San­lam mak­ing hedge fund his­tory

Blue Ink In­vest­ments, which launched the coun­try’s first fund of hedge funds 15 years ago, boasts South Africa’s largest data­base of hedge funds.

Finweek English Edition - - FUNDFOCUS -

in Au­gust 2016 al­ter­na­tive multi-man­ager Blue Ink In­vest­ments launched reg­u­lated funds of hedge funds (FoHFs) for re­tail and qual­i­fied in­vestors. These funds are ex­pected to of­fer in­vestors re­turn sig­na­tures that dif­fer sig­nif­i­cantly from that of their tra­di­tional peers while fur­ther en­hanc­ing the di­ver­sity and risk fea­tures of a well-di­ver­si­fied port­fo­lio.

The re­tail funds are po­si­tioned against As­so­ci­a­tion for Sav­ings and In­vest­ment South Africa (Asisa) risk-pro­filed funds – Multi-As­set Low Eq­uity, Multi-As­set High Eq­uity and Gen­eral Eq­uity. This step is an at­tempt at closer align­ment to the in­ter­me­di­ary’s ad­vice process and is a first in an in­dus­try that pre­dom­i­nantly uses cash as a bench­mark.

Bonolo Zwane, man­ag­ing direc­tor of Blue Ink In­vest­ments, notes that the way the re­tail funds have been pro­filed against broad Asisa fund risk cat­e­gories en­ables in­vestors to seam­lessly in­clude them in a bal­anced port­fo­lio.

The qual­i­fied in­vestor funds are de­signed to be a unique spe­cial­ist fund add-on to a pro­fes­sional in­vestor’s core satel­lite fund. It in­cludes funds that of­fer pro­fes­sional in­vestors ex­po­sure to soft com­modi­ties, the po­ten­tial for in­fla­tion-beat­ing and eq­ui­ty­beat­ing re­turns on a con­sis­tent an­nual ba­sis, and com­pet­i­tive fixed-in­come re­turns at al­most eq­uity-like risk.

Per­sis­tently pi­o­neer­ing

The in­no­va­tive bench­mark­ing is only one of many other firsts for Blue Ink In­vest­ments. It also in­tro­duced South Africa’s first FoHFs in 2001, first sin­gle-strat­egy FoHFs in 2009 and first daily priced FoHFs in 2011 while seed­ing suc­cess­ful and es­tab­lished hedge fund man­agers in the coun­try.

Ac­cess is easy and com­pet­i­tively priced

The funds are avail­able di­rectly to re­tail and qual­i­fied in­vestors with in­vest­ment amounts from R20 000 up­wards along with other unit trusts via San­lam Col­lec­tive In­vest­ments (RF). Ad­vis­ers may also ac­cess the re­tail funds with Glacier, the San­lam­owned linked in­vest­ment ser­vices provider. Blue Ink In­vest­ment charges 0.75% as an on­go­ing man­ager fee, as well as 15% of out­per­for­mance above the rel­e­vant bench­mark. These are stan­dard across both the re­tail and qual­i­fied in­vestor range.

Ac­cess to the best and helping you sep­a­rate the wheat from the chaff

Cur­rently, there are over 200 hedge funds avail­able to the re­tail and qual­i­fied in­vestor, and so the value of funds of hedge funds to as­sist in se­lect­ing and blending these hedge fund strate­gies is clear, es­pe­cially for first­time re­tail in­vestors.

Hav­ing been in the hedge fund in­dus­try since 1992, Blue Ink In­vest­ments has the long­est run­ning and most ex­ten­sive data­base of hedge funds in South Africa, which is free of sur­vivor­ship bias – both sur­viv­ing and closed or weaker funds are rep­re­sented to avoid per­for­mance bias. Within the newly launched FoHFs, in­vestors en­joy ac­cess to the most es­tab­lished and proven hedge fund man­agers.

San­lam also of­fers sin­gle-man­ager hedge funds

San­lam Al­ter­na­tive In­vest­ments, headed by Bruce Simp­son, is the di­vi­sion within the greater San­lam In­vest­ments busi­ness that runs sin­gle man­ager hedge funds. Many of these out­stand­ing funds have been in­cluded in Blue Ink In­vest­ments’ multi-man­aged FoHFs. Simp­son has been with the group for 18 years as mar­ket maker, trader and fund man­ager. He now iden­ti­fies tal­ent and over­sees the operations and risk man­age­ment across man­agers on the hedge fund plat­form. Man­ag­ing direc­tor of Blue Ink In­vest­ments Zwane and Simp­son agree that be­ing part of a hedge fund busi­ness within the San­lam Group re­ally of­fers the best of both worlds. While the more un­con­strained na­ture of hedge funds al­lows in­vestors nim­ble ac­cess to more op­por­tu­ni­ties, they’re still sup­ported by one of the largest in­sur­ers in Africa and the ex­ten­sive in­fra­struc­ture that comes with such a large com­pany.

Simp­son stresses, though, that the hedge fund man­agers don’t sit along­side a long-only process. In­stead, they have the free­dom to ex­press their own views but with a high level of risk and op­er­a­tional over­sight.

The qual­i­fied in­vestor funds are de­signed to be a unique spe­cial­ist fund add-on to a pro­fes­sional in­vestor’s core satel­lite fund.

A leader in trans­for­ma­tion

Simp­son’s hedge fund di­vi­sion, in par­tic­u­lar, has at­tracted plenty of young tal­ent. As part of its trans­for­ma­tion ini­tia­tive, San­lam launched a three-year grad­u­ate train­ing pro­gramme at the start of 2015 with room on the desk for up to five skilled in­di­vid­u­als: the San­lam Al­ter­na­tive In­vest­ment Academy, tar­get­ing black hon­ours- and mas­ters-level grad­u­ates.

“As a fund of hedge fund busi­ness that’s been in the fi­nan­cial ser­vices in­dus­try from as early as the launch of the first DVD player, we’re quite thrilled to be able to of­fer our ex­per­tise to an ex­panded set of in­vestors and im­por­tantly in an en­vi­ron­ment where the reg­u­la­tor has pushed for en­hanced trust and trans­parency in hedge fund strate­gies,” says Zwane.

Bonolo Zwane

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