The Basic Guide to Regulated Hedge Funds (10-Part Series)
Part 2 - Meet the Managers - Strategies and Themes
This marks the second chapter of a 10-part series, where I will distribute a chapter from my eBook on Regulated Hedge Funds to the Find an Advisor network every fortnight. Read on to learn about Long Only, Long Short, Market Neutral, Fixed Income, Multi Strat and Multi Manager funds
The purpose of this series, is to inform you and your clients of the 298 CISCA regulated hedge funds that are now available to both retail investors (RIHFs) and qualified investors (QIHFs), as of June 2017.
We will largely be focussed on RIHFs (Retail Investment Hedge Funds) which meet the requirements of Reg 28, exploring various alternative strategies and meeting many of the boutique fund managers along the way.
For more information, please visit my website www.blackonyx.co.za.
Have you ever considered the alternatives?
ü Better returns and less risk than the JSE over time.
ü Better returns and less risk than most unit trusts over time.
ü Portfolio diversification that ensures uncorrelated returns.
ü Active fund management that minimises downside risk.
ü Investor protection via FSB-regulated structures.
* I will reference these statements in more detail throughout this publication with data from fund factsheets, Minimum Disclosure Documents, Morningstar and other asset manager reports. Click here to review the source of the above statements
Let’s get started …
You can download Part 2 here, a PDF file, which includes Benefits and Drawbacks of Hedge Funds
Meet the Fund Managers
Traditional investors have been exposed to unit trusts and mutual funds that employ a range of investment strategies (value, growth and thematic), utilising shares, bonds, derivatives and cash. They are known as value investors or long only, who enter an investment position having priced an asset with a long-term view of investing. Typically, they buy and sit on stock, as seen by the likes of Warren Buffett and Charlie Munger.
One of the by-products of this competitive environment is a unique breed of investors who have gained expertise in sophisticated financial instruments (bonds, stocks, derivatives and private equity, to name a few), with exposure to global markets and alternative investments. Many left the mainstream to better their counterparts and take advantage of investor and market inefficiencies, capitalising on the volatility of the markets, utilising broader research and expertise in specific sectors.
There is a strong likelihood that many of these individuals had a material influence on your current mainstream investments and historic portfolio performance.
With confidence and grit, the “hedgies” broke away from the largest asset managers (and significant salaries), putting their hard-earned cash into their own hedge fund strategy. Only much later could they encourage others to invest alongside, having established a reputable track record. This alternative investment space was historically reserved for the ultra-wealthy and large institutions, but all that has changed with the new collective investment scheme regulations (CIS).
While hedge funds were allegedly established in the 1940s, Warren Buffett claims the first hedge fund was, in fact, created in the 1920s by his mentor, the father of value investing, Benjamin Graham, who used long and short positions and an incentive fee.
To continue reading and learning about Long Short, Market Neutral, Fixed Income, Multi Strat and Multi Manager funds …, this chapter, click here to download Part 2
Please visit www.blackonyx.co.za to contact me or for more information, or follow me on LinkedIn here for my weekly post on the boutique fund managers we represent at BLACK ONYX, or alternately follow BLACK ONYX on YouTube here or our podcasts here.