INVESTMENT STRATEGIES
Hedge funds should still form a vital part of portfolios
Despite negative press, a number of hedge funds have provided downside protection, reduced volatility and are positive year to date
There has been much negative press about hedge funds in SA. A key aspect that has been overlooked is that despite a sharp selloff in the FTSE JSE all share index (Alsi) in 2018, a number of hedge funds have provided significant downside protection, reduced volatility and are positive year to date. In early August, a prominent hedge fund allocator condemned the SA hedge fund space and stated that it was abandoning all hedge funds. Since then the SA equity market and that particular investment house’s exchange-traded fund (ETF) have fallen by close to 9% while the Hedgenews Africa single-manager composite is positive over the same period, indicating that sometimes you get what you pay for. From 1900 to the end of 2016 the SA market was the world’s best-performing market, delivering an average annual return of inflation plus 7.2%, according to the 2017 edition of the Credit Suisse Global Investment Returns Yearbook. It compared the returns of various asset classes over 117 years in 21 ...
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