Not all funds are created equal

BY ALAN YATES Business Development Manager, Peregrine Capital

It 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 returnin 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