Tue, Oct 24, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

South African hedge funds outperform broader hedge fund indices

Thursday, January 05, 2012
Beverly Chandler, Opalesque London:

South African-based Peregrine Securities, Prime Services division reports that for hedge funds serviced by them returns were pretty positive over 2011. Long/short strategies represent some 85% of assets under management for the firm and the year to date returns over 2011 for long/short equity hedge funds is 17.72% on an asset weighted, cumulative monthly before fee returns basis.

The total figure for equity hedge funds is 15.81% and for market neutral equity hedge funds was 7.58%. After fee returns came down to 15.98% for long/short equity hedge funds; 14.42% for total equity hedge funds and 6.60% for market neutral equity hedge funds.

Peregrine’s Ruth Forssman reported that December saw the year end on a negative note, although the final quarter’s figures remained positive, on the back of the very strong October returns and a mildly positive November. “Perhaps the most significant feature of December, however, was the substantial drop in intra-month volatility, with the market responding in slightly more subdued fashion to events in Europe. Lower volatility is, of course, a key requirement for a less risk-averse market environment favorable to emerging markets” she said.

Equity markets in South Africa generally ended the year pretty close to where they started, with the Resource sector continuing to lag according to Forssman. “Sectors remained fairly highly correlated, however, as the market focused almost exclusively on the generic prospects for global growth. There were some interesting regional differences, however, so that while the S&P 500 ended the year flat (up 2.1% on a total-return basis), it is worth noting that the Shanghai composite ended down some 22%, and the French and German bourses down 17% and 15% respectively. Currencies were also volatile, of course, and these need to be taken into account to get a true accounting of relative performance.”

Forssman says: “South African equity hedge funds have in fact performed relatively well, on average looking better than the global hedge fund average, and better than local equity returns. Performance did vary quite dramatically, though, as the roller-coaster action of the markets meant that even small differences in market timing could have large consequences. The HedgeNewsAfrica Single-Manager Composite index ended November up 4.3%, while the more conservative South African Fund of Funds Composite stood at 7.1%. Very simply put the average investor in SA equity hedge funds in 2011 is likely to find that their capital was essentially protected in real terms for the year, a satisfactory outcome in what the New York Times recently described as a “dismal” year for hedge fund performance”.

Peregrine’s range of hedge funds out-performed the broader hedge fund indices. “While both equity long-short and market neutral funds had a good month (and year), market neutrals continued to lag, with a 1% return for December bringing the year to something not too far from money-market levels for this style. Equity long-short managers serviced at Peregrine averaged an extraordinary 18% for the year, an exceptional number given the global context. While we do think that we service some of the very best of SA’s equity hedge fund managers, one should be aware that the numbers we publish, while useful, are not suitable as performance benchmarks for investors” warns Forssman.

“The numbers are basically intended to give a quick and dirty – and early - indication to fund managers of how the month turned out for significant subset of SA equity hedge fund managers. Firstly, the numbers are, unless otherwise indicated, before fees. More important, though, is that the funds at Peregrine are not necessarily a representative sample of SA equity funds. They are certainly a reasonable sample, but differences of style may well generate significant differences with the major SA hedge fund indices and surveys, especially in certain market conditions. Formally representative indices (for example the various indices tracked by the team at HedgeNewsAfrica) are obviously the preferred option when benchmarking manager performance.”

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Regulatory - David Stockman: Trump tax reform overhaul is a pipe dream, stocks are heading for 40-70% plunge, Carried interest tax: How much does it matter?, Odey sees 'terrifying' mix in MiFID, tapering, asset values, Hedge funds come together to share cost of MiFID and research, SEC turns up the heat on U.S. investment advisers, India's Sebi asks hedge funds to report investments in commodity derivatives[more]

    David Stockman: Trump tax reform overhaul is a pipe dream, stocks are heading for 40-70% plunge From CNBC.com: David Stockman is warning about the Trump administration's tax overhaul plan, Federal Reserve policy, saying they could play into a severe stock market sell-off. Stockman, the R

  2. North America - Puerto Rico rejects loan offers, accusing hedge funds of trying to profit off hurricanes[more]

    From TheIintercept.com: Puerto Rico has rejected a bondholder group's offer to issue the territory additional debt as a response to the devastation of Hurricane Maria. Officials with Puerto Rico's Fiscal Agency and Financial Advisory Authority said the offer was "not viable" and would harm the islan

  3. Investing - WPP targeted by short-selling American hedge fund, Sun co-founder sells secretive hedge fund on big chip trade[more]

    WPP targeted by short-selling American hedge fund From Cityam.com: An American hedge fund has mounted a bet against WPP, the world's largest advertising group, with a trade worth almost £90m. Lone Pine Capital has built a short position worth 0.51 per cent of the FTSE 100 company,

  4. Hedge funds up as industry adjusts to rising rates[more]

    Komfie Manalo, Opalesque Asia: Hedge funds have reshuffled their portfolio after nearly four weeks of rising rates as the Lyxor Hedge Fund Index was up +0.2% from 19 September to 26 (+1.1% YTD), fuelled by strong results of global macro funds, Lyxor Ass

  5. Manager Profile - How the world's hedge fund king used 'idea meritocracy' to become a billionaire[more]

    From Forbes.com: In 1982, Ray Dalio made what he calls the biggest mistake of his life. He made a bet that there would be an economic collapse stemming from a debt crisis. And he was wrong. He lost money. He lost his client's money. He had to let people go from his firm and borrow money from his dad