the quarterly journal of the african...

THE QUARTERLY JOURNAL OF THE AFRICAN ALTERNATIVES AND HEDGE FUND COMMUNITY FIRST QUARTER 2016 u VOL 3 Nº2 u WWW.HEDGENEWSAFRICA.COM

Stanlib LISP platform partners 2IP to pioneer retail hedge fund range Page 5

ACI ready for growth with co-naming solutions Pages 26-27

Flight patterns

Westbrooke finishes 2015 with a flourish to maintain a solid recordPages 22-23

Skybound sees China turnaround, looks to the service sector for growthPages 20-21

Taking your success to the next level with Prime Services

Corporate and Investment Banking

Absa Bank Limited Reg No 1986/004794/06 Authorised Financial Services Provider Registered Credit Provider Reg No NCRCP7

Equities, Fixed Income, ForeignExchange and Commodities throughout all geographies and markets.

For more information, contact [email protected]

Our Prime Services offering is the leading holistic solution to execution, financing and clearing across all asset classes.Backed by the global resources and expertise of Barclays, our unique approach allows you simultaneous exposure to

This could well be the year that South Africa’s hedge fund industry finally earns its wings.

Late last year, the country’s Financial Services Board (FSB) gave Novare’s Col-

lective Investment Scheme approval to launch the first retail hedge funds under new legal dispensa-tion announced in February, with more approvals due in the coming months.

There is much hard work to be done, and it will take time, but if one steps back from the minutiae, the bigger picture should be a significantly differ-ent one this time next year.

In this edition, we carry an interview with Udesh Naicker, who is head of the now six-strong hedge fund team at the FSB. A chartered account-ant with a background in investment banking, Naicker has a measured approach to the transi-tion – looking to engage with the industry on an ongoing basis. A year from now, Naicker expects a far more settled situation, with “key legislative requirements embedded in the daily endeavours of managers” – and is positive about the industry’s growth prospects (page 18).

Such change will have a range of impacts indus-try-wide. One example is a plan by Stanlib’s linked investment service provider platform (LISP) to in-clude hedge funds in their product offering. The Stanlib LISP currently has assets under administra-tion of R105 billion, much bigger than the entire hedge fund industry, which gives some indication of the growth potential for hedge funds once reg-ulated distribution channels are in place (page 5).

With transition as one key theme in 2016, trans-formation is expected to be another. This month we carry news of a new launch from Independent Alternatives, where partners Tatenda Chapinduka and Grant Hogan are building their own boutique alternative investments firm, launching a quantita-tively based macro-thematic multi-strategy hedge fund (page 4). We also interview Keabetswe Ntuli of Africa Collective Investments, the first “em-powered entity” designed to provide co-naming hosting solutions to asset managers (page 26). Both developments are proof positive that the South Af-rican industry is moving with the times, in all the right directions.

Last year was also one in which many domes-

tic firms forged strategic partnerships. The likes of Capricorn, Abax and Tantalum transformed their shareholder bases to offer critical support that should help them build their businesses and brands in difficult market conditions.

Delivering positive returns remains the most important area for the hedge fund industry this year, as in any year.

The heat has certainly been turned up in the markets in 2016, with fears about Chinese growth prospects, a depressed oil price and the return to a rate-raising cycle among the factors that have caused extreme movements in global markets in January.

There is certainly a great deal of negative senti-ment out there, which for some extends into a doomsday scenario. Others see opportunity in all the negativity.

Bloomberg reported recently that hedge funds were attempting to buy the dip in US equities, cit-ing client flow data from Bank of America Mer-rill Lynch. This comes as investors are wondering whether the recent market downturn is a buying opportunity or a sign of more to come.

In Africa, and particularly South Africa, there are many other homegrown political and eco-nomic concerns affecting market prospects. These are compounded by the fact that emerging and frontier markets are no longer being viewed in quite the same favourable light as many developed markets have now started to see improved growth and higher yields.

Yet fund managers are still finding opportunity, as calendar-year 2015 returns show (see our final award nominations on page 14). Many would ar-gue that hedge fund strategies are made for mar-kets such as these.

In the world of flight, heat creates updrafts, or thermals. By flying a spiralling circular path within these columns of rising air, birds are able to “ride” the currents and climb to higher altitudes while expending minimal energy.

In keeping with this edition’s flight theme, our hope is that hedge fund managers are using their skills to tap into the heat, rising above the noise of the markets to identify profitable opportunities in the year ahead.

A chance to fly in a make-or-break year

HEDGENEWS AFRICA First Quarter 2016 3

editor’s letter

By Gwyneth Roberts, editor

4-5 News Ex-Sanlam duo unveil Muhu multi-strategy at new shop Independent Alternatives. Stanlib LISP platform partners with 2IP to pioneer retail hedge fund product range

6-12 Online news

13-14 Symposium & AwardsSymposium debate centres on global volatility and regulation. Final list of nominees announced for the Awards

16-17 Fund profileAfrica Merchant notches up its first year in tough sub-Saharan markets

18 InterviewAn update from the FSB’s Udesh Naicker on the new regulatory environment

20-21 Building the businessNMRQL sets up as a new breed of dis-ruptor in the asset management space

22-23 Building the businessWestbrooke finishes 2015 with a flourish to maintain its strong performance record

24-25 Fund profileStock selection underpins Fairtree Assegai’s solid run of returns

26-27 InterviewACI’s Ntuli expects growth as industry positions itself to weather the storm

28 Performance South African funds shine in a tough year. Falling fortunes and a difficult 2015 for Africa managers

29-31 League tables for 2015

contents

Disclaimer: This publication is for information purposes only. It is not investment advice and any mention of a fund is in no way an offer to sell or a solicitation to buy the fund. Any information in this publication should not be the basis for an investment decision. HedgeNews Africa does not guarantee and takes no responsibility for the accuracy of the information or the statistics contained in this document. Subscribers should not circulate this publication to members of the public, as sales of the products mentioned may not be eligible or suitable for general sale in some countries. Copyright in this document is owned by HedgeNews Africa and any unauthorised copying, distribution, selling or lending of this document is prohibited.

www.hedgenewsafrica.comEmail: [email protected]: +27 (0) 43 748 6476Fax: +27 (0) 86 549 6914Published by African Financial MediaEditor: Gwyneth [email protected] manager: Aiden [email protected] editor: Maria Da [email protected] and events: Lindsay Mitchell [email protected] director: Mark CaldwellSubscription and database sales:[email protected] list your fund in our database:[email protected] and sponsorships:[email protected] and administration: [email protected]

Cover: Protasov AN/Shutterstock

new

s

4 HEDGENEWS AFRICA First Quarter 2016

Ex-Sanlam duo unveil Muhu multi-strategy at new shop Independent Alternatives

Former Blue Ink pair Grant Hogan and Tatenda Chapinduka have founded their own boutique alter-native investments firm, known as

Independent Alternatives, which is based in Johannesburg.

The duo left Sanlam-owned Blue Ink Investments during the fourth quarter of 2015, where they co-managed R4 billion across a range of hedge fund products.

Hogan and Chapinduka have been working together for the past six years and share a solid combination of relevant experience, skills and performance track record. They successfully managed a number of hedge fund and fund of hedge fund products during their time at Blue Ink, winning various HedgeNews Africa awards during that time.

“Tatenda and I each have our own strengths, distinct skills, specialisation and relevant experience; this allowed the Blue Ink funds to benefit from an expanded op-portunity set, without any dilution of spe-cialisation,” says Hogan.

Chapinduka says it had always been their ambition to start a hedge fund man-agement business. “Our time at Blue Ink was one of learning and preparation. We were fortunate to learn from South Africa’s best hedge fund managers, and we con-sidered it to be a privileged observatory,” he said.

The pair first met as students at the Uni-versity of Cape Town, before joining Blue Ink in 2010. Chapinduka has a degree in actuarial science and is a CAIA charter-holder while Hogan has a BCom (Econom-ics) Honours degree.

Independent Alternatives was founded on the belief that they could do more for their clients. Hogan said that while there are a number of great hedge fund busi-nesses, and a number of great hedge funds, the local industry remains dominat-ed by long/short equity funds and there is a real opportunity to create something new and different.

Their fund, the Muhu Multi-Strategy Fund, aims to be exactly that. It is a quan-titatively biased macro-thematic, multi-strategy hedge fund, investing into fixed income, equity, commodity and forex product markets. It will focus on the do-mestic markets, with some offshore expo-sure, in a well-diversified portfolio of 40-60 positions. The fund will have a moderate risk profile, targeting volatility of 6-8%.

“It is our view that investors are not com-pensated for investing in and across asset classes, but rather they are compensated

for assuming risks,” says Chapinduka. “Therefore, risk drives return, and our aim is to create a portfolio which is diversified across lowly correlated risk factors. Risk-allocation strategies provide better diver-sification and lower volatility compared to expected return asset class allocation strategies. We believe that we can iden-tify and harvest statistically independent risk premia and achieve more consistent and significant alpha utilising a diversified risk parity allocation approach to allocate capital.”

The fund’s idea generation and research is driven by proprietary rules-based mod-els, which the pair have been working on for some time. But it is not a passive fund, with a systematically modelled portfolio that retains a lot of the portfolio manager override.

According to Chapinduka, growth and inflation are the two most important macro factors they will analyse, to identify the macro environment they are operating within.

“The idea of a low-fee, passive multi-strategy hedge fund product fascinates us given our backgrounds, but we don’t believe the local market currently has all the tools to trade such a fund,” he says. “We will be building some of these tools as we move along, looking to create the best portfolio for the macroeconomic en-vironment. We have found out over time, that the macroeconomic environment has a huge effect on how risk premias behave.

Some environments are supportive of cer-tain risk premias, and other environments are destructive.”

The name Muhu is derived from the isiMuhu tree, which is Zulu for the baobab. The tree is popular in African tradition and culture, and is a symbol of endurance and longevity. It also doubles as a provider of life, in the form of the fruits it produces and as a meeting place for the community’s authorities and brightest minds. Chapin-duka says this encompasses all that the fund stands for, a consistent return profile, aided by relentless research and develop-ment.

The duo will co-manage the fund and share responsibility in managing the business, while all non-core activities will be outsourced to third-party service providers.

The company will initially operate as a juristic representative of an existing FSP and an application for its FSP CAT IIA li-cence will be made over the first quarter of 2016. The fund will be offered as Qualified Investor Hedge Fund (QHIF) during the first quarter of 2016, starting with around R25 million in assets under management.

It will form part of IDS’s management company offering and will utilise RMB Prime as prime broker.

“In our previous role we had an opportu-nity to perform due diligence on most ser-vice providers, and we believe the guys we have partnered up with provide the best services locally,” says Hogan.

Grant Hogan Tatenda Chapinduka

news


Stanlib LISP platform partners with 2IP to pioneer retail hedge fund product range

The Stanlib linked investment ser-vice provider platform (LISP) has teamed up with research and ad-visory business 2IP Independent

Investment Partners to provide clients with access to select retail hedge fund offerings as part of its broader product range.

With South African hedge funds expect-ed to become available as regulated collec-tive investment schemes (CIS) during the course of this year, Stanlib aims to be at the forefront in offering them to the advisory market, awarding the manager research contract to 2IP for vetting hedge funds and funds of hedge funds.

“We have been wanting to include hedge funds for a while but previously it was very difficult with legal compliance and the re-quirements of the Financial Advisory and Intermediary Services Act,” said Belinda Forbes, head of LISP product solutions at Stanlib. “CIS requirements make it much easier to open up to the market via advis-ers who want to offer such products to their clients.”

Forbes notes that while LISPs were cre-ated in South Africa to bring a range of in-vestment options under one roof, they had evolved over time to include offering model portfolios, personal share portfolios and other derivative-type products.

Started in 2002, the Stanlib LISP cur-rently has assets under administration of R105 billion. Around 95% is via collective investment schemes, although there is a growing percentage of personal share port-folios and structured products into other asset classes.

“We use the analogy of a shopping mall – the idea of a platform is to create a shop-ping centre instead of just one shop,” she says. “We already offer all the major stores and now we want to expand to other brands. For us, the next foray is hedge. We want to offer advisers and high-net-worth individuals access to these products, to in-crease the footfall on our platform.”

She said many advisers allocated via more than one platform, and by expanding its product range Stanlib stood to benefit from increased business. It would offer the opportunity to combine hedge funds with other asset classes to achieve different risk-reward characteristics, targeting pre- or post-retirement or discretionary money.

On the long-only side, the Stanlib LISP uses the services of Stanlib Multi-Manager to identify a ‘buy list’ of funds. Of the cur-rently 1,400 CIS-registered funds, they of-fer access to around 80 funds.

“Our intention is to do a similar thing

with hedge funds,” says Forbes. “We are not opening up to all funds – we have to be aware of reputational risk when adding funds and make sure expert verification work is done to protect the Stanlib brand, which is why we have contracted 2IP.”

As with the long-only selection pro-cess, 2IP would provide a ‘buy list’ of hedge funds. All funds are reviewed every six months, and will be classified in vari-ous ways, for example as a ‘buy’, ‘recom-mended’ or even ‘on hold’, should there be a change in management team or other event that would have a material effect on the business.

“We offer recommendations based on research and provide it to advisers so that they can make informed decisions,” says Forbes.

2IP is headed by ex-Novare team Fran-cois Cilliers, Marius Killian and Ronnie Retief. They have extensive experience across the investment spectrum, offering independent manager research and due diligence on behalf of other service provid-ers. 2IP currently fulfils a similar function on long-only manager research to Investec In-vestment Management Services.

Forbes added that logistical, functional and administrative processes had not all been finalised for including hedge funds on the platform. These would be dealt with as funds were approved by the Financial Ser-vices Board.

“Hedge funds are not quite the same as long-only funds when it comes to pricing and trading cycles – we will work out the best processes and reporting procedures in conjunction with managers and their service providers. We are already having discussions with service providers to build

seamless solutions when it comes to pric-ing and liquidity.”

Stanlib was also likely to set investment minimums in hedge funds at R500,000 to R1 million, unlike the much lower en-try point for long-only funds. Hedge funds included on the platform were also likely to be retail rather than qualified investor structures, given that Stanlib targets the retail market.

“We need to make sure we offer hedge funds to the right clients – the more so-phisticated investment managers and bro-kers. Our first intention is to offer them to discretionary fund managers (DFMs) who build bespoke portfolios or discretionary model portfolios for clients. Model manag-ers want to add something different to their investment proposition, and can combine hedge funds with other offerings to create optimal solutions.”

Stanlib currently has over 5,000 ac-tive advisers on its platform although just a small percentage offer personal share portfolios and more specialised advisory services to high-net-worth investors where they would be comfortable offering different solutions.

Forbes has been with Stanlib since 2008, and prior to that spent many years with Hollard Investments, where she gained a broad understanding of vari-ous investment vehicles, including hedge funds. “Hedge funds definitely provide an opportunity for certain investors within an asset allocation framework. There can be a negative perception of them, particularly because of certain highly publicised cases offshore. As with any investment strategy, it is up to us to help educate people as to what is out there.”

Cilliers at 2IP added that hedge funds were a useful strategy to either protect capital or enhance returns, but the lack of market knowledge and access within a reg-ulated structure had impeded advisors’ abil-ity and appetite to access these strategies.

“We are very excited about this develop-ment, not only as it offers opportunities for investors to be able to curb risk or enhance returns responsibly, but also because there is a lot of talent within the hedge fund space,” he said. “In a regulated environ-ment, hedge funds will now begin to get the recognition they deserve. But as in the traditional CIS space, investors need to do proper due diligence on these funds and not merely be guided by returns. They need a proper understanding of the risks being taken within each strategy, as well as when strategies are likely to rationally disappoint.”

Belinda Forbes


onlin

e ne

ws

ONLINE NEWS November-December 2015 www.hedgenewsafrica.com/newsReceive online news stories EACH MONTH. SUBSCRIBE to HedgeNews Africa at: www.hedgenewsafrica.com

The THINK.CAPITAL Growth Fund has reached the one-year mark, returning a net 21.21% in its first 12 months.

The South African equity-focused multi-manager fund is managed by Elmien Wagenaar, and allocates to six underlying managers.

For its first year, the fund ranked first on a 12-month basis in the fund of funds tables and also led year to date, adding a net 18.19% to the end of October, with a low volatility profile and no negative months.

It is a concentrated, best ideas portfolio with a focus on returns within a strong risk-management framework,

aiming to extract returns from hedge fund strategies without over-diversification.

Wagenaar designed the port-folio to combine uncorrelated returns between underlying managers, drawing from exten-sive experience in manager and mandate selection, portfolio construction and risk manage-

ment to construct a product that would benefit in all market conditions.

“One of the interesting aspects of the South African market in 2015 has been the constant short-term sector rotation. It has been difficult for single-manager funds to generate returns in all those pe-riods as they all have different strengths,”

she said. “We have seen different underlying mandates come to the fore in different months, creating a well-rounded return.”

The fund has assets under manage-ment of R33 million with significant remaining capacity.

The product is designed for investors seeking a different source of equity-type returns, rather than just the typical risk-reducing characteristics of many hedge fund portfolios. It will continue as a quali-fied investor product with a minimum investment of R1 million.

Besides the multi-manager portfolio, Wagenaar also designs customised hedge fund solutions for a range of cli-ents, bringing extensive experience.

Dec 2015 Novare’s CIS gets go-ahead for first retail hedge funds

Dec 2015 Green Oak Go Green Fund reaches six-year mark

Novare CIS has been granted regula-tory approval to launch South Africa’s first retail hedge funds under the new legal dispensation introduced in February 2015, resulting in hedge funds being regulated under the Collective Invest-ments Schemes Control Act (CISCA) that encompasses unit trusts.

“With the Financial Services Board (FSB) having indicated its satisfaction with our offering, we intend to launch our retail hedge funds in early 2016,” said Rene Miles, managing director of Novare Collective Investments Schemes (CIS) – a management company offering traditional unit trusts, retail retirement vehicles and post-retirement solutions.

Novare CIS also applied for regulatory

approval of a number of hedge fund port-folios managed by a range of boutique hedge fund managers including Matrix Fund Managers, Mazi Capital, Corion Capital, Tower Capital Management and Novare Investments.

Although product regulation is only now coming into effect, hedge fund asset managers have been regulated under the Financial Advisory and Intermedi-ary Services Act (FAIS) since October 2007 under a separate licence category, CATIIA. Discretionary asset managers require a CATII licence.

Novare CIS will host both retail and qualified investor hedge funds. The former will be accessible to the general public, while qualified hedge funds will

only be available to investors meeting cer-tain requirements, or those making use of the services of a financial adviser.

