South Africa: An emerging hedge fund market with plenty of potential

Wed Apr 11, 2007





Gwyneth Roberts, editor, South AfricaHedge

The South African hedge fund industry enjoyed strong growth in 2006, with investors seeing the benefit of alternative strategies after a protracted bull run in the domestic equity markets. While still very small in a global context, the industry's assets under management doubled during the year to more than R19 billion ($2.6 billion) with around 100 hedge funds in existence. The pipeline looks promising for 2007.

The bulk of the industry's assets under management are domestically sourced, with local fund of hedge fund companies playing an active role in seeding new managers to shore up capacity. While domestic appetite has increased, foreign investment in local hedge funds is still small although this is expected to change as local managers take active steps to create structures attractive to offshore investors.

The lack of hedge fund regulation in South Africa is an ongoing deterrent. Although the...

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