Novare CIS is the first asset manager to come to the market with an approved product, and it will host both retail and qualified investor hedge funds.
Retail hedge funds will operate under stricter regulations to ensure investor protection, while qualified investor hedge funds will be subject to a less strict but fitting regulation with a focus on reporting and monitoring potential systemic risk, as well as adequate disclosure to investors.
Eugene Visagie, head of hedge fund investments at Novare CIS, says the regulation of hedge funds will assist in growing industry assets, while generating opportunities to provide alternative investment vehicles to retail investors.
“The two most important benefits of including hedge funds as an additional alternative asset class in an investment portfolio are capital protection and asset class diversification,” he says.
Visagie says South African hedge funds have been successful in protecting capital and minimising drawdowns, resulting in enhanced returns and lower risk in the overall portfolio.
“In terms of diversification, hedge funds respond differently to market conditions when compared with traditional asset classes, resulting in a low correlation with other assets.”
The Novare Mayibentsha Growth Retail Fund of Hedge Funds aims to achieve moderate capital growth with reasonable levels of income, while keeping capital preservation in mind.