BLUE CHIP INVESTMENT |
BLUE CHIP INVESTMENT | Hedge funds Old Mutual Multi-Managers scoops hedge fund awards for the fifth consecutive year The Old Mutual Multi-Managers Long Short Equity fund of hedge funds won three trophies at the annual HedgeNews Africa Awards 2022. The fund won the award as the best fund of funds for its 2022 performance (+11.9%, with a 1.65 Sharpe Ratio) as well as for best fund over five years and 10 years. The Old Mutual Multi-Managers Long Short Equity fund of hedge funds has now received an award for the best fund of funds over 10 years for the fifth year in a row. This brings our total awards over various time periods to 12, since 2013. The awards recognise the best risk-adjusted returns of alternative strategies and hedge funds in South Africa and the broader Africa region each calendar year, based on an established methodology and independently verified data submitted to the HedgeNews Africa database. The Old Mutual Multi-Managers Long Short Equity fund of hedge funds outperformed local equities over all these periods at a lower level of risk and net of all fees. The addition of hedge funds in our inflation plus strategies has thus continued to deliver good risk-adjusted return outcomes for our clients over time. Clients get exposure to the Old Mutual Multi-Managers Long Short Equity fund of hedge funds by investing in our inflation plus strategy range of portfolios offered to retirement funds and their members via a fund policy. Hedge funds Although hedge funds have been around a long time now, they are still poorly understood, and many investors don’t know enough to understand what role hedge funds can play in their investment strategy. They are a valuable alternative type of investment that can play a role in a well-diversified long-term investment strategy. What are hedge funds? Hedge funds are alternative investment portfolios that employ additional investment trading strategies and specialist techniques that are not available to traditional collective investment schemes. In the case of long short equity hedge funds, as used by the Old 36 www.bluechipdigital.co.za
Mutual Multi-Managers Long Short Equity fund, the managers of the funds can invest in the usual array of shares on the JSE and they can also take short positions in the same shares. This allows them to profit from share prices going up as well as down, providing they have called the right direction of movement. The benefit of these additional tools in the toolboxes of hedge fund managers is that they can manage risk more tightly. In the hands of a skilled hedge fund manager, it’s possible to obtain similar returns to the stock market, at lower volatility. “This brings our total awards over various time periods to 12, since 2013.“ The benefits of hedge funds in a portfolio Including an allocation to hedge funds offers the following advantages: • Hedge funds, by their nature, earn returns in different ways to traditional assets. This means they offer valuable diversification benefits, with the potential to improve the risk-adjusted performance of a portfolio. • Local hedge fund managers have extensive skill in managing hedge funds across a range of investment mandates, with long short equity having the longest track record. • Accessing hedge funds through a fund of funds means investors benefit from the research and due diligence conducted by Old Mutual Multi-Managers and they benefit from a selection of top hedge fund managers and not just one. • Although hedge fund fees are high, like all fees in the asset management industry, they have been coming down due to better transparency and pressure from many investors. When paying attention to returns earned net of fees, instead of just aiming for the cheapest solution, is also essential to assess the extra returns that are possible in relation to the higher fees. www.bluechipdigital.co.za 37
