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Alternative Market Briefing

South African hedge funds face regulatory change as their industry grows

Tuesday, October 02, 2012

Beverly Chandler, Opalesque London: South African fund group Novare has published its latest Hedge Fund Survey examining the growth of the hedge fund industry across the country to June 2012. Their findings include an observation that the industry underwent some 'material changes in a tumultuous year’ when regulatory change was the backdrop to some interesting and varied investment returns.

According to Novare, assets in hedge funds in South Africa reached R33.6bn ($4bn), an increase of 6.9% over the years, with the bigger managers getting bigger, resulting in 46.2% of industry assets sitting with managers with assets over R2bn ($0.24bn). The increase in assets was dominated by returns rather than new capital inflows.

While the majority of assets are with funds that have a track record of over five years, 14 new funds were launched between 1 July 2011 and June 2012 with equity long/short dominating the strategies available. Of the new funds, 10 were launched by companies that already manage hedge funds.

When asked where they thought new assets might come from, South African hedge funds in the main, at 53.8%, believed that it would be from pension funds through funds of funds.

In terms of performance, larger hedge funds in South Africa achieved better returns with funds with over R1bn ($0.1bn) achieving returns of 16.1%.

Novare concludes that the fledgling hedge fund industry in South Africa is......................

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