WEALTH WATCH
STEPHEN CRANSTON: Swings, roundabouts and bumpy rides … how funds have fared
Amid the Steinhoff scandal and political uncertainty some have shone and others shrivelled
South African hedge funds are now available to the public, or at least those who can write a proverbial cheque for R50,000. Yet they have not got investors’ adrenalin pumping. In fact, at R62.2bn under management, industry assets fell by almost 10% in 2017. This is about a third of the size of the local private equity industry, which is clearly the preferred way to access alternative assets. Hedge funds certainly seem mundane compared with the much more exciting activity of investing in bitcoin, yet only 0.4% of people with bank accounts have bitcoin wallets, so growth potential is huge. Private equity as an illiquid off-market asset has no correlation with the market, except if and when it lists or relists. Hedge funds claim to have no correlation to the market, but this is untrue for the dominant strategy, equity long/short, which sometimes has a 60% to 80% net positive exposure. David Bacher of Corion Capital says most of 2017 was a time of benign volatility, which might sound ni...
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