Hedge Funds – They offer you greater returns but with greater risk
Hedge funds are aggressively managed investment funds. They use advanced investment strategies such as leveraged, long, short and derivative positions. They invest in both domestic and international markets with the goal of generating high returns…
These funds are more flexible than mutual funds in the strategies that they use. The first hedge funds only used one strategy. They went long or bought shares on the stock exchange and they also had short (sell) positions to protect themselves from the market moving downward. But as mentioned earlier, modern hedge funds use a lot of different strategies.
And they use these strategies with one goal, to outperform the market! Now you may be thinking that these funds are only for the super wealthy but that’s not entirely true… Some are easily accessible to investors just like you!
Let’s look at some South African hedge funds…
Tower Capital – Outperforming the JSE by 4.6% for the year so far
Tower Capital is one such fund in South Africa. They offer a range of different funds that you can choose from to satisfy your needs.
Their fund ranges from their Core Income Fund – This fund offers a very low risk strategy to outperform South Africa’s risk free rate. They call their most aggressive fund The Tower Aggressive Fund.
Here they look to outperform the market by a whopping 60%. But remember, with high reward comes equally high risk. Tower Capital also offers other funds with a wide range of risk and returns…
Tower Capital’s Tower Fund which is a moderate risk long short equity fund was only down 1.8% in September when the JSE corrected 10%
Two of Tower Capital’s funds outperformed the JSE up to date for 2014, the Tower Fund beat the market with 4.6% and the Equity Long only fund beat the market by 3%
To invest directly into Tower Capital you will need R1 million. You can also buy into this through Rand Merchant Bank for R250,000…
To view or contact Tower Capital’s offering you can view their products here
So, this fund is for the wealthy but there’s another fund where you can invest for less money…
Emperor Asset Management – Double the returns of the JSE
Emperor offers two alternative strategies…
Their first strategy is their The Robert Falcon Scott Strategy. With this strategy they follow a long-short equity strategy investing in the most liquid shares on the JSE. In other words, the buy and sell the Top 40 shares on the JSE. In 2012 this fund achieved an incredible 51% return!
The Robert Falcon Scott strategy’s total returns
Last 3 years
Last 5 Years
Emperors other strategy is The Sir Edmund Hillary strategy. Here they value shares according to their growth earnings and dividends.
If you wish to invest in this fund you may only invest 15% of your investable assets because of the risks involved.
To invest in an Emperor fund you only need R10,000. This makes the funds accessible to most investors…
To see what Emperor Asset Management has to offer click here
So as you can see, if you invest in these funds you can expect great returns. But, you must always consider the risks involved when high returns are offered.
And, if you invest in these funds you’ll also have that extra diversification that you didn’t have before…