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Sunday August 07 2022
Hedge Funds: Investment Vehicle of the Future

The Citizen November 12, 1999


        The third annual Hedge Fund Symposium held both at Gallagher Estate at Midrand and the Bay Hotel in Cape Town was greeted by the South African A investment industry with great interest.


        The international misconception that all hedge funds are macro funds that take directional bets and, hence, are hugely volatile was laid to rest.


        The fact of the matter is that the George Soros type hedge funds make up less than 5pc of the hedge fund universe, and that in fact, the addition of hedge funds to a traditional portfolio largely decreases the volatility as measured by standard deviations, and increases the return particularly in periods of market turbulence, was clearly exemplified.


        The conference featured a first for the South African industry.


        The fledgling hedge fund industry hosted local speakers, and on the second day the cream of the international fund management arena presented their winning strategies.


        Internationally the hedge fund industry is growing in excess of some 25pc per annum and there is large movement from the more conservative asset managers to invest in hedge funds, eg pension funds and endowments, as they are seeing the benefits of reduced volatility and increased returns for their portfolios.


        A highlight of the conference was the presentation by Raj Rajaratnam, from The Galleon Group, whose fund is up in excess of 64pc in dollar terms so far this year after costs.


        This exhibits "the edge" that hedge fund managers can have over traditional portfolio managers.


        "It is my access to superior research and the ability to go both long and short in my portfolio using no leverage that allows me to show this level of performance," says Raj Rajaratnam.


        Magnum Global Funds SA co founding president of the Hedge Fund Association and major sponsor of the conference said that the conference would continue to gain importance in South Africa, in line with international trends and become more sophisticated.

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