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From Christine Gaylican, Opalesque Asia:

As most hedge fund managers are on survival mode, some of the hedge funds firms based in South Africa opted to cut fees charged on clients from the usual 2% to only 1% annually on assets managed.

According to a survey sent to investors and received by Opalesque in early October, Novare Investments, a company engaged in alternative investments management based in Cape Town, said this has been a very good strategy allowing for 20 new fund launches (as of June-09) this year.

In terms of the 20% performance fee, Novare’s survey showed that the majority of fund administrators collect it if cash returns were obtained in a month. It has been noted that local hedge funds commonly apply the “high water mark” principle, which implies that a performance fee cannot be paid more than once on the same performance achieved.

Prevailing strategies

On strategies used in the South African hedge fund industry, Carla de Waal, portfolio manager at Novare Investments said in the survey: “Our local hedge fund industry has matured to the extent that it offers investors a less equity-centered pool of funds to choose from. Historically, the South African hedge fund industry has been characterized by a large majority of assets managed in equity long/short and equity market neutral funds. These strategies still dominate the market, but to a lesser extent.”

The survey (......................

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