Retail hedge funds, will operate under stricter regulations to ensure investor protection, while qualified investor hedge funds will be subject to a less strict but fitting regulation.

Miles said the regulation of hedge funds would assist in growing industry assets, while opening opportunities to provide alternative investment vehicles to retail investors.

“The two most important benefits of including hedge funds as an additional alternative asset class in an investment portfolio are capital protection and asset class diversification,” she said. More online

The Green Oak Go Green Fund, a fixed income hedge fund run by Stellenbosch-based Green Oak Capital, has reached its six-year anniversary with compounded annual returns of 10.41%.

The fund, managed by ex-merchant bankers Willie Viljoen and Rean Smit, with assistance from Henk Kotze, targets ab-solute returns of 2.5 times the short-term fixed interest rate (STeFI).

The lower-risk Green Oak Special-ist Fund targets absolute returns of 1.5 times the South African Reserve Bank (SARB) interbank call rate while maintain-ing capital stability. It has reached its nine-year anniversary with compounded annual returns of 9.79%.

The core of the portfolios is invested

in the funding curve, looking for the best area of that curve to express the team’s view. Remaining capital is deployed among underlying strategies. These in-clude a directional strategy based on the team’s view of whether interest rates are priced correctly; a yield-curve strategy, trading the shape of the curve; and basis trades where bonds are traded against swaps to take advantage of opportunities between the two curves.

According to Kotze, the start of 2015 took many by surprise as the oil price dropped significantly bringing the likeli-hood of interest-rate cuts, where at the end of 2014 the market was pricing in interest-rate hikes.

From February, the market outlook

changed again as the oil price started to rise and the inflation picture worsened with the market again pricing in interest-rate hikes.

The team took advantage of opportuni-ties early in the year following a theme where they believed the growth story would not allow the Monetary Policy Committee (MPC) to hike rates as ag-gressively as priced.

“We did see a risk of the MPC increas-ing interest rates by small increments to gain credibility based on inflation being towards the upper end of the band and the forecast being outside the band. However, we believed the market was overpriced and decided to be construc-tive on the curve.” More online

Nov 2015 THINK.CAPITAL delivers solid first-year returns

Elmien Wagenaar

Peregrine ad crops.indd 1 29/10/2012 21:14


onlin

e ne

ws

Johannesburg-based Emperor Asset Man-agement, a 100%-owned subsidiary of the JSE-listed Purple Group, has made steady headway with the Emperor Long/Short Hedge Fund, which reached its 12-month anniversary in November.

Since inception in November 2014, the fund has returned a net 61.33%. To the end of October 2015, it was up a net 45.67%.

Tom de Lange and TC van der Walt manage the quantitative long/short equity hedge fund that uses proprietary models to determine price movements and market sentiment.

The fund aims for maximum returns with downside volatility of less than the JSE All Share Index. Net gearing is controlled between 80% and 100%. A market-timing model is used to measure market valuation and sentiment, which indicates the poten-tial to increase long or short gearing.

“In bull markets we want our net gearing to be as high as possible and in bear mar-kets we’ll probably want to be net short of the market,” said de Lange.

De Lange had a neutral market senti-ment, stating that it was time to be cau-tious, but not too cautious.

The fund has around 30 longs and 15 shorts, with an average duration of 240 days, indicating its low trading frequency. Net gearing is currently around 91%.

Its biggest overweights were in the financial, consumer, property, and food and health sectors while its largest underweights were in the resources and platinum sectors.

De Lange said the large underweight in resources was based strictly on a quantita-tive approach, following the model’s valua-tions on stocks without taking a macro view.

“We don’t care what companies we in-vest in, we just follow the model, and that’s

specifically how we want it,” he said.“A lot of people, including myself, have

seen the resources share prices come down so hard that you get tempted to buy at these levels, only to find that three months later you are down 40%. Then you sell out and try to buy again at the lower level but lose another 40%, and so it goes. We stick to our model, and our model says to stay short,” he added.

Over the last 12 months, the fund has had two negative months when it was down a negligible 0.25% in April and 2.64% in May. Its highest performing months include a net return of 9.69% in July, 8.17% in its first month of trading in November last 2014, and 7.65% in October.

“We are not trying to eliminate volatility completely,” said de Lange. “The return you sacrifice to eliminate the down months is too high in my opinion.” More online

Nov 2015 Mazi market-neutral caps nine years of steady returns

Nov 2015 Quant strategy Trofin Blue at two-year milestone

The Mazi Market Neutral Fund reached its nine-year mile-stone in November with steady returns amid volatile market conditions.

Managed by Mazi Capital founder Malungelo Zilimbola, the fund has returned an an-nualised 16.2% since inception, versus 13% for the JSE All Share Index (ALSI) over the same period.

Zilimbola has been satisfied with the fund’s performance to date. For the year to the end of October, it added a net 9.3%. Its highest monthly return was in March when it added 2.4% mostly due to long positions in Naspers, Attacq, PSG and a selection of food-producing com-panies. The fund’s shorts in construc-tion and resources counters also added to performance. Its biggest dip was a negative 1.1% in January due to short positions in credit retailers, which rallied

during the month.In October, the fund gained

2.3%, versus record gains of 7.6% for the ALSI, its highest monthly return since May 2013. The JSE Share-Weighted Index (SWIX) also posted a large gain of 7.3%, its biggest since Sep-tember 2010. The fund’s long positions in traditional rand-

hedge stocks helped performance during the year, says Zilimbola, who notes that the fund was also on the right side of the weakness experienced in resources, particularly platinum.

“We were also short the construction sector, especially the large construction companies. Aveng was sold short at R43, and the stock is currently trading below R3,” he says.

Other shorts include Tiger Brands, which has continued to struggle after buying Nigerian-based Dangote Flour

Mills in September 2012, which itself had been making significant losses and has failed to recover.

Long positions include investments in healthcare companies and small construction materials companies like Afrimat, Cashbuild and Sephaku, which have done particularly well for the fund. For example, Afrimat was included in the portfolio when it was trading at R5 a share. It is currently trading at around R27 a share and has posted positive financial earnings, which continue to boost the share price.

Some of the fund’s other longs include retailer Pick n Pay and Pioneer Foods, which have been “good turnaround stories”, says Zilimbola.

Zilimbola believes it will be some time before the mining sector sees improve-ment based on continuing rising costs and underlying mistrust between govern-ment and the sector. More online

The Trofin Blue Fund, established by Peter Trollope and Jessica Mortlock, has reached its two-year anniversary with av-erage annualised returns of a net 25.42% since inception.

The fund is one of two quantitative long/short equity funds focused on the South African equity markets, which form part of the AG Capital stable.

For the year to the end of October, the fund added 18.92%. It posted a net return of 30.29% in 2014.

A quantitative model ranks the fund’s universe of 100 stocks, indicating those with the most momentum over a defined period. The top 15 stocks are added to the portfolio with the model automatically adjusting weightings ac-cording to rankings.

According to assistant fund manager

Claudius Rostoll, back-testing of the model has shown that holding 15 stocks in the South African market is an ideal number to ensure diversification while participating in momentum.

“We have found a significant difference in performance if we hold more stocks,” he says. “We still continue to outperform the general benchmark but it takes away about half a percent of our performance every month.”

Although the fund’s mandate allows it to short, Rostoll says it is perpetually long. A general hedge using put options is periodically applied to protect against calamitous risk rather than protecting existing returns. Cost is a major consid-eration, so risk and reward is continually weighed up before applying hedges.

In August, when the general market

was down 3.55%, the fund declined by just 0.32%, which Rostoll relates to posi-tions performing well, as well as cash flow resulting from put options.

The fund can be geared up to three times, with the aim of gearing long posi-tions 1.5 times. This is manually adjusted based on market outlook. During the volatile period of July to September the long-only gearing was 1.2 times but is now back in the region of 1.5 times.

Position duration is longer than typical long/short funds, with one or two stocks falling out of the top 15 every three to six months.

“Even if a stock falls out of our top 15 model, we won’t necessarily sell it all unless we feel that the momentum is decreasing at such a pace that it warrants being excluded,” says Rostoll.

Nov 2015 Emperor fund makes steady headway over first year

Malungelo Zilimbola

In a consolidating market where performance is key, you need an experienced partner in Prime Brokerage that can help you navigate the opportunities and challenges ahead.

The Global Prime Finance platform delivers innovative financing and prime brokerage solutions to the world’s largest and most sophisticated managers. Client service is the foundation of our model – providing seamless coverage, multi-asset financing solutions and access in markets worldwide.

You can expect more with Deutsche Bank.

www.db.com

Deutsche BankGlobal Prime Finance

This advertisment has been approved and/or communicated by Deutsche Bank AG or by its subsidiaries and/or affiliates. Deutsche Bank AG Johannesburg Branch, Deutsche Securities (Pty) Limited and Deutsche Securities (SA) (Pty) Limited are authorised financial services providers. Copyright Deutsche Bank 2015.

Peak Performance

Barak Fund Management has made two senior management appointments, boosting its financial and operational divisions.

Vincent Freemantle has joined Ripar-ian, the adviser to Barak Fund Manage-ment, as chief operating officer. Prior to joining Barak, he was vice-president, financial accountant and initial CFO of Credit Suisse Securities (Johannes-burg), a subsidiary of the global Credit Suisse Group. He has been contracted to the Johannesburg Stock Exchange and worked at the financial asset services custody division of Standard Bank of South Africa, where he was risk and compliance officer. He later took on the position of financial officer for BoE Stockbrokers. Freemantle is a CA (SA) with the South African Institute of Chartered Accountants and a member of the South African Institute of Stockbrokers.

Kevin Ramsamy joins the Barak Fund Management team as chief financial officer, bringing global financial experience to the role. Ramsamy is a member of the Association of Certified Chartered Accountants with more than 10 years’ experience in the banking sector in Mauritius. Prior to joining Barak, he worked for HSBC (Mauritius) in the finance department, and then at Standard Bank Mauritius from 2006 to late 2010. He later took on the posi-tion of business manager to the chief executive from 2011 to 2015, and was also the acting CFO for Standard Bank

DRC in 2015. He holds a BSc Honours in Economics and Finance from York University as well as an MSc in Manage-ment Science and Operational Research from Warwick University.

The two appointments follow the departure of Declan O’Brien, previously CEO, who left in mid-November to pur-sue other interests.

Barak has also appointed a new head of legal, Shaie Zindel, who joins from a boutique commercial law and litigation firm and will enable a client-centric ongo-ing legal service in a range of specialist practice areas.

Barak’s advisory team has over 50 years of combined experience in com-modities, origination, valuation, credit un-derwriting and marketing, with a product range that includes two Africa commodity trade finance portfolios focused on the commodities sector, as well as a liquid commodities portfolio.

In its third-quarter report to investors, Barak noted that it had been a tough quarter in the global markets, and par-ticularly for Sub-Saharan Africa, Barak’s

niche space. “These market conditions meant that

there were numerous factors to take into account when selecting suitable fund portfolios, and strategies had to be constructed to carefully approach subsequent risks,” said Barak’s Prieur du Plessis. “We continue to invest in a manner that focuses heavily on disci-pline, diversification, collateralisation and downside-case scenario valuation. Portfolio diversification is paramount to investing in the Sub-Sahara African environment, mitigating economic, sector and country risk.”

He said the team favoured companies in established markets within Sub-Sahara Africa, with six African countries making up 85% of its exposure, namely South Africa, Kenya, Zambia, Tanzania, Malawi, and Zimbabwe. Commodity products made up around 80% of the total commodity exposure within Africa for Barak’s commodity portfolios, with the four biggest contributors being fertiliser, fast-moving consumer goods, metals and cement.

The flagship Barak Structured Trade Fi-nance Fund gained 9.32% in the year to the end of October and a net annualised 14.5% since inception in February 2009.

The Barak Impact Fund gained 8.34% to the end of October, with increasing assets helping it to select more high-yielding transactions in the social and impact African environment.

The Barak Shanta Commodity portfolio added 12.04% to the end of September.


onlin

e ne

ws

Novare Actuaries and Consult-ants, the independent advisory business providing invest-ment consulting services to institutional clients throughout Southern Africa, has appointed Nowana Sobopha as manager research analyst.

With a BCom degree in ac-counting from the University of South Africa, Sobopha joined Novare in November and is responsible for researching investment managers. Based in Johannesburg, she has eight years’ industry experience.

Sobopha’s career began in 2008 at Thebe Stockbroking as junior equity re-search analyst. She was responsible for research report writing, financial model-ling and financial information analy-sis. In 2012 she joined 20/20 Insight Enterprise Development Specialists as a development consultant.

She joined Stanlib Multi-Manager in 2013 as manager research analyst where her responsibilities included qualitative analysis of asset manag-

ers, presenting recommendations and meeting with investment and portfolio managers from different funds.

Also in November, Mmathabo Moahloli joined Novare Actuaries and Consultants as fund manager, with re-sponsibility for client fund management and communication. She is currently completing a BCom (Risk Management) from the University of South Africa and began her career in 2005 as an invest-ment consultant at Malaczynski Burn Risk Management. She was responsi-ble for client communication, quarterly reports, liaising with fund managers, supporting trustees, and identifying

business opportunities in the pension funds industry.

In 2013 she joined Independ-ent Actuaries and Consultants as senior investment consultant involved with the client asset rebalancing functions and trustee training programmes.

Bandla Makwetu joined Novare Capital in November as fund

administrator, and is responsible for pricing and reporting to clients.

Makwetu started his career at Masibambane Community Projects, before joining Futuregrowth Asset Man-agement as client liaison officer with responsibility for preparing and com-municating audit information, managing client reports and attending to client queries.

He was previously with Maitland Group Fund Services as a fund ac-countant, taking care of daily fund pricing and report distribution, as well as calculating and processing perfor-mance fees, daily cash flows and scrip transfers.

APPOINTMENTS

Nov 2015 Barak adds management positions across the firm

Nov 2015 Novare expands business with several key hires

Kevin Ramsamy

Mmathabo Moahloli Bandla Makwetu

Vincent Freemantle

Nowana Sobopha


online news

South Africa’s Hedge Fund Academy (HFA) is offering fully funded learner-ship programmes to asset managers, providing an opportunity for them to improve their black economic empower-ment (BEE) scorecards while helping to develop talent in the industry. It is also working with the CFA Insti-tute to allow employers to receive BEE benefits from funding employees who are studying towards the globally recognised post-graduate chartered financial analyst programme, which is popular amongst South African financial institutions.

“BEE credentials are becoming more and more important in the context of raising assets for managers and it has become mandatory under the BEE

codes,” said Marilyn Ramplin, head of the academy. “We are working closely with industry to help raise the level of skills in the financial sector while tapping into government initiatives aimed at trans-forming the economy at various levels.”

The learnership programme is spon-sored by Fasset, which is the skills edu-cation training authority (Seta) for finance, accounting, management consulting and other financial services. The programme is designed to support employers in of-fering learnership programmes to black African graduates in the financial markets.

The learnerships are fully funded in that Fasset pays HFA for the training compo-nent, while the employer is responsible for offering learners a 12-month intern-

ship, and is then able to claim the associ-ated tax, SETA and BEE benefits.

Employers select graduate candidates for the programme and then pay them a stipend. They are able to claim back R60,000 per learner from the South African Revenue Service (SARS), about R40,000 per learner from their SETA and claim maximum BEE points. It therefore costs the managers nothing to participate in the programme.

The programme includes Financial Markets Certificate NQF Level 6, as well as various modules including an introduction to financial markets, analysis of financial markets, trading within a treasury, as well as accounting and soft skills modules. More online

Cape Town-based Abax Investments has concluded an agreement with NYSE-listed US investment firm AMG to acquire an equity stake in its business, the latest in a series of deals in the South African boutique asset management arena.

Abax senior partners will still hold a majority of the equity of the business and direct the firm’s day-to-day operations.

Under the deal, for a minority stake of around 25%, AMG is subscribing for a new class of shares that do not include voting rights. AMG will also not have board representation.

In addition, Abax’s four senior invest-ment managers have signed 10-year employment contracts and the rest of the staff have been bound to a shorter com-mitment period.

With approximately US$5.4 billion (R74 billion) in assets under management as of end-September, Abax is a leading

investment manager specialising in South African equity, fixed income, and strategic and tactical asset allocation strategies, as well as a separate global equity strategy.

Abax employs a disciplined, fundamen-tal research approach to investing in firms with strong potential earnings growth over the medium and long term. It has delivered excellent returns for its clients across man-dates and over all relevant time periods.

Abax serves retail and institutional clients across an array of equity, balanced, and hedge fund strategies. The firm was established in 2003 and is led by senior partners Anthony Sedgwick, Marius van Rooyen, Omri Thomas, and Steve Minnaar.

“Abax is an excellent addition to AMG’s group of leading return-oriented special-ists, and our partnership illustrates the global nature of our prospect universe, as well as the worldwide brand and reputation we have built over the past

two decades as the global partner of choice to independent firms,” said Sean Healey, AMG’s chairman and chief execu-tive. “Abax will enhance the diversity and breadth of AMG’s existing product set, and from its base in South Africa, the firm is well-positioned to benefit from the re-gion’s outstanding growth prospects. We have deep respect for the management team, and believe that with its outstand-ing performance and consistent invest-ment approach, Abax has tremendous opportunities for long-term growth.”

Abax CEO Sedgwick said the firm looked forward to continue delivering strong returns for clients as both an AMG affiliate and an independent firm.

“AMG’s unique partnership approach maintains affiliate autonomy,” he said. “In addition, our partnership provides access to the scale and resources of a leading global asset management company.” More online

Ashburton Investments is to acquire 100% of boutique Cape Town fixed income asset manager Atlantic Asset Management, which includes the Atlantic Specialised Finance division, with effect from January 1, 2016.

The acquisition will complement Ash-burton Investments’ existing new-gener-ation fixed income business by adding to its range of traditional fixed income funds as well as introducing Atlantic’s expertise in managing social impact investments.

Ashburton Investments’ CEO Boshoff Grobler said: “Atlantic has some of South Africa’s best expertise in the traditional fixed income and money market space, as well as being pioneers in social impact investing.

“We believe their entrepreneurial spirit and their investment philosophy is a perfect match for ours and that our com-

bined experience consolidates Ashbur-ton’s ability to offer clients a stand-apart fixed income offering.”

Atlantic’s funds will be incorporated into the Ashburton Investments’ stable but the mandates and teams will remain the same. Arno Lawrenz, Atlantic Asset Management’s chief investment officer, will be appointed head of fixed income portfolio management at Ashburton Investments.

