SA fund makes R130m from R1m

Peregrine Capital’s High Growth H4 QI Hedge Fund has seen tremendous growth since its launch on February 1, 2000, with a fund size of R5.98 billion. The hedge fund has provided a cumulative return of 13,147% since inception, according to the latest fact sheet, which translates to an annualised return of 23.67%. Peregrine Capital’s High Growth H4 QI Hedge Fund aims to create long-term wealth for investors by investing in their best investment ideas while taking moderate risks. The historic risk indicators of the high-growth fund are comparable to those of traditional South African balanced funds.

The Peregrine hedge fund is capable of investing in a wide range of assets, such as local and international listed shares, bonds and property, cash, and cash equivalents. Fund managers search for undervalued securities that have the potential for significant upside over the medium to long term, in addition to investing in equities. The fund can also invest in other assets, such as listed property and bonds. Peregrine Capital actively manages the fund’s exposure to different asset classes to enhance long-term returns while managing overall risk.

The Peregrine hedge fund outperformed benchmarks like the SA Multi Asset High Equity Category and the FTSE/JSE Capped SWIX All Share Index by a factor of ten. According to Jacques Conradie, Peregrine Capital CEO and portfolio manager, their broader toolset, including shorting shares and derivatives, aided their strong performance. In challenging market conditions, the goal is to outperform equity and balanced funds. While it is difficult for a hedge fund to match the returns of an equity fund in a robust bull market, in years when the market is down 10% or 20%, a hedge fund typically outperforms an equity fund.

Conradie added that their high-growth hedge fund turned R1 million into R130 million since inception, while their pure hedge fund returned R70 million. The pure hedge fund returns, he noted, were obtained without ever experiencing a negative year. Few local or global hedge funds have provided a 75x return without ever having a down year, according to Conradie. In sum, he believes that hedge funds truly excel for investors in flat or down markets.