31 July 2021
HEDGE FUNDS FEATURE
Not all funds are created equal BY ALAN YATES Business Development Manager, Peregrine Capital
I
t is almost a daily occurrence in my line of work to introduce our funds to people who are not hugely familiar with the hedge fund industry in South Africa. Many of them think of shows like Billions, or stories like the recent Game Stop saga, and therefore assume hedge funds are risky investments. But hedge funds are really a very broad category, with a lot of different risk profiles run by many different managers with varying levels of skill. Just like the unit trust categories we are all so familiar and comfortable with. One of the big advantages that hedge funds have over traditional long-only funds, is the larger toolbox of strategies that are available to the manager (in the form of shorting, pair trades and other hedging mechanisms). But that advantage is only an advantage when it’s in the hands of an experienced and skilful manager, otherwise it can indeed bring more risk to the fund in question if misused by the manager. At Peregrine Capital, we have a very long track record of managing our
funds with skill and prudence, and more and more institutions and financial advisers are including our funds in their offerings as a result. Our Peregrine Capital Pure Hedge H4 QI Hedge Fund (Pure Hedge Fund) has been a particularly popular option for investors who are looking for a stable and consistent return stream, while keeping their market risk to a minimum. The Pure Hedge Fund is South Africa’s oldest hedge fund, with more than two decades of track record behind it. It is a market neutral hedge
fund – a very conservative and prudent option compared to what might come to mind when the term hedge fund is mentioned. The fund has delivered annualised returns of between 10% and 13% per annum for the past one-year, three-year, five-year, 10-year and 15-year period, while keeping standard deviation and drawdowns to an absolute minimum. The maximum drawdown ever experienced in the fund is less than 5%, which means investors have had a very comfortable ride for many years with us. Perhaps our proudest achievement for the Pure Hedge Fund is that it has never had a negative return in any calendar year since its inception in June 1998. This sort of consistency makes it much easier for investors to remain invested for the long run and allows them to compound those returns over time. A final benefit for investors is the diversification advantage that the Pure Hedge Fund brings to an investor’s overall portfolio. The fund has almost zero correlation to what happens on
the JSE, and that means it can generate those much-needed returns, even when the stock market is falling in a heap. It’s a pleasure to speak to investors when you are able to offer them inflation-beating returns in a low-risk package that perform even when the rest of their portfolio is under fire! The Pure Hedge Fund is available via all major LISP platforms, as well as directly through Peregrine Capital. For more information visit www.peregrinecapital.co.za
“The fund has almost zero correlation to what happens on the JSE”
Pure Hedge Fund 23 years in the green
Since its inception in 1998, the Pure Hedge Fund has never experienced a negative year*
www.peregrinecapital.co.za *Fund performance: Returns are quoted net of fees Fund performance provided as at 30 April 2021 Annual management fee: 1% Performance fee: 20% subject to High Water Mark and above hurdle (STEFOCAD) Fee class status: Class: A, distributing Source: Peregrine Capital Peregrine Capital Proprietary Limited (“Peregrine Capital”) is an authorised financial services provider and is the investment manager of the Peregrine Capital Pure Hedge H4 QI Hedge Fund (“Pure Hedge Fund”). H4 Collective Investments (RF) Proprietary Limited, is an approved manager of collective investment schemes in terms of the Collective Investment Schemes Control Act, 2002. Net asset value figures (NAV to NAV) have been used for the performance calculations, as calculated by the manager at the valuation point defined in the deed, over all reporting periods. The performance is calculated for the portfolio. Individual investor performance may differ, as a result of initial fees, the actual investment date, the date of reinvestment and dividend withholding tax. Performance is based on a lump sum contribution and is shown net of all fund charges and expenses, and includes the reinvestment of distributions. Actual annual figures are available to the investor, on request at info@h4ci.co.za. A schedule of fees, charges and maximum commission is also available on request from the manager. The rate of return is calculated on a total return basis, and the following elements may involve a reduction of the investor’s capital: interest rates, economic outlook, inflation, deflation, economic and political shocks or changes in economic policy. Annualisation is the conversion of a rate of any length of time into a rate that is reflected on an annual basis. Past performance is not indicative of future performance. This is a low to medium risk investment. Fund Name
Inception date
Highest annual return
Lowest annual return
Peregrine Capital Pure Hedge H4 QI Hedge Fund
Jul 1998
67.90% (1999)
1.61% (2008)
Inflation (CPI)
Jul 1998
12.97% (2002)
0.21% (2003)
ASISA South Africa MA Low Equity
Jul 1998
40.59% (1999)
-10.69% (2008)
The calculation of all net returns from 1 July 1998 until 30 November 2016 are for the unregulated Peregrine Pure Hedge Fund, thereafter the data relates to the regulated Peregrine Capital Pure Hedge H4 QI Hedge Fund. The ‘Cash’ referenced is the STeFI Index (Stefocad) from July 2003 to date before that the JIBAR is used.
PC Money Market Half Pg-Pure-HedgeV2.indd 1 2021/05/31 09:04 www.moneymarketing.co.za 19
