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Alternative Market Briefing

South Africa's pension can allocate 10% of assets in hedge funds, but less than 1% are actually allocated

Monday, February 12, 2018

Komfie Manalo, Opalesque Asia:

South Africa's Regulation 28 of the Pension Fund Act allows pension funds to allocate at least 10% of their assets into hedge funds, a number that could translate to hundreds of billions of dollars in inflows into the industry.

However, in reality, less than 1% of South Africa's pension funds are allocated into hedge funds.

"One thing to look at is why there may be reluctance for pension funds to put any money into hedge funds," stated Udesh Naicker, head of hedge fund regulation in South Africa's, Financial Services Board (FSB) said at the latest Opalesque South Africa Roundtable.

Naicker explained that the cynical view expressed by some managers is the consultants to the pension funds actually have no vested interest in making that allocation and/or that they don't actually understand how hedge funds work. "So again, we as the regulator can't drive that allocation; that it something the industry has to drive," he continued.

The potential large amount of capital available to the hedge fund industry coming from pension funds is not lost to Steven Liptz of 36ONE Asset Management who added that the hundreds of billions of dollars from these institutional investors could be a big boost to the local fund industry which currently has......................

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