Happy birthday

The first full calendar year’s comparative survey of South African hedge funds indicates that many investors in this sector are notching up excellent returns.

The Nedcor Hedge Fund Review shows that the average annual return from the funds contributing to the Nedcor SA Hedge Fund Index was 25% for the four years since January 2001 (the period covered by the index), compared to the FTSE/JSE All Share Index returns of 15.4%.

The BESA All Bond Index return and the STeFI call rate for the same period were 16.8% and 10.1%

There are currently 68 hedge funds in South Africa, managing funds worth approximately R7bn on behalf of pension funds and high net worth individuals.

Nedcor Retail Investments’ Lizelle Steyn, who compiles the Nedcor Hedge Fund Review, says hedge funds must manage at least R1m each to qualify for inclusion in this survey.

While 18 funds initially participated, there are now 30 funds taking part, managing R4.2bn. The funds under analysis are divided into four categories: long/short equity funds (15 funds), fixed interest opportunities (two funds) market neutral equity funds (nine funds) and trading funds (four funds).

“We are progressing well in building up a track record and database of local hedge funds and are helping dispel some of the mystique,” said Nic Andrew, head of Nedcor Retail Investments.

“Today there are more than 7000 hedge funds all over the world, with assets under management estimated at $1 trillion.

"South Africa is slowly catching up and there is increasing interest in using these funds to hedge out risk and assist with overall portfolio diversification.”