Eye­ing a hedge fund fu­ture

Finweek English Edition - - UNIT TRUSTS -

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

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