Heather Jackson, CEO of Atlantic Specialised Finance, will be working with the strong alternatives capability within Ashburton. Her focus on solutions across the non-profit, private and government sectors is a differentiated approach to the complex financing challenges that South Africa faces, and one which few asset managers are able to offer.

Atlantic Asset Management co-founder and MD Murray Anderson said that there was a strong cultural fit along with clear synergies and that he expected the Atlan-tic team to flourish at Ashburton.

“The Atlantic team will continue to provide clients with our commitment to investment excellence. The additional investment and distribution reach within Ashburton will enhance our ability to ap-ply our approach.”

Grobler added that Ashburton Invest-ments was now well placed for the ongo-ing shift in asset allocation by institutional investors.

“We’ve seen a move away from fixed income mandates that include just govern-ment and state-owned companies bonds towards mandates that also include unlisted and listed corporate credit. More online

Nov 2015 US investment firm AMG takes stake in Abax

Dec 2015 Ashburton Investments acquires Cape Town’s Atlantic

Sept 2015 HFA offers beneficial internship programme

COMPANY NEWS


onlin

e ne

ws

The dominant investment theme in Africa is a valuation story, says Zin Bekkali, CEO and group CIO of London-based frontier market special-ists Silk Invest.

Africa’s performance over the past few years has been “soft” due to a combination of factors, including the Ebola cri-sis, uncertain political elections in Nigeria as well as generally lower inflows to emerging mar-kets. Added to this, most international investors still view the continent as a commodity story whereas consumer growth is the real driver, he says.

However, while markets may react irrationally over the short term, over the medium to longer term they revert to a rational state. This underpins the firm’s conviction in the African invest-ment story.

From the start of 2015 to the end of November, the MSCI Emerging and Frontier Markets Index lost 14.9%. However, the positive spinoff of this de-cline is that company valuations in Af-rica are trading at significant discounts, providing investors with a window of opportunity to position portfolios for a market turnaround.

“We have seen a shift in our interac-tions with investors where the smart money is starting to take more posi-tions,” he says. “Quarter one and two of this year saw net outflows. In quarter three, we experienced net inflows.”

Bekkali describes the extremely low valuations currently seen across the continent as an anomaly that will disappear in time as markets normalise. Many quality companies are trading on an average price-earnings ratio (PE) of 10 times with a dividend yield of between 5% and 6%. This is where investors should be focusing, he says.

The overall trading environment across Africa has been less of a

“beta play” and more a stock-picking one, he says. Companies that have done particularly well are those that have diversified their earnings streams targeting new markets. For example, Dangote Cement, one of the continent’s largest ce-ment producers, now earns one-third of its revenue from outside its home market of

Nigeria. Nigeria-based Zenith Bank benefited this year from its newly established retail operations, having been predominantly a corporate and commercial bank.

“A lot of investors have priced in the bad news [in Africa] but what people aren’t pricing in are the positive stories, such as the underlying resilience of companies,” he says. “As an example, Shoprite is still opening a lot of super-markets across Africa.”

“We have to look at the full picture and what people are doing is focusing on a very small subset of information.”

Silk Invest has a total of US$125 million invested in African assets. It has three Africa-focused funds, includ-ing the Silk African Lions I fund with a seven-year track record investing in equities across Africa, including South Africa. For the year to the end of October it was down a net 11.22% versus a negative 8.85% for the MSCI Emerging and Frontier Markets Africa ex South Africa Index.

The Silk Road Frontiers I Fund launched in October 2010 and invests in the frontier markets of the Middle East and North Africa (MENA), sub-Saharan Africa and the Caspian. For the year to the end of October it was down a net 11.22% versus a negative 12.7% for the Dow Jones African Titans and a negative 8.85% for the MSCI Emerging and Frontier Markets Africa ex South Africa Index.

The Silk Africa Bond Fund was launched as an Africa-only fund in 2014. Since inception it has returned -1.86% versus -6.57% for the JP Mor-gan Emerging Local Markets Index.

Looking ahead, Bekkali says the portfolios are well positioned to capital-ise on opportunities in 2016. He spent 2015 readying the funds for a market upturn. He regularly monitors “indirect” macroeconomic factors such as bank-ing deposits, airline passenger num-bers, property price increases and car sales. He uses this as a guide to what is happening on the ground across dif-ferent economies.

“In Nigeria, for example, the type of story that people are missing is that aside from the political uncertainty and market slump, there are now broad-band cables across Victoria Island, the main business hub,” he says. “People are now enjoying very good internet for the first time,” he adds.

“Even with all the challenges, we are still seeing companies doing well. Be-sides the dominant valuation theme that we believe in, our job is to find the com-panies that are positioning themselves for the longer term in these markets.”

Bekkali believes that African equities and bonds are both attractive for inter-national investors.

“Equities have clearly been oversold and are well placed for a recovery,” he says.

“Within bonds, the local-currency bonds are especially attractive with av-erage yields close to 15% in countries like Nigeria and Kenya. African curren-cies have sold off in 2015 in line with other emerging-market currencies and we expect a move back to annualised depreciation levels of 2% to 4% in-stead of the double-digit numbers that we have seen in the past. This should allow investors to target a net return of over 10%, which will be even higher if yields come down.”

Dec 2015 Africa is now a valuation story, says SilkInvest

AFRICA NEWS

Zin Bekkali

E+I 2

0174

Beef is back. Introducing the JSE Beef Carcass Futures ContractJSE, Driven for your growth.+27 11 520 7039 | www.jse.co.za/beef

An opportunity to manage price risk in the beef market


Sym

posiumThis year’s HedgeNews Africa Symposium offers a power-packed agenda, with ad-dresses from leading indus-

try players spanning both investor and manager perspectives at a critical time in the global markets.

Marcus Storr of FERI Trust, a prominent Europe-based global al-locator, will focus on investors’ needs and requirements, while Dr Ayo Sa-lami of Duet Asset Management in London will discuss the African op-portunity set against a troubled global back-drop.

For the first time in its seven-year history, the Symposium programme also features a timely address from the South African regula-

tor, to be delivered by Udesh Naicker, head of hedge funds at the Financial Services Board, which comes as the industry moves into a regulated environment.

Former First National Bank CEO Michael Jordaan, who founded venture-capital firm

Montegray Capital, will deliver a for-ward-looking analysis of how expo-nential changes in global technology might affect the asset management in-dustry. Also part of the agenda is Niki Natarajan, of In Ink, a London-based hedge fund communications con-sultancy, who will focus on the vital communication channels between investors and fund managers.

Chairing the day’s agenda is ex-perienced London-based hedge fund commentator Neil Wilson from Wil-

son Willis, who brings timely global perspec-tives to inform the local debate.

The Symposium also includes a range of topical panel sessions with leading interna-tional and domestic industry players.

Global volatility, local regulation top the agenda at this year’s Symposium

HedgeNews Africa Symposium

This programme is provisional and subject to change at the organiser’s discretion

07h00 Registration 08h00 Welcome and introduction

08h30 KEYNOTE ADDRESS Dr Ayo Salami, Duet Asset Management The African Opportunity in 2016 and beyond

09h00 PANEL SESSION GLOBAL OPPORTUNITIES: Global fund managers discuss how mac-roeconomic factors may affect performance over the next 12 months.

09h40 REGULATORY UPDATE Udesh Naicker, Financial Services Board South Africa A new environment for hedge funds

10h00 Tea, coffee, refreshments

10h30 PANEL SESSION SOUTH AFRICA – EQUITY: Equity hedge fund managers have seen a return to volatility in the markets, while sombre economic news at home is creat-ing an environment of fear and uncertainty after many years of bullish markets. Can hedge funds deliver in such conditions? Are managers seeing opportunities?

11h15 PANEL SESSION SOUTH AFRICA – NON-EQUITY: A return to an interest-rate hiking cycle globally is a key development affecting non-equity strategies. What are the implications for non-equity hedge fund managers in the South African market?

12h00 KEYNOTE ADDRESS Marcus Storr, Feri Trust What institutional investors need from hedge funds

12h30 Michael Jordaan, Montegray Capital The Future of Finance – How exponential changes in technology will transform the asset management industry

13h00 LUNCH

14h00 Niki Natarajan, In Ink The top 10 communication rules for managers and investors

14h30 PANEL SESSION ARCHITECTS OF INDUSTRY: The hedge fund industry has seen a significant uptick in corporate action in the past 12 months, both globally and in South Africa. Some firms have chosen to sell equity stakes, others have opted to go it alone. What are the key challenges in building a successful hedge fund business?

14h30 STREAM SESSION BLAZING A TRAIL: South Africa’s hedge fund firms are in virgin ter-ritory as they come to terms with new regulations. Panellists discuss the operational practicalities of achieving best practice within the new framework.

15h10 Tea, coffee, refreshments

15h30 PANEL SESSION IMAGE CONSCIOUS: In a more regulated environment, hedge funds stand to have a higher profile. Panellists discuss how to manage the transition to greater visibility, while remaining true to their objectives.

15h30 STREAM SESSION AFRICA PANEL: It has been a period of unprecedented difficulty for African markets, as investors have shunned emerging and frontier economies. What does the African continent have to offer for investors in 2016?

16h15 CLOSING PANEL INVESTORS IN ACTION: What is the case for investing in hedge funds today? Looking across the globe, where are big allocators identifying opportunity?

16h55 CLOSING REMARKS

• Craig Atherfold, Hill+Knowlton Strategies• Glen Baker, Anchor Capital• Cornelis Batten, Realfin• Chris Becker, Investec• Emmanuel Boakye, Aluwani Capital Partners• Dr Florian Bohlandt, PwC• Philip Bredenhann, H4 Collective Investments• Stephen Brierley, Old Mutual Multi-Managers• Andrew Crawford, Capricorn Fund Managers• Mark De Klerk, Tages Group• Chris Edwards, Absa• Albrecht Gantz, RisCura Analytics• Grant Hogan, Independent Alternatives• Heather James, Federal Street Partners• Michael Jordaan, Montegray Capital• Ken Kinsey-Quick, Diamond Capital Management• Jonathan Kruger, African Merchant Capital• Mark le Roux, Coronation Fund Managers• Tobie Lochner, Peregrine Capital• Rene Miles, Novare Capital• Lynn Miller, Edge Capital• Udesh Naicker, Financial Services Board• Niki Natarajan, In Ink• Carmen Nel, Rand Merchant Bank• Erik Nel, Terebinth Capital• Nas Noorizadeh, BlackRock Alternative Advisors• Keabetswe Ntuli, African Collective Investments• Paul O’Reilly-Hyland, OCP Capital• Danie Pretorius, Fairtree Capital• Lourens Pretorius, Matrix Fund Managers• Hayden Reinders, Prescient Fund Services• Erik Renander, Sub Sahara Capital• Dr Ayo Salami, Duet Group• Jan Silvis, X-Chequer Fund Management• Bruce Simpson, Sanlam Alternative Investments• Marcus Storr, Feri Trust• Rashaad Tayob, Abax Investments• Robert Walton, Boutique Collective Investments• Neil Wilson, Wilson Willis

CONFIRMED SPEAKERS

HedgeNews Africa Symposium

PROVISIONAL AGENDA*

HedgeNews Africa Symposium February 25, 2016

OR

OR

Marcus Storr Dr Ayo Salami Udesh Naicker


Aw

ards

HedgeNews Africa Awards

South African hedge funds in general offered a solid performance in 2015, beating both equities and bonds, with the HedgeNews Africa South

African Single-Manager Composite gaining a median 11.8% for the year.

Returns were more muted for the Hedge-News Africa Composite, which includes pan-African mandates, which ended the year with a return of 5.35%.

Meanwhile, the HedgeFund Intelligence Global Composite, which groups global hedge funds, finished the year up 2.42% as the MSCI World Index closed the year 2.74% lower.

Markets saw some trying times during the year, with stock-picking coming to the fore, helping many fund managers to achieve re-turns far in excess of the median numbers.

The result is an impressive list of nominees for the HedgeNews Africa Awards, across various strategy areas.

Now in their seventh year, the awards will be presented at a gala dinner at the Vineyard Hotel in Cape Town on February 25. Nomi-nations are based on an established quantita-tive methodology that seeks to identify those

funds that have delivered the best risk-adjusted returns to investors in each calendar year.

The award ultimately goes to the fund with the highest return for the 12-month period, provided its Sharpe ratio is within 25% of the top Sharpe among the nominees in each cat-egory. Exceptions are made in the case of cat-egories that combine different strategy areas, where other quantitative criteria are applied.

To qualify for a nomination funds must average a minimum of R80 million under

management throughout the 12-month pe-riod. Exceptions are in the new fund category, which allows for lower assets under manage-ment and considers funds with a track record of 12-23 months (with the award being based on calendar-year returns), and the long-term awards, which require minimum assets of R160 million.

Data used in deciding the awards will be once again be independently verified by eComply Consultants.

Impressive selection of names line up for the Awards after a testing year

Awards and Symposium sponsors:

Long/Short EquityAll Weather Performance FundCapricorn Performer FundFairtree Assegai Long Short Equity FundTower Aggressive Fund

Market Neutral and QuantitativeCapricorn Market Neutral FundMazi Capital Market Neutral FundOld Mutual Managed Alpha Hedge FundPeregrine Pure Hedge Fund

Multi-StrategyFairtree Wild Fig Multi Asset Class FundObsidian Xebec Multi-Strategy Hedge FundProsperitas Fund

Fixed IncomeAbax Fixed Interest FundProton FundSanlam Fixed Income Arbitrage Fund

Specialist StrategiesAlternative Real Estate Select Opportunity FundCatalyst Alpha En Commandite PartnershipPolar Star FundWestbrooke Special Opportunities Fund

Pan-Africa and MENA (Hedge)Laurium Chobe Sub-Saharan Long Short FundSSCG Africa Opportunities Master Fund

Fund of Hedge Funds (Multi-Strategy)Rosebank Long/Short Hedged Equity FundRosebank Low Volatility Equity Hedge FundSygnia All Star FoHFTHINK.CAPITAL Growth Fund

Fund of Hedge Funds (Fixed Income)Edge Iconic Picador Fixed Income FundTriAlpha Enhanced Fixed Income Hedge Fund

Three Year (Single Manager)Capricorn Performer FundLaurium Aggressive Long Short FundPeregrine High Growth FundPolar Star Fund

Five Year (Single Manager)Alternative Real Estate Select Opportunity FundFairtree Wild Fig Multi Asset Class FundPeregrine High Growth FundPolar Star Fund

Three Year (Fund of Funds)Blue Ink Commodity Arbitrage FundEdge Iconic Portable Alpha FundOld Mutual Multi-Managers Long Short Equity FoHFRosebank Wealth Group Long/Short Hedged Equity Fund

Five Year (Fund of Funds)Blue Ink Commodity Arbitrage FundEdge Iconic Torero Long/Short FundOld Mutual Multi-Managers Long Short Equity FoHFSygnia All Star FoHF

New Fund of the YearAll Weather Performance FundEmperor Asset Management Long/Short Hedge FundPeregrine Dynamic Alpha FundTower Aggressive Fund

Fund of the YearNominees to be announced on the night

FINAL NOMINATIONS HedgeNews Africa Awards

Authorised Financial Services and Credit Provider.

nedbank.co.za

14666

SUSTAINABLESOLUTIONS

MAKING

HAPPEN

Nedbank Corporate and Investment Banking is a division of Nedbank Ltd Reg No 1951/000009/06. Authorised fi nancial services and registered credit provider (NCRCP16).

At Nedbank Corporate and Investment Banking our influence extends far beyond the provision of funding, advisory and trading solutions for our clients. Through our impactful, integrated investment banking offerings we enable sustainable results throughout Africa.

14666 Nedbank CIB Rocky Barren Land 297X210.indd 1 2015/12/09 2:31 PM

Africa Merchant Capital Man-agement’s long-only Africa-focused fund, the Africa Mer-chant Sub-Sahara Fund, has

reached its one-year anniversary, amid a tough year for emerging and frontier markets.

The fund has returned a negative 12.65% in US dollars, net of fees, in its first 12 months versus the S&P Sub-Saharan Africa ex-SA Capped Index, which was down 28.3% for the year. Over one year, it ranks highly against its peers, coming in second in the HedgeNews Africa tables.

The fund is managed by Jonathan Kru-ger, who is one of three founding direc-tors. Kruger, a CFA charterholder with a BBusSci Quantitative Finance degree from the University of Cape Town, pre-viously pioneered the top-per-forming Africa Equity Fund at Prescient In-vestment Manage-ment in Cape Town. Fellow founding directors include Jan van den Berg, a CFA charter-holder and char-tered accountant

with a BCom (Honours) degree from the University of Stellenbosch, and Cobus Visagie, who has a BCom (Honours) de-gree from the University of Stellenbosch.

Despite a tough start, Kruger is satis-fied that the team has been able to deliver some downside protection in a falling market by investing in quality companies with a track record of maintaining earn-ings in different economic cycles.

“It’s been a very challenging year for the market, especially frontier and emerging markets,” he says. “We are fortunate that we started the fund at the end of 2014 so we missed some of the downturn that year.”

The US dollar-denominated fund in-vests in sub-Saharan markets, excluding South Africa. It chooses quality, under-valued companies using a fundamental

value-driven, bottom-up stock selection process based on a structured

framework. In-house risk-control processes iden-tify political and mac-

roeconomic risks, which feed into in-formation systems used to weight positions on a risk-adjusted basis.

The fund typically holds between 25 and 40 stocks. Presently, Kruger is running a concentrated portfolio with around 25 positions due to a lack of wider opportu-nities in the market.

“When we started the fund, the market wasn’t as cheap as it is now so the oppor-tunity set was lower in terms of value,” he says. “With the market coming down, we are now starting to see more value com-ing through and will probably look to in-crease the number of positions.”

Average duration of positions is be-tween one and three years, depending on market volatility when Kruger may take advantage of low valuations to buy into stocks that he will exit when the market becomes more expensive.

The fund’s mandate has a limit of 15% per individual stock, while industry

Africa Merchant notches up one year in tough sub-Saharan marketsCommitted to the Africa growth story, Jonathan Kruger’s ex-South Africa fund now sees better stock values and expects to increase positions across the board


fund

pro

file

Jonathan Kruger Jan van den Berg

and country exposure is capped at 50% maximum. During its first year, the fund reached 30% exposure to both Kenya and Nigeria at different times due to the larg-er availability of opportunities at the time.

“Our investments in Kenya are fairly diversified and include banks, insurance, media and investment holding compa-nies,” he says.

The fund’s top exposure by country includes Kenya (39%), Nigeria (20%) and Botswana (15%). By industry, it has 33% in banks, 18% in other financials (which includes microfinance, investment hold-ing companies and property), 10% in in-surance and 8% in telecoms.

