South African Hedge Fund Sector ‘Faces Constraints’
Friday, February 3, 2006 : PermalinkAllAfrica.com – THE South African hedge fund industry is facing capacity constraints as demand for hedge fund investments grows, a survey of hedge fund managers by SYmmETRY Multimanager has found.
But by diversifying their investment strategies, hedge fund managers could alleviate some of the pressure on these constraints, SYmmETRY head of alternative and fixed interest Warren Brown said yesterday.
Brown said 90% of managers surveyed believed they would cap their existing funds within the next three years. Many managers preferred to cap the size of their funds at low levels because it was sometimes difficult to deliver superior performances with larger funds.
Combined with the limited number of investment strategies available, this would constrain the industry.
At present, South African hedge funds adopt four strategies: long/short equity; market neutral; fixed interest; and trading funds. However, 85% of the R10bn invested in hedge fund assets are concentrated in long/short equity and market- neutral strategies.