. On the technology side, emerging managers especially need flexibility – they want access to global markets but prefer to use their chosen front-end systems rather than being locked into a single platform. Cost efficiency is also paramount given the competitive fundraising environment. Equally important is counterparty strength – fund managers need confidence that their prime broker has the financial stability and regulatory standing that their institutional investors demand during due diligence.

Do you think emerging hedge fund managers in Australia are attractive to local investors or are they better off focusing on overseas fund allocators?

Australian emerging managers have significant advantages with local investors. There’s strong institutional recognition of the quality of talent coming out of Australian banks and asset managers. Local investors also appreciate the operational convenience and familiarity of dealing with domestic managers, while still gaining exposure to global strategies. That said, the most successful emerging managers we work with take a dual approach – they establish credibility locally first, then use that track record to access offshore capital. The key is having the infrastructure from launch to serve both markets effectively.

IG’s prime brokerage is soon two decades old. How has it evolved over the years?

The biggest evolution has been our technology ecosystem. We recognised early that while managers want our global market access and execution capabilities, they have strong preferences for their operational workflow. Rather than forcing a one-size-fits-all approach, we’ve invested heavily in API development and third-party integrations.

What advantages does IG Prime have by being part of the wider IG Group, a FTSE 250 company?

The transparency and financial strength of being part of a publicly listed, FTSE 250 company are crucial for institutional due diligence. Fund managers’ investors can easily access our financial statements, understand our capital position, and assess our regulatory standing. This eliminates a major friction point in the onboarding process. Additionally, our scale within the IG Group gives us the resources to invest in technology and global infrastructure that smaller prime brokers simply can’t match, while maintaining the focused service that emerging managers need.

How do you see prime brokerage services and the hedge fund industry in Australia evolving in the coming years?

Our recent institutional investors survey shows AI adoption expectations – 67% of hedge funds expect significant AI impact over three years, primarily in predictive insights and data processing. This measured approach to innovation mirrors what we’re seeing in Australia. The industry will become increasingly democratised through technology. We’re seeing this already with emerging managers launching with institutional-quality infrastructure from day one, rather than having to build scale first. The barriers between domestic and global strategies will continue to blur – Australian managers will routinely access international markets as easily as local ones. For prime brokers, success will depend on providing that global connectivity while maintaining the high-touch service that emerging managers require. We’re also developing new products to support this evolution, though it’s too early to discuss specifics.