Small-, mid-cap focusKruger believes what sets the fund apart from other Africa funds is its ability to include more small- and mid-cap stocks, which allows it to invest in a much broader array of companies and capture diversified value. This differentiated fo-cus is made possible by the fund’s longer liquidity terms, the corporate finance experience in the investment team and on-the-ground networks. By market cap-italisation, the fund is 45.6% invested in small caps, 22.1% in mid caps and 32.4% in large caps.

Under-penetration in insurance has provided a key opportunity, with Kruger choosing top-quality insurers where the fund can get exposure to the growth in policy under-writing as well as at-tractive assets on insurers’ balance sheets. Property companies and

companies with private-equity type hold-ings, particularly in Nairobi, have also been good performers.

In West Africa, particularly Burkina Faso and Senegal, Kruger has identified telecoms companies that he says have been overlooked.

“Some of these markets are still under-penetrated, whereas a lot of other African markets are sitting at over 100% penetra-tion in telecoms,” he says. “In other mar-kets people have two SIM cards, but some countries in West Africa still have a lot of opportunity for growth.”

Defensive stock selectionThe fund’s strategy in its first year has been to select high-quality companies

that have performed well on a fun-damental earnings basis and

that have added defensively to the portfolio.

“We are happy that through our stock se-lection, we were de-

fensive. But there has still been a lot of risk aversion towards emerging and fron-tier markets and we were unfortunately unable to avoid that,” he says.

Kruger has concentrated on companies outside the “heavyweight sectors” to pro-vide downside protection. His focus has been on companies with lower leverage and strong balance sheets, as opposed to companies that have taken on a lot of debt, and invested in future growth to fund that debt.

Braced for challenging marketsSlowing investor interest has been a chal-lenge in 2015 and will continue to be of concern, says Kruger. However, he is con-fident of the longer-term African growth story with the continent still being one of the fastest-growing regions globally.

Kruger will continue to focus on bot-tom-up stock selection looking “across the capitalisation spectrum” for opportu-nities in small-, mid- and large caps.

“Our focus is on companies with high-er margins – operating as well as net mar-gins – and strong balance sheets,” he says. “It is a volatile period at the moment and I think it’s better to be positioned in more defensive companies than companies that are growing on debt.”

“We also focus on value and we are see-ing more value coming to the fore now with the markets having come off last year and the beginning of this year.”

The fund’s focus on small- and mid-cap stocks means its capacity is constrained at around US$150 million. However, it is still far off that target, having focused on portfolio positioning and strategy to date. Over time, Kruger may look to launch a pan-African fund with greater capacity and liquidity.

The Cayman Islands-domiciled fund was originally managed from London but in October Kruger moved the fund management to Cape Town where the business costs of running a fund are lower, while access to skilled talent is good. Kru-ger’s fellow directors remain in London providing analysis and business develop-ment support to the fund.

The fund’s investors include offshore private individuals. Having attained a one-year track record, Kruger is looking to at-tract institutional interest going forward.


fund profile

Africa Merchant notches up one year in tough sub-Saharan markets

“Our focus is on companies with higher margins – operating as well as net margins – and strong balance sheets”Jonathan Kruger

Africa Merchant Sub-Sahara Fund

Strategy: Long-only, Sub-Saharan Africa ex South AfricaManager: Jonathan KrugerInception date: December 2014Prime Broker: Investec Prime ServicesAdministrator: Prescient Fund Services (Ireland)Open to investment: YesMinimum investment: US$100,000

FUND FACTS

Cobus Visagie

Udesh Naicker is the head of hedge funds at South Africa’s Financial Services Board (FSB), which over-sees the non-banking financial ser-

vices industry in the public interest.Naicker joined the FSB in late 2014, and is

a chartered accountant with an MBA from Ny-enrode Business Universiteit in The Netherlands.

He has a background in investment bank-ing, working previously at Absa Capital, before spending five years at Transnet Freight Rail as CFO of its Export Coal Line division, and most recently at BankservAfrica, Africa’s largest payment clearing house, as CFO.

Naicker has been tasked with overseeing the integration of South Africa’s hedge fund indus-try into the new regulated framework under the Collective Investment Schemes Control Act (CISCA), which already governs the long-only industry, under legislation introduced last April.

HedgeNews Africa sat down with him to discuss the regulatory shift.

Where are you in the transition to the new regulatory environment, whereby the South African hedge fund industry will be regulated at product and manager level?

Right now, we remain focused on review-ing the applications for registration re-ceived from managers as prescribed by the legislation. We have not commenced with formal oversight until the registration pro-cess is wholly completed and industry has been given the requisite time to transition to the regulatory requirements.

The transition to the new regulatory environment seems to be a learning curve for all concerned. What is your view of the applications you have seen from the industry thus far?

Many of the applications are of a very high standard. There are mancos out there who have invested a vast amount of time and ef-fort to understand what is required from them. There are a few applications that have missed the mark as well. Our approach though, ensures that we provide the neces-sary guidance through contact sessions with every applicant in an attempt to assist them with meeting our requirements.

The initial stage is for funds to select management companies to host their offerings. So far, one has been approved. When do you expect more manco approvals?

Given the iterative nature of the application

review process, this is difficult to predict. We are targeting a completion date for all ap-plication reviews in the third quarter of the year. Bear in mind that we are dependent on how quickly the applicants turn around our queries. We expect an increase in the volume of approvals from March onward. We must point out that there is also a like-lihood of applications not being approved, should they not meet our requirements.

Are you happy with the quality and integrity of service providers to the industry?

Thus far, we have had no insurmountable issues. We do however assess the suitability of service providers against the complexity and/or size of the manco.

Are you happy with the quality and integrity of hedge fund managers that you are dealing with?

Regarding those applications we have re-viewed, managers have satisfied the impor-tant requirements of skill and integrity.

What are the biggest stumbling blocks in moving into this new environment?

I think it’s been a steep learning curve on both sides. The concept of ‘being regu-lated’ is new to most managers and there is some resistance to the changes that the regulation brings to their operations.

Other than that, there seems to be fear of reprisal from the regulator if the man-ager gets something wrong. This is not the way we operate and in fact we encourage managers to come forward with their is-sues so that we can find a workable solu-tion together.

Where would you like to see hedge fund managers improve in their interaction with the regulator?

As I said earlier, perhaps they could be more forthcoming in their interaction with us. Those managers that have followed this approach have benefitted. As we establish the oversight function, there will be more structure around communication; what we want, when and how. But this should never deter anyone from just calling me if they want to discuss something.

The regulatory change is obviously a significant administrative undertaking. How many people do you have in your team? What are their skills and backgrounds?

We are still building capacity so the team is almost brand new. Currently there are six of us with a few more joining us later this year. The eventual number will obviously be dictated by factors that will come into play later; scale, complexity etc. The skills of the team are generally in finance and in-vestment, risk management and econom-ics. Obviously the FSB has a wealth of legal expertise which we leverage off. The im-portant thing for me is to attract the people with the right attitude who are willing to develop and I believe that will cover most of our bases and enable us to engage with the industry on an equal footing.

Since the 2008 financial crisis, increased regulation has been a feature of the global financial industry, and in particular the hedge fund industry. What are the positives you see from this new landscape?

Regulatory oversight introduces certainty. Managers and investors alike will have a trans-parent, structured environment within which they operate. There are now rules to the game that everybody must adhere to. Surely this must bode well for industry growth. That is, after all, the ultimate objective.

Where do you expect to see the South African hedge fund industry in 12 months’ time?

More settled with the key legislative re-quirements embedded in the daily endeav-ors of the managers. We are already attract-ing some foreign interest and I hope for that to begin bearing fruit as well. Gener-ally, I am very positive about the growth prospects for the industry.

inte

rvie

w

FSB targets Q3 for manco approvals

Udesh Naicker


Well-known hedge fund pro-fessional Thomas Schlebusch has teamed up with former FNB chief executive Michael

Jordaan to launch a unique investment management firm with an innovative ap-proach to managing money.

Founded in 2015, investment manager NMRQL is based in leafy Bird Street in Stellenbosch, managing an algorithmic-based hedge fund strategy that seeks to deliver returns using a broad quantita-tive approach to the markets, tapping into evolving global technological trends.

NMRQL’s approach is based on the be-lief that we are part of a brave new world, where advances in technology and com-puter processing power are providing in-novators with the tools to not only disrupt, but also to turn traditional business models on their heads.

The founders collectively have almost four decades of financial markets’ experience.

Jordaan was the CEO of South Africa’s First National Bank for almost a decade, during which time the bank was named the “world’s most innovative bank” by the BAI-Finacle Global Banking Innovation Awards. He left to pursue entrepreneur-

ial interests via his private invest-

ment company Montegray Capital, and is actively involved in funding and mentoring small businesses and entrepreneurs.

Schlebusch, who holds a masters in engi-neering, was former CEO of one of South Africa’s largest hedge fund of funds busi-nesses, Blue Ink Investments, with a wide understanding of both global and South African hedge fund strategies and offerings. He was appointed CIO of Sanlam Interna-tional Investments in 2012.

Schlebusch and Jordaan believe that technology is disrupting industries at an increased rate, and the financial services in-dustry will not be spared.

They cite key examples of ‘disruption’ in the global market place – namely that the world’s largest taxi operator, Uber, does not own a single vehicle; and that the largest accommodation provider, Air BnB, does not own any of the properties it lets.

They also note that global financial tech-

nology investment

NMRQL: A new breed of disruptor in the asset management space The fund uses the latest technology to power its big data quant strategies and aims to disrupt the way business is conducted within financial services


build

ing

the

busi

ness

Thomas Schlebusch Michael Jordaan

NMRQL Fund 1

Strategy: CTA/multi-strategyFund manager: Thomas SchlebuschInception date: Tested with live assets since August 2015. First outside client in November 2015Administrator: PrescientPrime broker: ABSA PrimeAUM: R22 millionOpen to investment: Yes, but would ideally await regulatory approval under CISCA.

FUND FACTS

grew fourfold in 2014 from 2013, accord-ing to the Economist magazine.

The pair believe that the high barriers of entry to the financial services industry have, to an extent, protected traditional players from disruption up to now, but the heady combination of “geeks” in T-shirts and venture capital, who have so success-fully disrupted other industries, now have the lucrative financial services sector in their sights.

They note that four technology trends, which leverage off each other, are driving the entrance of disruptors to the financial services industry.

Firstly, cloud computing is lowering the cost of doing business and enables business-es to store and access vast amounts of data without investing in expensive infrastruc-ture. Secondly, computers are getting expo-nentially more powerful and now have the ability, not only to process vast amounts of data, but to learn from it whilst doing so – at a fraction of the cost compared to just a few years ago. Thirdly, the rise of big data means that more data has been generated in the past two years than was created in history up until that point. This, coupled with rising computing power and the ability to store and access this data, means that this infor-mation can now be processed, analysed and used to make better decisions. And finally, open-source tools, software and architec-tures are allowing programmers around the world to work together to create transpar-ent, open-source software that is of a higher quality and more feature-rich than any in-dividual or corporation could have created on their own, for a fraction of the cost.

NMRQL is Jordaan’s first venture into the asset management space – and it’s an industry he plans to disrupt.

“The trends we are seeing will impact the entire financial services industry, from dealing rooms of banks to the strategies of investment managers,” he says. “In order to effectively leverage off these advances, dis-ruptive firms demand a different culture – one of agility, risk taking, and deep tech understanding.”

Both Jordaan and Schlebusch separately attended the Singularity University execu-tive programme in California and, after dis-cussing their experiences there, the concept for NMRQL was born.

“It really was a meeting of minds,” says Jordaan. “Being exposed to all these disrup-tive tech developments, it dawned on us that the asset management industry in its current form is ripe for massive change and that we would rather drive this disruption than be victims of it.”

“With the advances in computing pro-cessing power and big data, one can now identify patterns, anomalies, cycles and pre-miums on a large scale, across asset classes and geographies, and construct a dynam-ic and ultra-diversified portfolio, which

should deliver consistent, long-term out-performance.”

The management team is quick to point out that NMRQL’s strategy does include fundamental analysis as well, but that it is only one part of how they reach investment decisions. They also stress that they are not a high-frequency trading house either.

“Current state-of-the-art algorithms are incredibly powerful and are used in many predictive analytics problems today,” says Schlebusch. “These algorithms interact with fundamental, sentiment, and system-atic data to predict specific stock outcomes, rating changes, volatility or simply variance drivers in factor analysis. Our mission is to harness all of this power to generate invest-ment returns that outstrip those delivered

by traditional players.”NMRQL’s proximity to the University

of Stellenbosch has enabled it to work with some of the brightest minds in the techno-logical and mathematical fields in Africa – with NMRQL’s quantitative strategist, Stu-art Reid, a key example. Reid is currently pursuing a Masters degree in Computer Science. During the course of his studies, he has focused on exploring the gap be-tween computer science, in particular ar-tificial intelligence, and traditional math-ematical finance models.

“With the team in place, building the back end, or rather the engine of our busi-ness, was the first obvious challenge,” con-tinues Schlebusch. “We are fortunate to have access to networks of brilliant computer sci-entists and mathematicians who work at the cutting edge of their fields. We have built a system, with the help of their insights and open-source code, that enables us to run a repeatable process, which we believe can de-liver consistent uncorrelated returns.”

All of this analysis and data crunch-ing translates into a very different looking portfolio, which is a far cry from traditional long-term fundamentally driven buy-and-hold strategies.

Traditional investment portfolios tend to be segmented into asset classes and man-aged according to specific investment styles, for example on a value basis.

NMRQL believes that what makes them different is that they offer a portfolio of quantitative sub-strategies. In other words, their portfolios have a number of different quantitative strategies within them, across different asset classes, and timelines.

Using technology also means that NM-RQL can bring their cost base down. “This in turn, means we can offer industry-beat-ing pricing on much of what we do,” says Schlebusch. “Our approach to investment management is a big departure from what is offered by the traditional players in the industry. As a disruptor, we find this excit-ing, especially in light of the fact that we believe we are only starting to scratch the surface when it comes to applying technol-ogy to investing.”

For now, the team is managing a South African-focused hedge fund, based on a combination of algorithms that mine infor-mation from the markets, providing buy-and-sell signals into the portfolio across a variety of different asset classes. The strategy launched in November last year with the first outside funds, and the team has been testing strategies with internal capital since August.

They believe their strategy offers inves-tors a different source of returns to more traditional hedge funds. “Our fund does take risk and can be volatile at times, but we believe it’s still early days and we are super excited about the opportunity space we are finding,” Schlebusch concludes.


building the business

Stuart Reid

“We are fortunate to have access to networks of brilliant computer scientists and mathematicians who work at the cutting edge of their fields. We have built a system, with the help of their insights and open-source code, that enables us to run a repeatable process, which we believe can deliver consistent uncorrelated returns”Thomas Schlebusch

The Westbrooke Capital Manage-ment Special Opportunities Fund finished the year with a strong net return of 18.5%, having added a

net 12.7% in the second half. The fund has delivered a net annualised gain of 17.4% per annum over the last three years.

Alternative asset manager Westbrooke Capital Management was founded by West-brooke and Capricorn together with Jarred Winer in 2012. The fund is managed by Winer with J.P. Du Buisson as investment analyst. The investment committee includes Martin Sacks and Mark Matisonn of West-brooke, and Capricorn’s Rob Fihrer.

The fund follows a dual investment ap-proach with a longer-term active portfolio where it buys equity stakes in small- and medium-sized listed companies, often be-coming a representative at board level. It applies private equity skills to unlock value in the active portfolio, and to date has real-ised value through providing growth capi-tal, driving restructurings and merger and acquisition activity.

This portion of the fund is known as the “active” book and accounts for around 50% to 60% of the fund’s capital. It currently in-cludes four companies in which the fund has a significant equity share.

The “liquid book” makes up around 40% to 50% of the fund and is tilted to more liquid shorter-term special opportunities in small- and mid-cap listed shares. It is highly concentrated with six longs and shorts at present.

Strong performance across the boardThe fund delivered strong results for the last quarter, adding a net 7.5% to its total gains of 18.5%. By comparison, the JSE All Share Index returned 5.1% for the year, while the small-cap index and mid-cap in-dex declined by 3.9% and 7.5% respectively.

Performance was primarily driven by longs and assisted by short positions. The active book delivered strong returns, with a low correlation to the market.

The fund owns a significant stake in Amalgamated Electronics Corporation Limited (Amecor), a diversified electronics manufacturer, which has done particularly well following a re-rating of the stock.

The fund bought a 13% stake in Ame-

cor in October 2012, increasing it to 20% after Winer took a position on the board in March last year. Winer, together with other anchor shareholders, has been active in restructuring the group over the past 18 months, selling non-core operations and re-positioning the company back to its core focus, as well as restructuring its high-yield bond. The company recently released interim results post the restructuring where headline earnings per share increased by 44%.

Another position that has performed well is an equity stake in logistics firm San-tova. The fund has built up a shareholding over time and backed management’s ac-quisitions strategy acting as the lead capital provider for Santova’s acquisition of UK-based Tradeway Shipping. It is a transfor-mational acquisition as it expands Santova’s international presence and strengthens its

capabilities on trade routes between the UK and East and West Africa.

“We estimate that post this transaction, approximately 65% of Santova’s earnings will be derived from its international oper-ations,” says Winer. “The market has gained a renewed interest in the company since its strong results and the acquisition.” The company published interim results in No-vember where normalised earnings grew by 47%.

Within the liquid book, the fund has held a macro view on a relative strengthen-ing of international property stocks versus a weakening local sector. It started build-ing the positions in 2014, which Winer says may have been premature at the time, but has subsequently paid off.

“We were a bit early to start in 2014,” he says. “Our longs in local listed international property were going up as were our shorts on local South African property. It was only in the back end of last year that our longs continued to go up while our shorts plum-meted.”

In Winer’s view, local real estate funds were overpaying for assets against a back-drop of a weakening economy and rising interest rates.

“Local property stocks de-rated as a re-sult of a major shift in South African in-terest-rate expectations and movements in the rand,” he says. “Simultaneously, our in-ternational longs benefitted from South Af-rican investors searching for hard-currency exposure.”

The liquid book also posted gains in De-cember from shorts on the South African industrial and retail sectors.

Performance detractorOne significant position that has negatively impacted performance in the past year is Rolfes Holdings, where the fund owns a 13% stake. They initially invested in 2014 and subsequently provided acquisition cap-ital for the purchase of Bragan Chemicals in 2015. The company has now restruc-tured and new shareholders have come on board. Winer believes the stock is under-valued and is confident that it will realise its full value.

