South African Investible Hedge Fund Index Launched

by Robert Lee, Tax-News.com, London

13 October 2005

Clade Investment Management this week announced the launch of the South African Investible Hedge Fund Index (SAIHF), a product that is intended to allow investors to access the investment class at a low cost and without incurring significant fund-specific risk.

The SAIHF is a capital weighted index of South African hedge funds. It contains four strategy specific sub-indices: Fixed Income; Long/Short Equity; Market Neutral and; Arbitrage Trading.

Only funds that meet reporting requirements and that have meaningful track records or assets under management qualify for inclusion in the SAIHF.

The 28 qualifying funds have widely varying returns and risks. However, while individual funds can be volatile, the SAIHF offers a low volatility investment option with high risk adjusted returns and a low correlation to the JSE. Over the past 12 months the SAIHF has returned 23.25%, Clade said.

Carl Liebenberg, CEO of Clade Investment Management, believes that the SAIHF will be embraced by both institutional investors and knowledgeable retail investors.

“There is considerable interest in hedge funds, which have performed exceptionally as an asset class over the past two years, but the high level of perceived firm specific risk combined with the “black box” technology approach of most firms and the high fees charged by multi managers has inhibited investment," Mr Liebenberg noted.

He added that strong interest in the SAIHF is already being shown from domestic institutional investors who are looking at a low cost and low risk method of diversifying into a new asset class. Mr Liebenberg also believes that the product will appeal to offshore institutional investors who are looking for access to the South African hedge fund market.

The fund has a minimum investment level of R1 million (US$153,000) and is aimed exclusively at sophisticated high-net-worth and institutional investors.

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