| Thu 17 Nov 2005, 10:59 | | Alexander Forbes Limited - Investment Solutions Pr |
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Alexander Forbes Limited - Investment Solutions Press Release
Alexander Forbes Limited
(Incorporated in the Republic of South Africa)
(Registration number 1958/001974/06)
Share code: AFB
ISIN code: ZAE 000018230
Investment Solutions Press Release
South Africa"s leading multi-manager, Investment Solutions and JSE-listed
Peregrine, currently the country"s largest single strategy hedge fund manager,
have launched a dedicated fund-of-hedge funds (FoHF) joint venture company -
Caveo Fund Solutions.
The word Caveo, meaning to "take care" refers to the rigorous processes and
monitoring technologies employed by FoHF managers in constructing and
maintaining appropriate portfolios.
While Caveo Fund Solutions is a new company, the shareholders have invested in
hedge funds for over 7 years and have built up considerable experience, risk
management infrastructure and proprietary hedge fund portfolio construction
technologies. In addition, Caveo Fund Solutions will be responsible for
managing several hundred million Rand of existing assets.
The big differentiator between Caveo Fund Solutions and other FoHF providers is
that Caveo Fund Solutions will be leveraging off the existing infrastructure of
shareholders with over R100 billion in assets under management.
"We anticipate that Caveo Fund Solutions will play a substantial role in
developing the South African fund of hedge fund industry," said Sean Melnick,
the chief executive of Peregrine.
Melnick said over the past year, Peregrine has explored the possibility of
entering the local fund-of-hedge fund market and Investment Solutions, being the
leader in the fund of fund market in South Africa was the perfect partner.
Both Investment Solutions and Peregrine believe that hedge funds will play an
increasingly important part in the construction of appropriate portfolios for
institutional investors. "Caveo Fund Solutions has been created to give due
focus to this increasingly popular area of investments," said Jonathan Hertz,
Caveo Fund Solutions newly appointed managing director and former chief
operating officer of Peregrine.
David Bacher, who was previously responsible for hedge fund investments at
Investment Solutions, has been appointed investment director of Caveo Fund
Solutions.
"Hedge funds in South Africa, which are not regulated by the Financial Services
Board, have followed international trends and increased substantially in both
numbers and assets under management over the past five years. They offer
investors access to an investment option that is designed to bring
diversification as well as reduce the volatility of an investment portfolio,"
said Bacher.
From a handful of hedge funds which were in existence in South Africa 5 years
ago, information is now available on more than 80 funds, managing approximately
R10 billion. Even though South Africa has a relatively advanced institutional
investment management industry, this figure represents far less than 1% of the
local industry, whereas internationally alternative investments account for more
than 5%.
Bacher said as a result of some of the complexities of hedge fund investing, he
believed that it was more appropriate for hedge investors to consider a fund of
hedge funds. "Fund of hedge funds blend different hedge fund strategies
together and aim to provide a more stable long-term investment return than any
of the individual funds. Furthermore, a fund-of- hedge fund portfolio has an
obligation to conduct comprehensive due diligence investigations into all
aspects of the underlying manager"s business focussing on investment,
administrative, structural and operational issues," explained Bacher
The transaction is subject to the necessary regulatory approvals (including
approval as a Financial Services Provider) and there will be no immediate impact
on earnings or net asset value for Investment Solutions and Peregrine but the
joint venture partners expect meaningful benefits to accrue to their
shareholders over time.
"We believe that our expertise in the multi-management industry combined with
Peregrine"s skills in this segment of the market will result in Caveo Fund
Solutions becoming the leading fund-of-hedge fund investment company in South
Africa," said Steven Braudo, managing director of Investment Solutions.
Caveo Fund Solutions will house both Peregrine and Investment Solutions" fund of
hedge fund initiatives and will utilise the portfolio construction,
administrative and technology skills which exist within Investment Solutions and
augment these with the hedge fund specialist knowledge that Peregrine has
developed over the past seven years.
"Investors are often attracted to hedge funds as a result of their ability to
generate absolute returns in various market conditions as well as the
diversification benefits that hedge funds provide to an investors overall
portfolio. This trend is expected to continue as investors are concerned about
having all of their investments exposed to assets that only appreciate during
upwardly trending markets," said Hertz.
While more than half the global hedge fund managers reside within the United
States, some of the largest growth in hedge fund management companies has
emanated from Asia in recent years. At the recent Hedge Funds World Africa
Conference some of the giants of the international hedge fund industry,
including Jack Schwager renowned author of the best selling Market Wizards
(1989), mentioned that much of the future growth in hedge funds was likely to
come from emerging markets such as South Africa.
According to the Hennesse Hedge Fund Advisory Group, the assets invested in the
global hedge industry have grown at an astonishing compound growth rate of 26%
per annum over the last 10 years to approximately $1 trillion. 36% of the
assets are currently managed by fund of hedge fund managers.
Date: 17/11/2005 10:59:39 AM Produced by the JSE SENS Department