“We have recently increased our stake at these lower levels and continue to play an

Westbrooke finishes 2015 with a flourish to maintain its strong recordDespite the volatile start to 2016, founder Jarred Winer believes his Special Opportunities fund will continue to identify prospects in bull and bear markets


build

ing

the

busi

ness

Jarred Winer

Westbrooke Capital Management

Special Opportunities Fund

Strategy: South Africa special opportunitiesManager: Jarred WinerInception date: June 2012Administrator: Investment Data ServicesOpen to investment: YesMinimum investment: R1 million

FUND FACTS

active role, including gaining a seat on the board,” he says. “There’s a group of active shareholders that sees the value and growth potential in this company.”

Opportunistically buying mispriced assetsWiner is positive on the opportunities going forward and is ready to adjust his expectations based on changing market conditions and unexpected shocks, such as the recent replacement of South Africa’s finance minister.

“Events like the changes in finance minister towards the end of 2015 have a significant impact,” he says. “A steeply de-preciating rand changes the operating per-formance of businesses to the point where we are investing in a different environment with heightened local economic and politi-cal risk and declining global growth.”

“However, we believe we can find op-portunities in bull and bear markets. It’s just about different types of opportunities.”

Winer believes this year will provide more opportunistic situations where com-panies are devalued and shareholders are looking to exit. “There are several compa-nies in our universe that we like but have never been able to buy at valuations that we thought were acceptable,” he says.

Over the past month, he has reduced the fund’s net exposure and continues to short industrials, retail and companies with ex-

posure to the agricultural sector (due to the drought), as well as interest-rate sensitive companies. He has also adjusted his price-earnings expectations. Instead, he plans to focus on companies that have offshore op-erations that will benefit from exposure to higher-growth economies and a depreciat-ing rand.

“But in saying that, we still think that

you will get the local winners who have attractive and defensive business models that will benefit from currency-led infla-tion and those that are well-positioned for corporate activity,” says Winer. “Corporate activity will continue to be a theme across our active portfolio.”

Winer believes balance-sheet restructur-ing and consolidation opportunities will increase in this environment.

The strategy currently has R260 million in assets under management with capacity to reach between R1 billion and R2 bil-lion. Investors include niche institutions and high-net-worth individuals and family offices.

Winer is looking to add one investment professional to the team this year and is considering setting up a retail investor fund in line with the recent changes to regulat-ing hedge funds and allowing them to raise retail capital.

Richard Asherson joined Westbrooke Capital Management in January 2015 to focus on the establishment of the Section 12J private equity business. Prior to joining, Asherson spent seven years in structured and acquisition finance at Investec Bank, focusing on financial sponsor-driven trans-actions and leveraged finance. He has led Westbrooke’s launch of two new Section 12J private equity funds focused on alter-native rental assets as well as on the hotel and hospitality sector.


building the business

“Events like the changes in finance minister towards the end of 2015 have a significant impact. A steeply depreciating rand changes the operating performance of businesses to the point where we are investing in a different environment with heightened local economic and political risk and declining global growth”Jarred Winer

An annual subscription to HedgeNews Africa includes:

• 12 monthly online news and data editions available on your computer via personal access

• Quarterly print edition of the HedgeNews Africa journal delivered to your desk four times a year

•Complimentary copy of all special reports

• Preferential rates at annual HedgeNews Africa Symposium held in Cape Town each February

HedgeNews Africa offers must-read market intelligence and data on the talented fund managers at work in the African markets.

HedgeNews Africa is the most timely, accurate and independent source of information covering the South African hedge fund industry and the alternative investment space across Africa. We reach fund managers, investors and other industry players based on the African continent and around the world.

Subscribe to

� Quarterlyprintanddigitaledition of the HedgeNews Africa journal

THE QUARTERLY JOURNAL OF THE AFRICAN ALTERNATIVES AND HEDGE FUND COMMUNITY

THIRD QUARTER 2015 u VOL 2 Nº12 u WWW.HEDGENEWSAFRICA.COM

Capricorn gains global traction with GEM fund on Lyxor platformPages 24-25

Sanlam Multi Strategy duo Ofosu and Manyadu clock up one year Pages 26-27

Attention to detail

Get the latestnews and views in this fast-changing industry at www.hedgenewsafrica.com

For a FREE copy of HedgeNews Africa email [email protected]

or sign up for a free trial at www.hedgenewsafrica.com

THE QUARTERLY JOURNAL OF THE AFRICAN ALTERNATIVES AND HEDGE FUND COMMUNITY

FOURTH QUARTER 2015 u VOL 3 Nº1 u WWW.HEDGENEWSAFRICA.COM

Skybound sees China

turnaround, looks to the

service sector for growth

Pages 20-21

Sygnia boosts brand

awareness with

JSE listing

Pages 24-25

Teaming up

RMI seeks further stakes

as it builds South African

hedge fund portfolio

Page 27

Skybound sees China

turnaround, looks to the

service sector for growth

Pages 20-21

The Fairtree Assegai Long Short Equity Fund delivered solid net returns to investors in 2015 amid volatile market conditions

in a year that will not be easily forgotten by fund managers and investors across the board.

For the calendar year ending in De-cember, the fund returned a net 31.28%. Since inception in July 2011, it has deliv-ered a net 25.19% compounded annually versus a return of 14.37% for the JSE All Share Index.

Managed by Stephen Brown, who built a reputable track record managing a long-only fund at RMB Asset Management be-fore joining Fairtree Capital in July 2011, the fund has delivered consistent outper-formance in a “stockpickers’ market”.

“Last year wasn’t a year where inves-tors could take a beta-driven direction-al view and enjoy a rally,” says Brown. “Stock selection was absolutely key to outperforming.”

The fund is a directionally biased long/short equity fund that aims to capture 60% of market upside while protecting against 60% of the downside. It uses relative-value pairs and absolute longs and shorts to sta-bilise returns in turbulent markets, as well as adjusting net exposure. It can use lever-age of up to three times net asset value, based on Brown’s view of the market.

He runs a long book, which in a rising market can account for 60% or more of the fund’s positions. Long and short po-sitions from stocks within the same sec-tor are included in the portfolio as pair trades. Cross-sector pair trades are made up of longs and shorts across sectors with the same broader macroeconomic drivers. The “market-neutral” portion of the book houses intra-sector pair trades, which is where Brown applies a pure mean rever-sion and valuation-based approach.

Performance across sectorsDuring the past year, 95% of performance came from the top 100 listed companies on the JSE All Share Index, says Brown, while 60% came from the top 40 shares.

“This means that the fund is sticking to its key investment philosophy of remain-ing liquid,” he says. “Performance came

predominantly from the larger companies, secondly the mid-caps and then a very small portion from small caps.”

On a stock basis, the fund has done well from being long and short the right companies, says Brown. Attribution anal-ysis shows gains across sectors, includ-ing resources, financials and industrials. Around 70% of performance was added through the fund’s pair-trading positions, while 30% came from absolute long or short positions.

“Last year was one of the years where macro views and a directional bias were much less of a driver of performance,” he says.

Idea generationBrown follows a top-down and bottom-up process to generating investment ideas. Top down, he filters the macro environ-ment using strategic focus areas to deter-mine the type of strategies that will work in the prevailing macroeconomic climate. He uses seven different factors to distill idea generation and portfolio construc-tion, which include cyclical, value, yield, earnings growth, defensives, high quality or low quality.

From a bottom-up perspective, he looks at what ratings are acceptable for different types of businesses – specifically, which businesses should trade at a premi-um to the market and which should trade at a discount. He looks at external fac-tors driving the rating of the entire mar-ket, and also analyses internal and external factors driving the earnings of individual businesses and dividend yields.

Following the initial analysis, he moni-tors stocks on a continuous basis and makes a decision about investment size and whether to take a long or short posi-tion, based on the probability of a stock’s return.

Financials and industrials over resourcesThe portfolio includes between 45 and 60 positions. Leverage has remained constant at around 2.5 times net asset value. Dur-ing the past year it reached leverage of 2.7 times as Brown took advantage of key op-portunities.

One of the fund’s top performers has been rand-hedge paper producer Sappi, which has seen its South African-based businesses producing strong earnings.

“Sappi is generating strong free cash-flows at the moment, de-leveraging its balance sheet and re-financing its debt. Dissolving pulp prices are rising, paper prices may rise in Europe and oil-based costs are declining,” says Brown. “Put-ting these factors together, you have a very powerful opportunity, and that’s

Stock selection underpins Fairtree Assegai’s steady performanceStephen Brown navigated last year’s turbulent markets with relative-value pairs and absolute longs and shorts, to stabilise returns, gaining most from large caps


fund

pro

file

“If you look at the weakness of the yuan against the US dollar, it is actually very limited. A 3% move for a currency is not a big move. The yuan has been very strong against the euro, while the US dollar has been a very strong currency. On a trade-weighted basis, the yuan has been strengthening against a basket of currencies. It should not be looked at in isolation against the US dollar”Stephen Brown

Fairtree Assegai Long Short Equity Fund

Strategy: Long/short hedgeManager: Stephen BrownInception date: July 2011Prime broker: RMBAdministrator: Investment Data ServicesOpen to investment: YesMinimum investment: R1 million

FUND FACTS

done well for the fund.”Financials and industrials have per-

formed well over resources, which are free cashflow negative at the moment with commodity prices and productivity continuing to decline while costs rise.

“There are also additional costs being pushed on to the mining companies from social factors and other external factors,” adds Brown. “It just becomes very diffi-cult for these businesses to generate cash. They will have their day again but for now their equity is overpriced.”

Shocks to the financial marketsLooking ahead for the year, Brown says global and local market shocks continue to make the market difficult to read.

In China, the government tried to reduce volatility in the stock market by adding “circuit breakers”, which auto-matically close the CSI 300 Index when it declines by 5% or more. However, these efforts proved futile as the Chinese market dropped by 5% in local currency on the first trading day of this year as investors sold into the drop, causing a 15-min-ute halt in trading. After reopening, it took the market two minutes to reach a loss of 7%, forcing a close for the day. The government there has since scrapped its circuit-breaker plans, realising it added to volatility as investors sold into the fall.

Globally, investors have been concerned about the Chinese yuan losing ground against the US dollar. From the beginning of December to early January, it moved 3% weaker. However, Brown believes this is not cause for concern.

“If you look at the weakness of the cur-rency against the US dollar, it is actually very limited,” he says. “A 3% move for a currency is not a big move. The Chi-nese yuan has been very strong against the euro, while the US dollar has been a very strong currency. On a trade-weight-ed basis, the yuan has been strengthening against a basket of currencies. It should not be looked at in isolation against the US dollar.”

The fall in the oil price is another global stress that must push down cer-tain equity markets and oil-producing companies and countries. However, Brown believes the market is looking at the weakening oil price too negatively.

On a global level, the negative

impact is

contained and it benefits consumers.Geopolitical events such as the migrant

crisis in Europe and resulting rising dis-content in Germany as well as increasing tensions between Saudi Arabia and Iran, are factors weighing on global equity markets. The US Federal Reserve raising interest rates is a positive sign of the econ-omy there growing, says Brown. Moreo-ver, the increase comes off a zero base.

Locally, the removal of finance minister Nhlanhla Nene in early December came as a big shock and has caused the rand to weaken considerably. It also increases ex-pectations of domestic interest-rate rises.

In December, the fund dropped 0.8% and Brown has subsequently taken long positions in gold equities to counter the weakening currency, and has repositioned the portfolio towards companies that are leveraged to a weak rand. He believes that many of the sectors susceptible to a weak rand, such as financial and industrial shares, have already priced in the negative shock of the weaker currency.

Brown will be looking out for a strong rally in resources in the coming year as well as possible gains in financial and in-dustrial stocks, coupled with higher inter-

est rates locally.The strategy has nearly reached its capacity of around R1.5 billion

to R1.8 billion, amassing assets from institutional and high-net-worth investors. It also receives allocations from Fair-

tree’s multi-strategy funds.


fund profile

Stephen Brown

“Last year wasn’t a year where investors could take a beta-driven directional view and enjoy a rally. Stock selection was absolutely key to outperforming”Stephen Brown

Keabetswe Ntuli has recently taken up a new role at the helm of Africa Col-lective Investments (ACI), a collec-tive investment schemes management

company (manco) whose shareholders include 27four Investment Managers and Prescient Global.

Born and raised in Soweto, Ntuli matriculat-ed from Queens High School in Johannesburg and went on to study BCom Accounting Scienc-es (CTA) at the University of Pretoria. She is a qualified chartered accountant and completed her three-year articles at PricewaterhouseCoop-ers (PwC), then working as an audit manager at PwC before joining Deutsche Bank.

As ACI’S managing director, Ntuli will drive marketing and business development. The manco is designed to provide co-naming hosting solutions, or white-label arrangements, to both traditional and alternative asset managers domi-ciled in South Africa.

ACI aims to be the first empowered entity in South Africa providing co-naming services. Asset managers would directly earn procurement points through using services from an empowered entity under the Revised Financial Sector Code. How would you describe yourself?

I have a calm, dedicated and professional approach to my career. I believe that one’s happiness and success are in direct propor-tion to one’s service to others, so I have taken every responsibility afforded to me as an opportunity to serve. I realised early in my life that hard work is directly correlated to success in my case. So I work really hard and enjoy doing so too.

My family and friends are my life, I con-sistently nurture the relationships I have with them because I wouldn’t be who I am today without them.

What attracted you to the hedge fund industry?

I wanted to gain experience within an investment bank and Deutsche Bank is a really strong global brand. At the time I had no idea what hedge funds were, or what a prime broker

did. But I took the opportunity and it paid off.

I started out as a client relationship man-ager in 2010 handling the day-to day re-porting requirements of prime clients that operate in the hedge fund space. In 2013 I was appointed as head of Prime Finance Client Relationship Management, during which time I managed the realignment of the client relationship management func-tion. Then in 2014 I moved into Global Prime Finance sales, where I was respon-sible for managing diverse areas including client transition and reporting, taxation re-view, regulation and regulatory implemen-tation and client relationship development.

My time at Deutsche was re-warding. I learned a lot about the industry and had amazing colleagues. So making the move to ACI felt like a natu-ral progression in my career. I wanted to broaden my skills into new areas but still stay within the hedge fund industry and I was ready to take the next step professionally.

What does your role at ACI entail?

We are still waiting for regulatory approval on the manco, which we expect before April. Once that is in place, my role will be to provide an exceptional service to clients on the platform and to position ACI as a leading provider of third-party manco ser-vices. We already have several clients signed up, as managers were required to decide on their service providers prior to submitting their applications to the Financial Services Board for regulated hedge fund structures.

I will also be working closely with Pres-cient Fund Services, which will provide the fund administration services. They were established in 2010 and have a proven

track record in collective investment schemes’ fund administration and reporting.

Why should clients choose ACI?

Retirement funds, which are the largest investor in hedge funds in South Africa, require their service providers to meet increasingly onerous transformation require-

ments. Many hedge funds do not meet black ownership requirements

and so need to score highly in the other four elements under the Revised

Financial Sector Code, which came into effect in November. Pro-

curement makes up the largest element. Investors hosting funds through ACI will be

able to claim full procure-ment points, given that we are an empowered entity. We believe there is room to benefit from synergies be-tween transformation and business. It makes commercial sense.

Both share-holders of

inte

rvie

w

ACI’s Ntuli expects growth as industry positions itself to weather the stormHedgeNews Africa talks to Africa Collective Investments’ Keabetswe Ntuli, who will drive South Africa’s first empowered entity offering co-naming solutions


Keabetswe Ntuli


interview

ACI are well established, well recognised and successful brands within the South African asset management industry. Investors will be utilising the skills and expertise of organisa-tions with CISCA technical experience.

Lastly being the new kids on the block, we intend to bring innovative solutions to our clients that provide a competitive ad-vantage in the marketplace.

Who are your mentors?

I am privileged to have three mentors each from different walks of life. Deutsche’s current head of Global Prime Finance South Africa and my former manager Brett Thornton-Dibb guided me through the industry and helped me keep focus on both a personal level and professional level, steering me back on course when I headed in the wrong direction. He is a constant source of encouragement and the epitome of what a leader should be to his team. Sorelle Gross, senior legal counsel fi-nancial markets, Standard Chartered Bank, is my sounding board on any decision I make, she is my confidante and an amazing woman who is always there for me. And then there is Nthime Khoele, co-founder and principal at private equity firm Bopa Moruo. His input to my career choices is second to none; he helps me think prag-matically and has taught me how to make informed well-researched decisions.

What is your view of the South African hedge fund industry?

I believe there is a lot of potential for growth. But we need to get more al-locations from retirement funds and in-dependent financial advisers. For that to happen, we need education. These types of investors need to know what a hedge fund can do for them. This education pro-cess needs to come from all stakeholders in the industry. Right now, industry assets are stagnant. When I started in the space, assets were at R40 billion. Now they are at R60 billion. To attract more capital we need to effectively communicate the value proposition.

What are your thoughts on the markets at present?

It is a tough time for all markets at the moment and one cannot predict with reasonable certainty what is likely to happen this year. It was a terrible start to the year, with China stumbling and af-fecting all emerging markets as a result. And it does not help that global econom-ic growth is stagnant, caused mainly by the problems in China. The South Afri-can markets will continue to struggle like all emerging markets and we should not expect any significant returns.

It is therefore time for hedge fund man-agers to design strategies that are intended to at least weather the storm.

Will the new regulatory environment be good for the industry?

The good thing is that the new rules will allow the industry to tap into the retail space. Some fund managers may choose to stay in the qualified investor space and others may choose retail structures.

Either way, institutional allocators will have more comfort with a regulat-ed product. So in the long run it should be a good thing. But the funds will still have to consistently generate positive returns. That is the whole point of a hedge fund.

ACI’s Ntuli expects growth as industry positions itself to weather the storm

“We already have several clients signed up, as managers were required to decide on their service providers prior to submitting their applications to the Financial Services Board”Keabetswe Ntuli

Need advice in building a bespoke hedge fund portfolio? Seeking to source service providers in the hedge fund industry?Get your copy of the annual HedgeNews Africa Hedge Fund & Alternative Manager Directory.Now in its fourth year, the directory is a leading source of information on high-quality funds across a range of strategies, as well as funds of funds, consultants and service providers.

Looking to identify top talent in African investment markets?

WWW.HEDGENEWSAFRICA.COMHedge Fund & Alternative Manager DIRECTORY 2015/2016A handbook of leading players in Africa’s

alternative asset management industry

Sponsored by Absa, member of Barclays

14 HEDGENEWS AFRICA DIRECTORY 2015/2016

He

dg

e fu

nd

Fixed income

The Coronation Granite Fixed Income Fund

The Coronation Granite Fixed Income Fund makes use of multiple strategies in the pursuit of attractive risk-adjusted returns, independent of general market direction.

