It is almost a daily occurrence in my line of work to introduce our funds to people who are not hugely familiar with the hedge fund industry in South Africa. Many of them think of shows like Billions, and therefore assume hedge funds are risky investments. But hedge funds are really a very broad category, with a lot of different risk profiles run by many different managers with varying levels of skill. Just like the unit trust categories we are all so familiar and comfortable with.

One of the big advantages that hedge funds have over traditional long-only funds, is the larger toolbox of strategies that are available to the manager (in the form of shorting, pair trades and other hedging mechanisms). But that advantage is only an advantage when it’s in the hands of an experienced and skillful manager, otherwise it can indeed bring more risk to the fund in question if misused by the manager.

At Peregrine Capital, we have a very long track record of managing our funds with skill and prudence, and more and more institutions and financial advisers are including our funds in their offerings as a result. Our Peregrine Capital Pure Hedge H4 QI Hedge Fund (“Pure Hedge Fund”) has long been a popular option for investors who are looking for a stable and consistent return stream, while keeping their market risk to a minimum.

The Pure Hedge Fund is South Africa’s oldest hedge fund, with more than two decades of track record behind it. The aim of the fund is to produce inflation-beating returns over the medium term, while protecting investors when markets fall. The fund has delivered returns between 8% and 12% per annum for the past 3-, 5-, 10- and 15-year periods, while keeping standard deviation and drawdowns to an absolute minimum. The maximum drawdown ever experienced in the fund is less than 5%, which means investors have had a very comfortable ride with us for many years.

Perhaps our proudest achievement for the Pure Hedge Fund is that it has never had a negative return in any calendar year since its inception in July 1998. This sort of consistency makes it much easier for investors to remain invested for the long run and allows them to compound those returns over time.

A final benefit for investors is the diversification advantage that the Pure Hedge fund brings to an investor’s overall portfolio. The fund has almost zero correlation to what happens on the JSE, and that means it can generate those much-needed returns, even when the stock market is falling in a heap. It’s a pleasure to speak to investors when you are able to offer them inflation-beating returns in a low-risk package that performs even when the rest of their portfolio is under fire!

The Pure Hedge Fund is available via all major LISP platforms, as well as directly through Peregrine Capital.