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Peregrine Prime South Africa hedge funds added 2.55% before fees in March

Thursday, April 08, 2010
Opalesque Industry Update - South African equity-centric hedge funds forged ahead in March as the JSE All Share Index went above 29 000 for the first time since mid-2008, according to funds with Peregrine Prime, a provider of wealth and alternative asset management solutions in South Africa.

Before fees and on average, hedge funds added 2.55% - with long-short funds ahead by 2.88%, market-neutral by 1.21%, and multi-strategy by 3.34%. This brings the indexed returns for the 3 strategies together to 105.63 for the year so far.

Monthly Market Recap
After a flat February, a range of positive economic data saw markets rallying strongly across all indices. Resources topped the list returning 10% for the month, but all major indices topped 5%. And on April 1, one day after the end of the month under review, the AllShare index went above 29 000 for the first time since mid-2008. More on current market levels below.

Of course the current bouyancy is based on a range of encouraging economic signs. Locally, the unexpected rate cut naturally helped things, as did continued interest in SA retail plays, but the biggest influence is undoubtedly the popularity of the mining sector on the back of very firm commodity prices across the board, in turn based on views that the global recovery is looking to be stronger than expected.

Amidst the optimism, it may well be worth remembering that in order to sustain prices this general economic environment (a) has to remain positive and, perhaps more importantly (b) has to translate into the sorts of earnings increases which can justify some of the prices seen at present. The latter point has been questioned.

Returns for March:

Index------ Return
All Share….. 7.9%
Top40….. 8.1%
Fini15….. 7.6%
Indi25….. 5.6%
Resi20….. 10.2%
Findi30….. 6.3%
Swix40….. 7.0%
MidCap…… 6.9%
Data from Bloomberg. SmallCap is capital return as total return is unavailable

The AllShare Total Return index ended March 2010 at 3 250. At that level:

• The index is just 8% below its record high (3 560) of 22 May 2008;

• And that high was something of a Resource-led blow-off: a more meaningful high was probably that of 11 October 2007 (3 330): the index ended March just 1% below that level (and even that high could be ascribed to a bull market which had already run more than its course);

• The index is now 69% up on the low of 20 November 2008 (and 65% up on the retested lows of March 2009);

• And also worth noting, the compound annualised return over the last 5 years has been 20.2% That’s not bad for a period covering the worst economic crisis since the 1930’s. Time to stop whining (not an easy thing, of course, for a Wall Street banker) and say thanks to Ben and Timmy (and Trevor too).


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