Company

Coronation Asset Managers (Pty) Ltd, 7th Floor, MontClare Place, Cnr Campground and Main Roads, Claremont 7708, Cape Town, South Africa

Fund manager: Mark le Roux, Adrian van Pallander, Nishan Maharaj

CEO: Anton Pillay

Phone: +27 21 680 2000

Fax: +27 21 680 2100

Email: [email protected]

Website: www.coronation.com

Investment strategy

The Coronation Granite Fixed Income Fund makes use of six core and distinct fixed income strategies, namely: directional view taking, yield-curve positioning, corporate credit opportunity, arbitrage, quantitative and relative-value trades in the pursuit of producing consistent absolute returns independent of general market direction.

The fund is expected to have low volatility with a very low correlation to the All Bond Index (ALBI). Investment decisions are driven by fundamental proprietary in-house research. The fund’s target return is cash plus 3%. The objective is to achieve this return with low risk, providing attractive risk-adjusted returns through a low fund standard deviation.

Investment teamWe operate as an integrated global team headquartered in Cape Town, South Africa, comprising 71 professionals. The fund is managed by Mark le Roux (head of Coronation’s fixed-interest unit), Nishan Maharaj (head of fixed-interest research) and Adrian van Pallander (portfolio manager), whose combined investment experience exceeds 49 years.

Strategy

Type of fund: Low-volatility multi-strategy fixed income

AUM: R356 million

Currency: ZAR

Fund domicile: South Africa

Inception date: 1 October 2002

Investment terms

Hurdle rate: Cash

High water mark: Yes

Fund open: Yes

Min investment: R1 million

Management fee: 1%

Performance fee: 20% of performance above hurdle rate

Subscription: Monthly

Redemption: One month

Service providers

Prime broker: ABSA and RMB

Administrator: Maitland Fund Services

Auditor: Ernst & Young

CMYK ( PRINTING)

C - 100M - 807 - 0K - 35

C - 23M - 177 - 13K - 46

NAVYBLUE

SILVERGREY

CORONATION ASSET MANAGEMENT

Mark le Roux Nishan Maharaj

Adrian van Pallander

The document has been prepared by Coronation Asset Management (Pty) Ltd (Reg.No.1993/002807/07) (FSP 548) an authorised financial services provider in South Africa. This document is not an advertisement and it is not intended for public use or distribution. This document does not constitute advice on the merits of buying or selling an investment nor does it form part of any offer to issue or sell, not any solicitation of any offer to subscribe for or purchase, shares in any fund managed by Coronation, nor shall it or the fact of its distribution form the basis of, or be relied upon in connection with, any contract for shares in any fund. It is recommended that an investor first obtain the appropriate legal, tax, investment or other professional advice and formulate an appropriate investment strategy that would suit their individual risk profile prior to acting upon such information. Opinions expressed in this document may be changed without notice at any time after publication. We therefore disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered as a result of or which may be attributable, directly or indirectly, to the use of or reliance upon the information. Past performance is not necessarily a guide to future performance.

Kaizen Asset Management was founded in May 2010 and launched the Kaizen Strategic Opportunities Fund in July 2010. Kaizen became adviser to the offshore version of the local fund in October 2013. The fund invests across a diversified portfolio of equities, foreign exchange, rates, commodities and derivatives to monetise its outlook on global macro conditions and fundamental company research, related predominantly to South African listed companies.

Kaizen draws its name from the Japanese principle that advocates an orderly, incremental and continuous improvement in a process without becoming rigid in a way of thinking. The Kaizen investment philosophy is predicated on the mandate that we are a hedge fund and consequently, consistent and absolute returns are our main objective and focus.

Multi-strategy


He

dg

e fu

nd

KAIZEN ASSET MANAGEMENT

Company

Kaizen Asset Management (Pty) Ltd

Fund manager: Mark Witten

COO: Ruth Forssman


Phone: +27 10 593 3165/900 4333

Fax: +27 10 214 8511

Website: www.kaizenam.co.za

Investment terms

Fees: 1% management and 20% performance or 0% management fee and 27.5% performance

Investment strategy

Kaizen Strategic Opportunities Fund The fund has a top-down global macro view of the current themes playing out in the global credit cycle, liquidity conditions, monetary policy/inflation and interest-rate expectations, purchasing managers’ indices, demographics, global growth expectations and commensurate supply and demand for commodities. This is an initial tool to identify the main macro themes to participate in, i.e. which industries are in structural decline and which are going to benefit from emerging-market urbanisation and the rise of the emerging-market middle class. The team then identifies companies that fit quality and value parameters and starts the bottom-up stock-selection process.

Investment team

Mark Witten is a founding partner and the fund manager. He is a CFA charterholder with an MBA and a BCom (Honours) cum laude, in law and finance. Witten started his career at RMB Asset Management in 2000 before joining Goldman Sachs Asset Management in London. He then spent two years at Peregrine Capital as an analyst.

Giuseppe Jerman is head of research and a chartered accountant with 16 years of equity research experience. He spent four years with Investec Securities as the top-ranked senior analyst covering the small and mid-capitalisation sector of the JSE.

In May 2015 Jolin Majmin joined the team as a quantitative analyst after spending nine years in London managing a global multi-strategy fund.

The investment team also includes analysts: Stephanie Kaufman, Michael Homem and Shaun Williams. Ruth Forssman is the chief operating officer and Saul Kaplan heads business development and investor relations.

Service providers

Offshore administrator: Maitland

Onshore administrator: IDS

Offshore auditor: Deloitte

Onshore auditor: Grant Thornton

Legal counsel: Webber Wentzel

Strategy

Strategy: Multi-strategy single manager

Fund AUM: R1.25 billion

Firm AUM: R2.2 billion

Currency: ZAR, US$

Domicile: South Africa

Inception date: July 2010


He

dg

e fu

nd

Long/short – Market neutral – Volatility arbitrage

Old Mutual Customised Solutions is a specialist investment boutique within the Old Mutual Investment Group. We focus on partnering with clients and leverage off our extensive skills and experience to create value-adding solutions. Our goal is to provide clients with superior investment returns over the long run, regardless of the mandate. In addition to our pursuit of long-term returns, we also pay careful attention to the analysis and management of risk across all portfolios. The boutique’s fund range includes risk-managed solutions, actively managed equity portfolios, indexation solutions, Shari’ah portfolios and alternative investment strategies.

OLD MUTUAL CUSTOMISED SOLUTIONS

Managed Alpha investment team

The portfolio management team includes Grant Watson (22 years’ experience, 11 at Old Mutual), Saliegh Salaam (21 years’ experience, nine at Old Mutual) and Warren McLeod (17 years’ experience, 17 at Old Mutual). Grant also holds the position of joint boutique head of Customised Solutions. His financial markets’ experience encompasses proprietary trading in currencies, equity derivatives and managing various portfolios across the hedge fund, general equity, specialist equity and multi-asset class range. Grant was a founder member of the team that set up one of the first hedge funds in South Africa in 1997. Warren’s experience spans managing hedge funds, absolute-return funds, general equity and multi-asset class funds; he is accountable for the quantitative research and risk control of the hedge fund. Saliegh has experience across the entire investment value chain – this covers dealing, equity analysis and portfolio management, of general equity, hedge fund and multi-asset class portfolios.

MANAGED ALPHA HEDGE FUND

Investment strategyThe Managed Alpha Hedge Fund identifies the themes driving the market, then builds an appropriately positioned portfolio to benefit from exposure to these themes. The fund has an adaptive weighting to these themes.

DERIVATIVE-BASED HEDGE FUNDS

Investment strategy

The derivative-based hedge funds, Old Mutual Aristeia Opportunities Fund and Old Mutual Chronos Fund, aim to generate returns by exploiting mispricing in the equity derivatives market, using a systematic and structured investment process. We combine macro research with fundamental and quantitative analysis using our proprietary databases, to identify under- and overpriced derivatives. Our extensive experience in derivatives markets enables us to monetise these mispricings within a risk-controlled framework.

Company

Old Mutual Investment Group (Pty) Ltd

Phone: +27 21 509 7567


Derivative-based investment team

The portfolio management team includes John Gilchrist (19 years’ experience, 11 at Old Mutual), Bivashen Naidoo (12 years’ experience, 8 at Old Mutual) and Bryn Hatty (21 years’ experience, 9 at Old Mutual). John also holds the position of joint boutique head of Customised Solutions. Both John and Bryn have extensive sell-side derivatives experience – John was head of derivatives at a major international bank, while Bryn was a highly rated derivatives analyst. Bivashen is an actuary with prior experience in managing capital-guaranteed products and investment product development. All three team members have been active and extensive users of derivatives in the funds that they have managed since joining the Old Mutual Investment Group.

Service providers

Administrator: CURO

Auditor: KPMG


Fund

of f

und

s

27four Investment Managers (27four) is an independent South African-based multi-manager focused on understanding and addressing the evolving needs of retirement funds and retail investors through unique product solutions and portfolio customisation options. We offer a range of traditional mainstream multi-manager funds, alternative fund of hedge funds and an Africa fund of funds. 27four has won numerous awards, including five Raging Bull, three Morningstar, a HedgeNews Africa and two Africa Asset Management awards. Through ongoing value-add, by way of product differentiation and the delivery of consistent returns, 27four has earned its position as a leading provider of fund of funds solutions to South African and international investors.

Company

27four Investment Managers, PO Box 522417, Saxonwold, 2132, Johannesburg

Fund manager: Team-based approach

Phone: +27 11 442 2464

Fax: +27 11 442 2465

Website www.27four.com

Investment terms

Hurdle rate: Yes

High water mark: Yes

Fund open: Yes

Minimum investment: R1 million

Management fee: 1%

Performance fee: 15%

Subscription: Monthly

Redemption: 60-day liquidity

Investment strategy

• The preservation of capital – to control downside risk.

• To skilfully balance alpha generation and risk management within a portfolio framework that seeks to produce strong absolute returns with low correlation to traditional “asset classes” across market cycles.

• To achieve this through a superior manager selection and portfolio construction process, offering multiple levels of diversification between underlying managers, strategies and asset classes.

• Stringent risk-management controls are applied at every level of the investment process.

Investment team

The 27four investment team has extensive experience in fund of hedge funds management. The same team has been responsible for our exceptional and consistent track record. A stable and well-balanced team comprising individuals who complement each other boasting multi-disciplinary skills across quantitative analysis, qualitative analysis and macro investment strategy.

Product offering

Service providers

Administrator: Investment Data Services

Auditor: PwC

Risk manager: RisCura Analytics

Compliance officer: Independent Compliance Services

27FOUR INVESTMENT MANAGERS

Equity Long/ Short FoHFs

Exposure to a blend of top-performing equity long/short funds. Designed to deliver consist-ent positive risk-adjusted returns, with some market direction.

Equity Market Neutral FoHFs

Exposure to a blend of leading funds that predominantly apply a low-risk market-neu-tral strategy. Designed to deliver consistent returns, independent of market direction.

Fixed Income FoHFs

An optimal blend of fixed income hedge funds exploiting relative value and credit arbitrage opportunities in the listed fixed income space. Moderate to low risk profile, designed to deliver consistent returns, independent of mar-ket direction.

Multi-strategy multi-asset class FoHFs

Exposure to a blend of leading hedge funds across asset classes and investment strate-gies. Designed to deliver above-average posi-tive returns, with some market direction.


Prim

e b

roke

r

A truly Out of the Ordinary partner

We help clients manage risk, monitor portfolios real time, maintain liquidity and build their businesses

Investec Primes Services’ integrated business model offers a complete solution to the global market by providing a best-in-class service in the following key areas:

• Prime broking• Clearing services• Securities lending• Prime margin lending• Capital introductions• Research• Structuring• Execution services

Whilst the ultimate gauge of a Prime Service Division’s current state of health is reflected in its financials and customer metrics, its ability to ensure longevity in the market is more a factor of its capacity to continually innovate, adapt and offer niche and differentiated services in an ever-evolving regulatory and financial market place. Our prime solution will continue to support you as you grow.

PRIME BROKING: a single integrated platform

With an international multi-asset-class platform, and a strong focus on client service, we offer customised solutions that help our clients reach their business goals. Our team’s expertise, backed by a best-in-class technology, lets us execute effectively to support our global client base.

CLEARING SERVICES: a comprehensive, market leading offering

Investec is a Clearing Member of JSE Clear and provides clearing services for exchange-traded equity, commodity, currency and interest-rate derivatives.

Investec Clearing Services operates within a stringent risk and margin methodology framework.

SECURITIES LENDING: pioneer in the market

Investec Securities Lending has been a pioneer in the securities lending market since 1996 and was one of the first desks to open in South Africa. As a business partner to STRATE, our team plays a key role in the growth and strategic developments within the industry. Investec Securities Lending offers innovative solutions, reporting, daily portfolio holdings and access to a deep pool of internal and external supply which allows us to enhance the trading strategies of our client base.

TECHNOLOGY AND REPORTING: award-winning portfolio management system

We offer a global, multi-asset-class, multi-currency reporting and technology platform that scales with clients as they expand into new strategies, markets and products. We understand the importance of supporting our clients across a wide range of investment strategies and products. Our flexible infrastructure allows for customisable solutions to meet clients’ unique reporting needs. We offer a wide range of data formats and secure delivery options, and we work to integrate our solutions with our clients’ existing processes and systems.

An internationally recognised solution used by eight of the top 10 international prime brokers. Some key features of our new technology stack include:

• A consolidated, multi-product, client-eye view of sec-urities, fixed income, futures, OTC, money market and cash portfolios with the ability to drill down to trades and audit activity.

• Tailored client reporting that offers a high degree of automation and support for report and data extract re-run demands

• Integrated cross-product margining and comprehensive financing solution

• Investrack – a client-focused web-based portal allowing for flexibility and bespoke access to individual and consolidated portfolio information

CAPITAL INTRODUCTIONS: networking opportunities in an informal and relaxed environment

Our team can track, synthesise and optimise the information gained from our manager and investor relationships to make effective client introductions.

Interested in “Out of the Ordinary”? Contact us to find out more

www.investec.co.za/ps

Contact:Hamish JamesT: +27 11 286 7666, [email protected]

INVESTEC PRIME SERVICES

Corporate & Institutional Banking, a division of Investec Bank Limited, Reg. No. 1969/004763/06. An authorised Financial Services Provider. A registered credit provider, registration number NCRCP9. A member of the Investec Group. Investec Securities (Pty) Ltd. Reg. No. 1972/008905/07. An Authorised Financial Services Provider. A registered credit provider. A member of the Investec Group.


Pro

fess

iona

l se

rvic

es

RisCura Analytics is Africa’s leading independent provider of investment data analysis and is an expert in quantifying, understanding and monitoring risk. The financial services industry is obliged to adopt ever more transparent practices that protect the interests of investors and satisfy regulators. Global best practice requires risk, mandate compliance, performance and regulatory reporting service providers to be independent and perform regular portfolio audits. We pride ourselves in providing this independent analysis and verification needed throughout the investment value chain, promoting sound investment decisions.

From asset owners to managers, brokers, consultants and more, we transform both internal and external raw data into useable, understandable and valued information for the end user. We offer the following services: risk, performance attribution, mandate compliance monitoring, regulatory reporting, quantitative analysis, indexation, securities lending and data services.

Since 2002, RisCura Analytics has been supported by skilled staff, solid processes and robust technology that leave clients confident of the best service the industry has to offer.

EXPERTISE

We have the experience and knowledge of servicing the South African hedge fund industry since 2002. Through our multi-asset, multi-currency systems, you can access highly customised outputs tailored to your unique needs. Complex data can be processed from multiple sources and in different formats. This is managed in line with our reputation for confidentiality and safeguarding intellectual property.

APPROACH

We provide a bureau-based solution. Being different from a desktop software solution enables RisCura Analytics to effectively act as your risk and compliance middle office, but act independently and be the experts in our field.

SOLUTIONS

RisCura Analytics prides itself on being able to meet any specific client need, through a variation of outputs. Our standard offering falls primarily into the following areas of expertise:

Risk, performance and attribution services: We provide daily, monthly and quarterly independent verification of multi-asset, multi-currency investment vehicles, from unit trusts to hedge funds, ranging across different risk and performance profiles. Our reporting is based on daily transactions and holdings data.

Independent mandate compliance and regulatory reporting services: Our ability to measure investments on a daily basis not only allows managers to provide comfort to investors, but also takes compliance a step further by enabling the active management of exposures through early warning systems and strict notification protocols.

New regulatory changes have allowed us to extend our regulatory reporting offering by giving single managers, fund of hedge funds and mancos the independent reporting services required to comply with BN52 regulatory reporting. Our experience in reporting on Regulation 28 has bolstered our capabilities, and provides the experience and skill needed for new regulation in the hedge fund industry.

Data services: Through our ability to transform complex data into accurate, timeous and useable information, we carry out the time-consuming and labour-intensive procedures necessary in financial data processing. We have the sources to obtain that “difficult to find data”, as well as delivering high-quality data consolidation, bespoke calculations and reporting.

Quants services: By providing access to industry expertise, we can help you create custom solutions for your investment-related quants services, including back testing and scenario analysis.

Indexation and benchmarking: We provide expert independent indexation and benchmarking services for a range of investment managers and service providers, from stock exchanges to banks. As an independent external indexation calculation agent, we create safe and cost-effective models.

Transaction cost analysis: We deliver transactional costing measurement tools to clients along the investment value chain. Through identification and attribution of all costs, including the most obscure, our clients closely monitor and control costs and ultimately protect value.

For further information contact:

Albrecht Gantz, Executive E: [email protected]

Tom Esterhuysen, Business and Product Development E: [email protected]

Andrew Bovell, Business and Product Development E: [email protected]

Or alternatively call us on: T: +27 21 673 6999

RISCURA ANALYTICS

LATEST EDITION OUT NOW! Email [email protected] to receive your copy or log on to www.hedgenewsafrica.com for the digital edition

The HedgeNews Africa South African Single Manager Composite added 0.07% in December, to end the year 11.8% higher.

The broader HedgeNews Africa Single Manager Composite, which includes Africa mandates, added 0.03% in December to fin-ish 5.35% higher.

The top performing category for the year was long/short equity, with funds adding a median 0.2% in a difficult month for the mar-kets, to end 2015 16.88% higher. However, the mean return for the category was -1.23%, reflecting a tough month for some funds.

The best return in the category for the month was the Acanthin House Hedge Fund, managed by Harry Singh, which gained 5%. The fund launched in September and has added 17.99% in its first four months.

