Eyeing a hedge fund future
THIS YEAR IS likely to be an interesting one for hedge funds in South Africa as the regulatory environment changes and opens up these instruments to a wider range of potential investors. As it stands, domestic hedge funds are largely unregulated and therefore unavailable to the likes of pension fund administrators and regular retail investors. However, all indications are that that will change over the next 12 months.
Despite not being formally regulated, hedge funds have been gaining traction despite their international counterparts facing a lot of criticism. One operator that’s stood out has been the Sanlam-partnered Blue Ink Investments and its Blue Ink-Ubator Diversified Fund. Established in September 2007, the fund aims to deliver a return of cash plus 6% over a rolling three-year investment period. To date the fund has performed well, returning 14,18%. Over the past three years the fund has delivered 12,66%, 19,20% and 10,25 over 2010, 2009 and 2008 (net of fees).
This fund of hedge funds provides investors with some alternative investment strategies. Instead of putting money into traditional high-profile managers, the fund will seek out promising alternative management teams and place some money with them. That makes the fund well suited for investors seeking a more aggressive return. Investors can participate after an initial investment of R25 000 and a monthly contribution of R1 000. Importantly, investments can be redeemed within 60 days, with a 30-day notice period.
As with most hedge funds, fees will always be closely scrutinised. The fund