Australian hedge funds do not pose a systemic risk to the country's financial services system because while there is a lot of activity, there is not enough of these to affect liquidity, a survey by the Australian Securities and Investment Commission reveals.

In a survey of 12 hedge funds, said to be representative of the state of the Australian hedge fund industry as a whole, the ASIC found that hedge funds manage only a small share of the country's A$2.1 trillion ($1.96 trillion) managed funds industry. Also, while redemptions exceeded applications in 2012, these are unlikely to result in liquidity pressures because the average redemption size is small. Among the asset classes, listed equities represent the greatest exposure, with 32 per cent in Australian-listed shares.

"Surveyed funds use relatively low levels of leverage, with synthetic leverage being the largest source in 2012. Average leverage, by gross market value as a multiple of net asset value, increased from 1.25 times assets in 2010 to 1.51 times assets in 2012," said the ASIC in a statement. 

Should the market be subjected to stress, the ASIC said the hedge fund sector may at first struggle to meet redemption requests, but the risk will eventually be offset by funds being able to suspend redemptions, if necessary.