The NXN Olympus Fund also had a strong month, gaining 3.7%. The trading-oriented portfolio managed by Nicholas Brett and Nico-las Spetsiotis, finished the year with a net gain of 23.79%. Also strong in December was the Catalyst Alpha En Commandite Partnership, which rose 3.62%. The Tower Aggressive Fund and the Mazi Capital Long Short Fund also both gained more than 3%.

For the calendar year, the Emperor Long/Short Hedge Fund is top of the tables with a gain of 47.66% despite a tough December. The Tower Aggressive Fund also had a stel-lar year, with a net return of 47.13% over the 12-month period, followed by the Capricorn Performer Fund, which rose 38.01%. The All Weather Performance Fund and the Fairtree Assegai Long Short Equity Fund also gained more than 30% each during the year.

South African event-driven/credit funds were the strongest category in December, gaining 1.16% to leave them with the second-highest return for the year of 14.19%. Top of the category for the month was the Credit-smith Specialised Opportunity Fund, which added 1.18% to end the year in the lead with a 14.9% return.

Elsewhere in the tables, South African mar-ket-neutral and quantitative funds delivered a

respectable 0.91% in December, to end 2015 with median return of 12.04%. The mean re-turn of funds in the category was also positive for the month, coming in at 0.35%.

The G3 Tlou Market Neutral Fund was ahead of its peers in December, with a 3.11% gain to finish the year 9.02% higher.

The Mazi Capital Market Neutral Fund was also strong, with a 3.1% gain for the month to help it end the year up 14.26%.

Leading the way over 12 months was the Capricorn Market Neutral Fund, with a 34.81% net return, followed by the M1 Capital Market Neutral Hedge Fund, which has added 26.33% since its March launch.

By category, fixed income and multi-strat-egy funds were both slightly in the red in De-cember, with the HedgeNews Africa Fixed In-come Composite delivering a median -0.02% (6.76% higher on the year) and the Hedge-News Africa Multi-Strategy Composite dipping a median -0.65% for the month (+7.69% on the year).

Top of the fixed income tables in December was the Investec Asset Management Fixed In-come Hedge Fund, which added 2.79% in a month during which some funds were deeply in negative territory. The Oakhaven Capital

Strategic Fixed Income Fund was also strong, gaining 1.66%, while the South Easter Fixed Interest Fund rose 0.98%.

The Investec Asset Management Fixed Income Hedge Fund is also the leader over 12 months, with a 12.07% gain, followed by the Abax Fixed Interest Fund, which gained 9.52%.

For the month, the multi-strategy category was led by the Blue Quadrant Capital Growth Fund, which rose 9.63% (leaving it 7.53% higher on the year). The Tantalum MNC Fund gained 2.59% in December (11.92% for the year) and the G3 Nkwe Multi-Strategy Fund rose 2.39% for the month to close the year 9.58% higher.

The Alternative Real Estate Select Oppor-tunity Fund was the top performer for the cat-egory in 2015, gaining 22.75%, followed by the Prosperitas Fund, which added 20.71%. The Fairtree Wild Fig Multi Asset Class Fund and the Obsidian Xebec Multi-Strategy Hedge Fund both rose more than 15% for the year.

Amongst specialist mandates, the West-brooke Capital Management Special Opportu-nities Fund gained 3.65% in December, while the Fairtree African Blackwood Commodity Partnership added 2.58%.

perfo

rman

ce


The Africa league tables were awash with red ink in 2015, as most bours-es declined steeply. Of the 11 main indices in Africa, ex-South Africa,

seven recorded double-digit declines with only Botswana’s Index positive for the year.

December brought some respite for pan-African long and absolute return strategies, with the Optis African Frontiers Fund adding 2.05% for the month while the Steyn Capital Africa Fund rose a net 1.94%.

The Sanlam Africa Frontier Market Fund was also positive, gaining 1.65%, while the

Prescient Africa Equity Fund rose 1.22%.The calendar year brought negative num-

bers across the board. The Laurium Limpopo African Equity Fund declined by 11.88%, far-ing far better than its peers and the key African indices, followed by the Africa Merchant Sub-Sahara Fund, which fell 12.63%.

Pan-African hedge funds achieved much better results, led in December by the Enko Opportunity Growth Fund, which rose 8.25%, putting it in positive territory for the year.

The Laurium portfolios had a positive month, with the Laurium Okavango African Long Short

Fund gaining 1.1% (7.83% lower on the year) while the Laurium Chobe Sub-Saharan Long Short Fund gained 0.36% in December to sit 5.56% higher on the year. Leading for the year was the SSCG Africa Opportunities Master Fund, which gained 9.75% over 12 months, including a 0.71% in December.

Amongst other African strategies, the Atria Africa Income Fund rose 0.67% in December to finish the year 9.76% higher.

African trade finance funds continued their consistent returns, led by the Atria Africa Trade Finance Fund which rose 14.18% on the year.

Falling fortunes define a difficult 2015 for Africa managers

Median MeanSouthAfrica Dec-15 YTD Dec-15 YTDLong/Short Equity 0.20% 16.88% -1.23% 16.24%Market Neutral & Quantitative 0.91% 12.04% 0.35% 12.40%Multi-Strategy -0.65% 7.69% -0.64% 8.36%Fixed Income -0.02% 6.76% -1.78% 4.81%Event Driven 1.16% 14.19% 1.10% 13.34%

Africa Pan-Africa/AME -0.20% -21.21% -0.44% -20.36%

Composites SA Single-Manager Composite 0.07% 11.80% -0.74% 11.95%HNA Single-Manager Composite 0.03% 5.35% -0.59% 0.14%

FundofFunds Nov-15 YTD Nov-15 YTDSouth African Composite 0.56% 10.29% 0.63% 10.28%HedgeNews Africa Composite 0.46% 9.82% 0.15% 6.95%

MarketIndices Dec-15 YTD FTSE/JSE All Share Index (TRI) -1.72% 5.13% South African All Bond Index -6.67% -3.93% MSCI Emerging Markets Index -2.48% -16.96% MSCI Frontier Mkts. Africa Index 1.31% -21.38%

HEDGENEWS AFRICA INDICES

South African funds shine in a tough year


performance

To li

st y

our

fund

in th

e d

atab

ase

ple

ase

emai

l Aid

en D

avis

at d

ata@

hed

gen

ewsa

fric

a.co

m. S

ee w

ww

.hed

gen

ewsa

fric

a.co

m fo

r d

ata

upd

ates

South African Long Short Equities (ZAR) TowerAggressiveFund 16.00% 3.30% 8.49% 47.13% 47.13% 26.16% n/a n/a Jun-14CapricornPerformerFund 15.61% 1.28% 24.89% 38.01% 38.01% 32.51% 29.50% n/a Aug-12AcanthinHouseHedgeFund 13.23% 5.00% n/a n/a 17.99% 64.30% n/a n/a Sep-15FairtreeAssegaiLongShortEquityFund 10.59% -0.74% 12.54% 31.24% 31.24% 25.18% 25.73% n/a Jul-11CatalystAlphaEnCommanditePartnership 10.13% 3.62% 19.35% 28.77% 28.77% 21.65% 24.73% 23.57% Feb-06BataungCapitalGrowthFund 9.66% 0.64% -3.27% -6.89% -6.89% 17.61% -0.38% n/a Sep-11TowerFund 9.38% 2.10% 4.72% 15.26% 15.26% 18.58% 17.22% 18.26% Aug-09EmperorAssetManagementLong/ShortHedgeFund 9.14% -4.92% 27.16% 47.66% 47.66% 52.43% n/a n/a Nov-14LauriumAggressiveLongShortFund 9.10% 0.83% 8.36% 23.99% 23.99% 35.92% 35.92% n/a Jan-13AllWeatherPerformanceFund 8.17% 2.38% 15.83% 31.35% 31.35% 26.77% n/a n/a May-14MaziCapitalLongShortFund 7.95% 3.00% 11.80% 19.70% 19.70% 18.91% n/a n/a Apr-1436ONEHedgeFund 7.87% 0.33% 11.19% 20.86% 20.86% 20.42% 20.19% 20.93% Apr-06PeregrineHighGrowthFund 7.11% 0.07% 9.32% 28.11% 28.11% 29.15% 29.58% 27.80% Feb-0036ONEFund 6.29% 0.39% 9.15% 16.65% 16.65% 18.08% 15.95% 16.18% Dec-08PeregrinePerformanceFund 5.32% -0.15% 7.51% 22.18% 22.18% 19.74% 21.51% 19.53% Jun-03VisioII(GoldenHindPartnership) 5.08% -0.55% 7.57% 11.73% 11.73% 26.83% 16.60% 18.18% Nov-03ObsidianXebecAggressiveEquityHedgeFund 5.00% 0.58% 4.00% 16.43% 16.43% 15.35% 16.45% 16.87% Jul-08SteynCapitalSALargeCapFund 4.89% 1.58% 13.68% 26.02% 26.02% 22.23% n/a n/a May-13PeregrineDynamicAlphaFund 4.57% 0.42% 9.40% 25.54% 25.54% 26.24% n/a n/a Dec-14NitrogenFund 4.29% 0.72% 5.61% 11.30% 11.30% 15.01% 12.26% 13.20% Aug-06M1CapitalSALongShortEquityFund 4.05% -3.30% 11.92% 29.52% 29.52% 17.00% 14.62% 16.62% Mar-10LauriumLongShortFund 3.99% 0.45% 3.40% 11.47% 11.47% 14.65% 17.01% 14.44% Aug-08SteynCapitalFund 3.45% 1.27% 11.63% 22.53% 22.53% 21.80% 19.01% 16.79% May-09NXNOlympusFund 2.84% 3.70% 4.29% 23.79% 23.79% 26.30% 23.42% n/a Oct-12SalientQuantsSAHedgeFund 2.44% -1.79% 7.47% 15.82% 15.82% 12.49% 9.21% 12.62% Aug-06BacciProtectedEquityFund 0.66% -2.42% -0.36% 5.06% 5.06% 11.53% 10.37% 11.33% Dec-10X-ChequerFlexibleLong/ShortFund 0.06% -0.05% -0.59% 3.34% 3.34% 14.85% 10.27% n/a Sep-11AbsoluteAlphaFund -0.28% -3.00% -0.97% 4.84% 4.84% 17.13% 10.33% 7.97% Nov-03ImpactFund -0.73% -1.94% -5.25% -3.54% -3.54% 9.31% 2.20% 4.12% Feb-02X-ChequerLong/ShortFund -0.78% -0.18% -1.19% 2.25% 2.25% 14.28% 6.78% 8.48% Jun-08EmperorAssetManagementSirEdmundHillaryFund -0.81% -11.47% -2.78% 2.14% 2.14% 11.79% n/a n/a Jun-14EmperorAssetManagementRobertFalconScottFund -1.61% -9.95% -5.76% 1.07% 1.07% 20.58% 12.81% 18.69% Oct-04CoronationPresidioFund -1.93% -4.11% -0.50% 10.01% 10.01% 18.33% 20.32% 19.22% Oct-05TrofinBlueFund -4.15% -8.14% -2.19% 6.19% 6.19% 16.98% n/a n/a Nov-13TrofinRedFund -7.46% -14.76% -5.38% 4.40% 4.40% 25.01% n/a n/a Jan-14OldMutualChronosFund -8.01% -8.59% -10.23% -2.33% -2.33% 4.13% 3.27% n/a Sep-12 South African Long Short Equities (USD) CapricornPerformerFund(USD) 12.87% 0.40% 20.49% 26.89% 26.89% 24.48% n/a n/a Dec-14SA-AlphaPeregrineCapitalHighGrowthOffshorePortfolio 5.39% -0.11% 6.09% 19.91% 19.91% 14.18% 15.80% 13.60% Oct-03TowerFundUSD(ClassB) 4.75% 0.40% -2.14% 5.46% 5.46% 8.14% 8.17% n/a Jul-12SA-Alpha36ONEOffshorePortfolio 3.65% -0.86% 3.72% 8.08% 8.08% 14.83% 9.58% 10.89% May-08 South African Market Neutral & Quantitative Strategies (ZAR) CapricornMarketNeutralFund 13.98% 2.54% 24.90% 34.81% 34.81% 13.67% 23.29% 15.58% Apr-06MaziCapitalMarketNeutralFund 6.90% 3.10% 9.28% 14.26% 14.26% 16.39% 14.32% 14.41% Nov-06MatrixMarketNeutralHedgeFund 6.09% 1.62% 4.28% 5.43% 5.43% 10.33% 8.02% 7.30% Jul-06M1CapitalMarketNeutralHedgeFund 5.71% -5.00% 18.21% n/a 26.33% 32.35% n/a n/a Mar-15TowerTemperateFund 5.49% 2.10% 5.46% 12.36% 12.36% 13.24% n/a n/a May-14PeregrinePureHedgeFund 4.33% 0.48% 7.69% 18.40% 18.40% 22.90% 16.93% 15.79% Jul-98FairtreeAcaciaFund 4.29% 1.34% 1.60% 3.76% 3.76% 20.20% 3.54% 7.80% Sep-03MatrixEquityHedgeFund 3.75% 2.12% 10.49% 10.66% 10.66% 7.64% n/a n/a Jul-13InvestecAssetMngmtActiveQuantsHF 3.68% -0.64% 5.33% 13.33% 13.33% 10.36% 9.38% 10.86% Oct-05LauriumMarketNeutralFund 3.61% 1.82% 5.04% 10.24% 10.24% 12.19% 14.01% 10.52% Jan-09OldMutualManagedAlphaHedgeFund 2.75% -0.74% 8.98% 16.93% 16.93% 13.85% n/a n/a Jul-14G3TlouMarketNeutralFund 1.73% 3.11% 3.74% 9.02% 9.02% 7.10% 6.74% n/a Feb-11X-ChequerMarketNeutralFund 1.71% 1.44% 0.45% 4.49% 4.49% 13.00% 10.00% 9.51% Jun-06AbaxBaoFund 1.15% -0.71% 2.80% 9.58% 9.58% 9.56% 10.22% n/a Apr-11OldMutualVolatilityArbitrageFund 1.12% 0.07% 1.57% 5.18% 5.18% 7.99% 5.36% 5.38% Sep-05OldMutualAristeiaOpportunitiesFund 0.50% -0.41% -0.10% 4.80% 4.80% 6.10% 5.49% 6.00% Dec-10PrescientMarketNeutralHedgeFund -2.07% -2.95% -5.88% 1.91% 1.91% 6.03% n/a n/a Oct-14X-ChequerEquityHedgeFund -3.88% -2.94% -4.35% -4.51% -4.51% 8.82% 2.55% 4.20% Oct-07 South African Single-Manager Multi-Strategies (ZAR) BlueQuadrantCapitalGrowthFund 10.19% 9.63% 6.49% 7.53% 7.53% 14.47% 15.23% n/a May-11AlternativeRealEstateSelectOpportunityFund 7.98% -0.47% 12.38% 22.75% 22.75% 40.47% 20.78% 41.88% Jan-09TantalumMNCFund 6.27% 2.59% 7.25% 11.92% 11.92% 10.98% 7.02% 7.46% Jun-05X-ChequerCTAFund 5.84% -2.56% 8.28% 11.41% 11.41% 43.10% 39.03% n/a Aug-12NorthshoreOpportunityFund 4.19% -1.94% 2.53% 9.28% 9.28% 16.20% 15.88% n/a Oct-11AnchorLong/ShortHedgeFund 4.04% -0.27%* 5.10% 12.82% 12.82% 14.90% n/a n/a Apr-13AylettHedgeFundI 3.40% 1.38% 7.59% 11.39% 11.39% 10.46% 7.56% 7.56% Jun-08ObsidianXebecMulti-StrategyHedgeFund 3.19% 0.15% 4.24% 15.70% 15.70% 12.61% 13.74% 12.67% Oct-07ProsperitasFund 1.55% 0.20% 7.17% 20.71% 20.71% 22.41% n/a n/a Jun-13G3NkweMulti-StrategyFund 1.34% 2.39% 3.72% 9.58% 9.58% 10.94% 9.96% 10.94% Jan-11FairtreeWildFigMultiAssetClassFund 1.27% -3.29% 3.79% 16.78% 16.78% 28.78% 22.26% 30.95% Aug-10FairtreeWoodlandMultiStrategyFund 0.87% -2.46% 2.62% 11.80% 11.80% 12.31% 13.39% n/a Apr-12

Data tables www.hedgenewsafrica.com/dataSingle Managers – December 2015Fund name Last 3 Last 6 Last 12 YTD Ann. 3-yr ann. 5-yr ann. Incep. months Dec-15 months months return comp. comp. comp. date


perfo

rman

ceSingle Managers – December 2015Fund name Last 3 Last 6 Last 12 YTD Ann. 3-yr ann. 5-yr ann. Incep. months Dec-15 months months return comp. comp. comp. date

To li

st y

our

fund

in th

e d

atab

ase

ple

ase

emai

l Aid

en D

avis

at d

ata@

hed

gen

ewsa

fric

a.co

m. S

ee w

ww

.hed

gen

ewsa

fric

a.co

m fo

r d

ata

upd

ates

ClearHorizonMulti-StrategyFund -0.17% -1.35% -1.18% 7.47% 7.47% 10.96% 7.26% 6.98% Oct-05MatrixMulti-StrategyFund -1.25% -4.14% 2.82% 5.57% 5.57% 13.11% 5.83% 8.87% Oct-06HighStreetHedgeFund -1.78% -1.40% 0.19% 3.17% 3.17% 6.66% 2.76% 5.12% Sep-11CoronationMulti-StrategyArbitrageFund -2.84% -0.82% -3.50% 1.10% 1.10% 11.61% 4.89% 6.83% Jul-03KaizenStrategicOpportunitiesFund -4.16% 0.29% -11.54% -17.14% -17.14% 19.53% 16.67% 21.66% Jul-10AlternativeRealEstateMonthlyIncomeFund -15.31% -9.44% -9.63% -5.26% -5.26% 11.27% 6.58% n/a Aug-12 South African Single-Manager Multi-Strategies (USD)

SA-AlphaKaizenOffshorePortfolio(ClassY) -5.15% 1.45% -13.42% -21.32% -21.32% -2.48% n/a n/a Nov-13 South African Event Driven/Credit (ZAR)

CreditsmithSpecialisedOpportunitiesFund 3.51% 1.18% 7.16% 14.90% 14.90% 13.02% 13.62% n/a Aug-11CreditsmithEnhancedYieldFund 3.48% 1.16% 7.11% 14.51% 14.51% 12.31% 13.16% n/a Feb-11ChrysalisCreditArbitrageFund 2.65% 0.97% 5.26% 11.02% 11.02% 12.64% 10.97% 10.97% Aug-08 South African Special Opportunities (ZAR)

