In Aug 2016 alternative multi-manager Blue Ink Investments launched regulated funds of hedge funds (FoHFs) to retail and qualified investors. These funds are expected to offer investors return signatures that differ significantly from traditional peers while further enhancing the diversity and risk features of a well-diversified portfolio.
The retail funds are positioned against ASISA risk-profiled funds – Multi Asset Low Equity, Multi Asset High Equity and General Equity. This step is an attempt at closer alignment to the intermediary’s advice process and is a first in an industry that predominantly uses cash as a benchmark. Bonolo Zwane, MD of Blue Ink Investments, notes that the way the retail funds have been profiled against broad ASISA fund risk categories enables investors to seamlessly include them in a balanced portfolio.
The qualified investor funds are designed to be a unique specialist fund add-on to a professional investor’s core-satellite fund. It includes funds that offer professional investors exposure to soft commodities, the potential for inflation-beating and equity-beating returns on a consistent annual basis, and competitive fixed income returns at almost equity-like risk.
The innovative benchmarking is only one of many other firsts for Blue Ink Investments. It also introduced South Africa’s first FoHFs in 2001, first single strategy FoHFs in 2009 and first daily priced FoHFs in 2011 while seeding successful and established hedge fund managers in the country.
Access is easy and competitively priced
The funds are available directly to retail and qualified investors with investment amounts from R20 000 upwards along with other unit trusts via Sanlam Collective Investments (RF) (Pty) Ltd. Advisers may also access the retail funds with Glacier, the Sanlam owned linked investment services provider. Blue Ink Investment charges 0.75% as an ongoing manager fee, as well as 15% of outperformance above the relevant benchmark. These are standard across both the retail and qualified investor range.
Access to the best and helping you separate the wheat from the chaff
There are currently over 200 hedge funds available to the retail and qualified investor and so the value of funds of hedge funds to assist in selecting and blending these hedge fund strategies is clear, especially for first-time retail investors.
Having been in the hedge fund industry since 1992, Blue Ink Investments has the longest running and most extensive database of hedge funds in South Africa, which is free of survivorship bias – both surviving and closed or weaker funds are represented to avoid performance bias. Within the newly launched FoHFs, investors enjoy access to the most established and proven hedge fund managers.
Sanlam also offers single manager hedge funds
Sanlam Alternative Investments, headed by Bruce Simpson, is the division within the greater Sanlam Investments business that runs single manager hedge funds. Many of these outstanding funds have been included in Blue Ink Investments’ multi-managed FoHFs. Bruce has been with the group for 18 years as market maker, trader and fund manager. He now identifies talent and oversees the operations and risk management across managers on the hedge fund platform.
Nimble and secure
Bonolo and Bruce agree that being part of a hedge fund business within the Sanlam Group really offers the best of both worlds. While the more unconstrained nature of hedge funds allows investors nimble access to more opportunities, they’re still supported by one of the largest insurers in Africa and the extensive infrastructure that comes with such a large company.
Bruce stresses, though, that the hedge fund managers don’t sit alongside a long-only process. Instead, they have the freedom to express their own views but with a high level of risk and operational oversight.
A leader in transformation
Bruce’s hedge fund division, in particular, has attracted plenty of young talent. As part of its transformation initiative, Sanlam launched a three-year graduate training programme at the start of 2015 with room on the desk for up to five skilled individuals: the Sanlam Alternative Investment Academy, targeting black honours and masters level graduates.
“As a fund of hedge fund business that’s been in the financial services industry from as early as the launch of the first DVD player, we’re quite thrilled to be able to offer our expertise to an expanded set of investors and importantly in an environment where the regulator has pushed for enhanced trust and transparency in hedge fund strategies,” says Bonolo.