South African hedge funds are enduring a tough year in 2017, as a troubled economic and political environment has heightened risks, putting managers on high alert.
For the first nine months of the year, South African hedge funds have added a median 4.87%, lagging the JSE All Share Index, which has gained 12.58% to the end of September, and the All Bond Index, which has added 7.82%.
South African hedge fund have also lagged their global peers as the global industry has seen improved fortunes this year, with the HedgeFund Intelligence Global Composite adding 5.15% for the first nine months.
According to the HedgeNews Africa database, fixed income has been the strongest performing category so far in 2017, adding a median 8.11%, while market-neutral and quantitative strategies have gained 4.73%, multi-strategy has risen 4.06% and long/short funds have lagged with a 3.92% return.
It has been a particularly tough environment for active strategies, with the performance of the JSE driven largely by a handful of counters, favouring a passive approach so far this year.
Yet hedge fund managers remain committed to their strategies of minimising downside risk while accessing long-term gains across a variety of market conditions.
Within the league tables, there are many funds that have delivered strong numbers so far this year and even a handful that have outperformed the JSE, putting them on the radar ahead of the next HedgeNews Africa Awards.
The awards will, however, ultimately take into account risk-adjusted returns, based on an established quantitative methodology.
The first provisional nominations for the 2017 HedgeNews Africa Awards will be announced in next month’s online edition.
Now in their ninth year, the Awards will be celebrated at a gala dinner at the Vineyard Hotel in Cape Town on February 22, 2018.
To qualify for a nomination, funds must average a minimum of $10 million, or R80 million, in assets under management throughout the calendar year. Exceptions are made in the new fund category, which allows for lower AUMs and considers funds with a track record of 12-23 months (with the award based on calendar-year returns) and the long-term awards, for which higher minimums apply.
Nominations are based on an established quantitative methodology in an effort to judge the best risk-adjusted returns, with the award ultimately going to the fund with the highest return provided its Sharpe ratio is within 25% of the top Sharpe among the nominees in each category.
Exceptions are made in categories that combine different strategy areas, where other quantitative criteria may need to be applied.
Funds submitting monthly returns to our database are automatically considered for the Awards. New funds can submit data to firstname.lastname@example.org before the end of November.
Data used in deciding the awards will be independently examined by eComply Consultants.
Market neutral and quantitative
Pan Africa (Long/Absolute Return)
Fund of Hedge Funds – Multi-strategy
Fund of Hedge Funds – Fixed income
Three-year performance – Single-Manager
Three-year Performance – FOHFs
Five-year performance – Single-Manager
Five-year Performance – FOHFs
New Fund of the Year
Fund of the Year