Sanlam owned hedge fund of fund business honoured at industry awards

10 March 2011: Leading South African manager of fund of hedge funds, Blue Ink Investments (Blue Ink) - part of Sanlam Investments’ hedge fund cluster - walked away with the only two awards for Hedge Fund of Funds at this year’s annual HedgeNews Africa Awards. The awards are based on the best risk-adjusted returns generated during 2010 by signature role-players in the South African and African-based hedge fund industry across 10 distinct categories.

The company was awarded in the categories Best Fund of Funds Award for the Blue Ink Fixed Income Arbitrage Fund and Long-Term Performance Fund of Funds Award for the Blue Ink-ubator Diversified Fund. This is second consecutive year that the Blue Ink-ubator Diversified Fund has been honoured at the awards.

“The Blue Ink Fixed Income Arbitrage Fund consists of the top fixed income hedge fund managers in South Africa. The award is testament to our belief that fixed income hedge fund managers can achieve success in either an interest rate hiking or cutting period, as they have proved in the past,” says Thomas Schlebusch, CEO of Blue Ink Investments.

The Blue Ink Fixed Income Arbitrage Fund, which is aimed at high-net worth individuals or institutions with a risk appetite in the region of cash +3%, posted a total gain of 24.23% (after all fees). Schlebusch says that the fund is most suitable for investors that have an allocation to fixed income as an asset class and need to add some diversification to their portfolio. “According to our research, the average South African single strategy hedge fund posted gains of 9.79 % last year.”

Schlebusch says that the Blue Ink-ubator Diversified Fund, which is aimed at investing in high-calibre early stage managers with varying strategies, posted a total gain of 13.74% (after all fees) in 2010. “The fund was launched in September 2007, just as the financial crisis began to impact on equity markets. The award recognises the successful investment strategies employed by the early stage fund managers in which we invested.”

He explains that the Blue Ink-ubator Diversified Fund aimed to pioneer a new investment strategy in the South African hedge fund space by identifying new fund manager talent, particularly those pursuing alternative strategies. “Research has shown that most funds typically have the best returns in the early years, while the ideas are still new and the capital being managed is small. This fund is proving to be increasingly popular among investors, particularly institutional investors.”

Schlebusch expects another strong year for the hedge fund industry in 2011, “We are particularly positive with regards to the proposed new Regulation 28. The draft release of the regulation states that hedge funds will be allowed an allocation from Pension Funds up to 10%. This is a vast improvement on the 2.5% allowed before.

“We believe that if the final regulation is this favourable, we will see a great deal more appetite from institutions. The history of the hedge fund industry in South Africa shows that the product is well suited for long-term stable investment with decent growth.”