WestbrookeCapitalManagementSpecialOpportunitiesFund7.44% 3.65% 13.48% 18.47% 18.47% 16.71% 17.41% n/a Jun-12 South African Fixed Income (ZAR)

InvestecAssetMngmntFixedIncomeHF 4.65% 2.79% 6.08% 12.07% 12.07% 11.13% 8.59% 6.97% Apr-04OakhavenCapitalStrategicFixedIncomeFund 3.86% 1.66% 3.31% 6.89% 6.89% 10.41% 9.70% n/a Oct-12GreenOakGoGreen 2.06% 0.28% 2.38% 4.54% 4.54% 10.30% 5.22% 6.59% Dec-09GreenOakSpecialist 1.76% 0.22% 2.06% 3.87% 3.87% 9.60% 4.25% 5.26% Dec-06AbaxFixedInterestFund 1.62% -0.02% 4.07% 9.52% 9.52% 12.33% n/a n/a Feb-13CoronationGraniteFixedIncomeFund 1.08% 0.03% 2.77% 6.41% 6.41% 10.15% 6.85% 7.70% Oct-02SanlamFixedIncomeArbitrageFund 0.60% -0.83% 3.55% 8.62% 8.62% 10.48% 7.30% 7.89% Oct-04X-ChequerFreestoneFund 0.55% -0.47% 2.03% 3.91% 3.91% 7.79% 2.20% 4.13% Jul-09ProtonFund -0.08% -2.82% 3.02% 8.77% 8.77% 11.68% 11.82% 12.47% Aug-01SouthEasterFixedInterestFund -0.69% 0.98% -4.55% -2.65% -2.65% 8.07% -1.22% 3.26% Nov-05AcuityOneHedgeFund -5.28% -5.94% -0.62% 5.36% 5.36% 21.54% 11.90% 17.98% Sep-09MatrixFixedIncomeFund -6.43% -7.92% -4.60% -2.74% -2.74% 17.22% 2.99% 9.11% Oct-08ValidusFixedIncomeFund -11.58% -11.10% -9.18% -3.06% -3.06% 13.22% -4.03% 3.24% Sep-06 South African Absolute Return (ZAR)

CoronationCapitalPlusFund 2.87% 0.87% 1.25% 4.59% 4.59% 13.56% 9.70% 10.56% Jul-01AllanGrayOptimalFund 2.48% -0.33% 2.44% 6.85% 6.85% 8.11% 8.58% 6.37% Oct-02OMIGCapitalBuilderFund 0.78% -0.11% 0.56% 2.77% 2.77% 8.46% 6.43% 6.29% Dec-05 Pan-African Equities (Long/Absolute Return) (USD)

AfricaMerchantSub-SaharaFund -2.53% -1.18% -11.18% -12.63% -12.63% -11.24% n/a n/a Dec-14IPROAfricanMarketsLeadersFund -5.69% 0.02% -16.84% -21.04% -21.04% 2.59% -3.68% -0.79% Jul-08SustainableCapitalAfricaSustainabilityFund -5.87% -0.41% -21.34% -25.64% -25.64% -5.28% -9.05% -8.72% Nov-09LauriumLimpopoAfricanEquityFund -6.18% 1.01% -12.15% -11.88% -11.88% -3.21% n/a n/a Jan-14ImaraAfricanOpportunitiesFund -6.69% -0.58% -17.22% -18.35% -18.35% 3.01% -2.10% -0.82% Jul-05SustainableCapitalAfricaConsumerFund -7.14% -0.40% -14.52% -22.83% -22.83% -5.75% n/a n/a Mar-13KuraAfricaFund -7.21% 0.55% -17.33% -23.21% -23.21% 0.03% -2.86% -4.41% Apr-09AbsaAfricaEquityFund -7.40% -0.17% -16.55% -19.75% -19.75% -20.30% n/a n/a Aug-14OldMutualAfricanFrontiersFund -7.65% 0.94% -15.13% -16.80% -16.80% -0.02% -1.55% -1.99% Jul-10RenAssetAfricaex-SAFund -8.07% -0.20% -17.96% -26.15% -26.15% -29.83% n/a n/a Jul-14SteynCapitalAfricaFund -8.26% 1.94% -17.40% -22.85% -22.85% 9.49% 1.79% n/a Sep-11OptisAfricanFrontiersFund -8.35% 2.05% -21.12% -25.05% -25.05% -3.09% -8.09% -6.30% Aug-09SanlamAfricaFrontierMarketFund -8.36% 1.65% -17.75% -23.99% -23.99% -1.31% -3.88% -2.97% Mar-10SilkInvestSilkAfricanLionsFund -8.42% -2.91% -18.30% -26.04% -26.04% -2.66% -7.39% -7.23% Jul-09PrescientAfricaEquityFund -8.60% 1.22% -19.23% -26.76% -26.76% -2.28% -5.89% n/a Apr-11CoronationAfricaFrontiersFund -8.69% 0.70% -15.46% -21.11% -21.11% 7.34% -0.20% 1.22% Oct-08InsparoAfricaEquityFund-ClassD -9.77% -1.20%* -19.08% -26.53% -26.53% -4.28% -8.13% n/a Feb-11SustainableCapitalAfricaAlphaFund -10.21% -3.06% -35.41% -42.98% -42.98% -6.43% -16.60% n/a Feb-12AllanGrayAfricaex-SAEquityFund -10.42% -0.79% -25.33% -32.59% -32.59% 0.47% -9.27% n/a Jan-12OldMutualPanAfricanFund -10.65% -6.76% -24.02% -24.50% -24.50% -1.76% -6.40% -5.74% Jul-10AtriaAfricaFranchiseFund -10.74% -1.80% -16.49% -18.56% -18.56% -5.05% n/a n/a Mar-13AshburtonAfricaEquityOpportunitiesFund -10.83% -1.50% -20.98% -29.48% -29.48% -11.09% n/a n/a May-13CoronationAllAfricaFund -11.47% -2.07% -24.43% -29.91% -29.91% 4.36% -5.63% -2.51% Aug-08AllanGrayAfricaEquityFund -11.78% -1.97% -26.15% -33.60% -33.60% 17.95% -10.98% -5.65% Jul-98RenaissanceSub-SaharanFund(UCITS) -13.41% -5.50% -27.24% -32.51% -32.51% -7.08% -14.29% -7.64% Oct-10ImaraAfricanResourcesFund -14.93% 0.95% -40.26% -51.30% -51.30% -15.05% -39.58% -32.06% Jan-09 African Regional-/Country-specific Equities (Long/Absolute Return) (USD)ImaraEastAfricaFund -1.72% 0.56% -12.62% -21.75% -21.75% 1.05% 3.14% 1.83% Feb-08ImaraZimbabweFund -9.62% -3.89% -17.63% -16.10% -16.10% -1.95% -8.26% -5.19% Mar-07ImaraNigeriaFund -12.52% 1.93% -18.56% -23.11% -23.11% -4.20% -11.83% -4.09% Mar-07SustainableCapitalNigeriaFund -13.64% -0.63% -22.12% -29.06% -29.06% -4.06% -14.26% n/a May-12LauriumZambeziEquityFund -14.19% -1.87% -24.48% -30.00% -30.00% 0.69% -9.17% -4.51% Dec-09 Africa Multi-Strategies (USD)

EnkoOpportunityGrowthFund 9.70% 8.25% 9.77% 7.92% 7.92% 10.10% 5.02% 7.73% Sep-09LauriumChobeSub-SaharanLongShortFund 3.31% 0.36% 0.12% 5.56% 5.56% 14.07% 14.20% 11.68% Dec-08LauriumOkavangoAfricanLongShortFund -1.98% 1.10% -7.60% -7.83% -7.83% 1.68% n/a n/a Oct-13SSCGAfricaOpportunitiesMasterFund -7.58% 0.71% 9.31% 9.75% 9.75% 9.06% n/a n/a Jan-14

Africa Middle East (Long/Absolute Return)

SilkInvestSilkRoadFrontiersFund -4.12% -0.43% -13.58% -12.63% -12.63% -4.56% -1.34% -5.30% Oct-10 Africa Fixed Income (USD)

AtriaAfricaIncomeFund 1.88% 0.67% 4.28% 9.76% 9.76% 8.70% n/a n/a Mar-13SilkInvestSilkAfricaBondFund 1.72% -1.64% -5.16% -10.91% -10.91% -1.62% -6.81% -2.15% Dec-09IPROAfricaAbsoluteReturnFund -0.80% -2.02% -5.86% -8.59% -8.59% -3.74% n/a n/a May-14InsparoAfricaFixedIncomeFund -1.31% -4.83%* -6.41% -5.47% -5.47% -2.61% n/a n/a Apr-14 African Commodity Trade Finance (USD)

AtriaAfricaTradeFinanceFund 4.97% 0.80% 7.95% 14.18% 14.18% 14.77% n/a n/a May-14BarakStructuredTradeFinanceFund 2.43% 0.80% 5.07% 11.02% 11.02% 14.38% 12.14% 13.39% Feb-09ScipionCommodityTradeFinanceFund 1.66% 0.50% 3.38% 7.05% 7.05% 10.12% 7.44% 8.73% Aug-07 Commodities (ZAR)

PolarStarFund 6.37% -0.20% 10.24% 22.84% 22.84% 26.35% 34.36% 31.19% Nov-08FairtreeAfricanBlackwoodCommodityPartnership 4.93% 2.58% 5.77% 4.91% 4.91% 8.51% 3.63% n/a Feb-11 Global Focus (USD)

OptisGlobalOpportunitiesFund 12.45% 2.96% -1.18% 9.96% 9.96% 5.38% 3.51% 2.00% Sep-06ImaraGlobalFund 6.30% -1.33% 2.57% 2.87% 2.87% 5.69% 7.08% 10.03% Oct-97CratonCapitalPreciousMetalsFund -7.24% 0.90% -25.34% -26.94% -26.94% -4.26% -32.13% -31.13% Nov-03CratonCapitalGlobalResourcesFund -7.67% -5.60% -42.09% -46.31% -46.31% -11.50% -30.11% -29.93% Dec-08

Fund of funds – November 2015Fund name Last 3 Last 6 Last 12 YTD Ann. 3-yr ann. 5-yr ann. Incep. Return months Nov-15 months months return comp. comp. comp. date objectiveFund of Funds – South African (ZAR) THINK.CAPITALGrowthFund 7.11% 2.55% 10.63% 23.95% 21.20% 22.23% n/a n/a Nov-14 STeFI+3%BlueInkCommodityArbitrageFund 6.77% 4.35% 4.22% 14.09% 12.00% 18.60% 16.53% 19.59% Jan-09 Cash+6%EdgeIconicEquityAlphaPlusFund 6.16% -1.63% 3.22% 11.02% 11.47% 19.67% 18.34% n/a Dec-11 OutperformSwixTop40TRIRosebankWealthLong/ShortHedgedEquityFund 6.12% 1.50% 9.63% 21.28% 19.29% 15.47% 17.98% 15.65% Oct-10 CPI+5%over3-5yearsEdgeIconicPortableAlphaFund 5.82% -0.63% 3.67% 14.89% 13.33% 22.02% 19.37% n/a Jun-12 SWIXTop40TotalReturnIndexRosebankWealthLowVolatilityEquityHedgeFund 5.44% 2.03% 9.45% 17.34% 15.41% 12.57% 13.48% n/a Feb-12 CPI+5%over3-5yearsKanaanFundofHedgeFunds 5.23% 2.36% 3.31% 11.98% 11.16% 15.55% 8.12% 9.37% May-05 CPI+3%EdgeIconicMatadorIFund 5.22% 1.46% 5.40% 15.17% 12.79% 14.19% 14.22% 13.93% May-04 STeFI+4%SygniaAllStarFoHF 5.08% 0.84% 7.38% 19.24% 17.10% 13.51% 16.17% 15.64% Dec-06 CPI+5%CaveoModeratePortfolio 4.97% 1.23% 7.47% 14.97% 13.78% 10.64% 11.34% 11.13% Mar-00 30%SWIX+70%STeFIEdgeIconicMatadorIIFund 4.89% 1.68% 5.79% 15.15% 13.13% 12.00% 14.49% 13.54% Dec-04 STeFI+4%PrescientWealthMulti-StrategyFundofFunds 4.86% 2.00% 6.95% 13.84% 12.25% 11.99% 13.06% 11.43% Apr-01 CPI+4%EdgeIconicToreroLong/ShortFund 4.64% 1.19% 4.40% 14.69% 12.78% 16.03% 15.38% n/a Jan-11 OutperformSWIXrolling3yrsAlphaEquityHedge 4.58% 1.30% 5.86% 16.28% 14.00% 9.57% 15.49% 13.66% Nov-07 ALSINovareMayibentshaModerateFundofFunds 4.12% 1.03% 6.24% 13.09% 12.03% 12.39% 11.14% 11.04% Apr-03 CPI+3.5%OldMutualMulti-ManagersLongShortEquityFoHF 4.03% 0.32% 6.14% 16.76% 14.80% 15.07% 17.47% 17.23% May-04 STeFI+7%SygniaSignatureFoHF 3.99% 0.82% 6.36% 16.56% 14.58% 13.98% 14.79% 13.86% Nov-03 CPI+5%SygniaAbsoluteFoHF 3.54% 0.84% 6.17% 15.27% 13.54% 11.20% 12.60% 11.82% Nov-03 CPI+3%27fourAlternativeLongShortEquity 3.39% 0.50% 4.51% 13.15% 11.09% 12.35% 13.05% 13.31% Feb-09 STeFI+4%27fourAlternativeMarketNeutralEquity 3.36% 0.83% 4.75% 11.97% 10.40% 10.15% 11.62% 10.56% Feb-09 STeFI+3%CaveoFocusFund 3.28% -0.35% 2.55% 14.16% 11.95% 14.65% 15.30% n/a Feb-11 65%SWIX+35%STeFINovareMayibentshaCoreFundofFunds 3.27% 0.92% 5.05% 11.88% 10.46% 11.75% 11.37% n/a Jul-11 CPI+3.5%NovareMayibentshaMarketNeutralFoF 3.20% 1.07% 5.21% 10.60% 9.32% 8.26% 8.76% 8.21% Jul-10 CPI+2.5%NovareMayibentshaGrowthFundofHedgeFunds 3.13% 0.46% 5.55% 13.20% 12.43% 11.43% 13.29% 12.59% Jul-06 Cash+6%EdgeIconicAbsoluteReturnFund 3.11% 1.11% 4.61% 10.90% 9.81% 10.65% 8.95% 8.93% May-02 STeFI+2%CaveoPerformancePortfolio 3.02% -0.40% 1.99% 11.35% 10.12% 11.16% 13.08% 12.78% Jan-06 40%SWIX+60%STeFIRosebankWealthGroupIncomeProviderFund 2.43% 0.13% 4.40% 7.64% 7.55% 7.86% 7.69% 7.85% Oct-10 Cash+3%over3yearsCaveoStablePortfolio 2.33% 0.29% 4.28% 10.26% 9.03% 9.49% 8.68% 9.19% Jan-06 15%SWIX+85%STeFINovareMayibentshaFocusedFundofFunds 2.32% 1.15% 3.74% 9.04% 8.16% 11.12% 10.85% 11.04% Dec-08 CPI+4.5%27fourFortressFund 2.26% 0.22% 3.17% 9.37% 7.92% 10.89% 10.79% n/a Feb-12 STeFI+4%EdgeIconicPicadorFixedIncomeFund 2.21% -0.41% 4.61% 4.98% 6.69% 8.22% 6.58% n/a Jan-11 Cash+5%TriAlphaEnhancedFixedIncomeHedgeFund 1.91% 0.56% 3.72% 7.06% 6.58% 8.34% 6.49% 6.92% Aug-07 STeFI+2%MomentumZARDiversifiedFund 1.74% -0.15% 3.05% 9.14% 8.01% 9.53% 8.57% 8.14% Nov-07 STeFI+5%AlphaSaturnTrust 1.63% -0.08% 2.51% 8.51% 7.04% 8.16% 8.33% 8.48% Jun-07 STeFI+5%BlueInk-EvergreenFund 1.50% 0.43% 2.26% 6.48% 5.66% 9.22% 6.12% 6.62% Nov-02 Cash+2%BlueInkFixedIncomeArbitrageFund 1.26% -0.57% 3.60% 7.45% 6.64% 11.31% 6.29% 8.00% Sep-09 Cash+2%27fourAlternativeIncome 0.91% -0.53% 2.52% 4.13% 4.63% 6.97% 3.69% 5.67% Feb-09 STeFI+2%AlphaCautiousHedge 0.64% 0.01% 1.78% 5.67% 4.70% 9.36% 6.11% 6.43% Mar-03 CPI+3%SkyboundCapitalSolarFlareFund 0.12% -1.83% 2.38% 11.65% 9.18% 10.76% n/a n/a Jan-13 12%-15%paoverrolling5yrBlueInkLongShortAggressiveFund -0.68% -0.08% -1.85% 4.01% 2.09% 11.06% 11.09% 10.61% Sep-09 Cash+6%AlphaFixedIncomeBlendofFunds -0.96% -0.63% 0.01% 1.25% 1.10% 7.06% 1.82% 4.00% Jan-06 CPI+3% Fund of Funds - Pan African (USD) FMGAfricaFund(Malta)B09Shares(USD) -5.63% -3.74% -20.16% -23.56% -21.39% -8.73% -6.62% -5.95% Apr-07 n/aCaveoAfricaFund -7.67% -5.43% -21.91% -28.16% -26.22% -1.85% -6.09% n/a Jun-12 n/a27fourPangaeaAfricaFundofFunds -8.12% -5.28% -20.48% -26.72% -24.08% -5.52% -3.86% n/a Jun-11 n/a Fund of Funds - Pan African (EUR) FMGAfricaFund(BER)AShares(EUR) -8.34% -4.55% -22.93% -29.67% -27.20% -12.32% -12.07% -11.00% Jun-07 n/a*estimate


performance

To li

st y

our

fund

in th

e d

atab

ase

ple

ase

emai

l Aid

en D

avis

at d

ata@

hed

gen

ewsa

fric

a.co

m. S

ee w

ww

.hed

gen

ewsa

fric

a.co

m fo

r d

ata

upd

ates

Single Managers – December 2015Fund name Last 3 Last 6 Last 12 YTD Ann. 3-yr ann. 5-yr ann. Incep. months Dec-15 months months return comp. comp. comp. date

Clearing servicesSecurities lending and borrowingMulti-asset prime broking

74049 HedgeNews.indd 1 2013/10/22 4:18 PM

the quarterly journal of the african...

Documents