Old Mutual Multi-Managers has been managing a hedge fund of funds for institutional clients for almost 20 years. It has won numerous accolades, including awards for the Best Hedge Fund of Funds in various categories for six years running between 2018 and 2023, at the annual Hedge News Africa Awards.
Building on this success, Old Mutual Multi-Managers recently launched the Old Mutual Multi-Managers Diversified RI Hedge Fund of Funds, a retail hedge fund of funds. This new offering aims to make hedge fund investments accessible to retail investors, providing them with the opportunity to benefit from the same robust investment strategies and expertise that have driven the success of Old Mutual Multi-Managers’ funds.
PROVEN AWARD-WINNING – Old Mutual Multi-Managers have been managing hedge fund solutions for almost 20 years, mainly for institutional investors. Over this time, they have built a proven track record and won numerous industry awards. They have been recognised at the Hedge News Africa Awards every year since 2013, and most recently named Best Fund of Hedge Funds over 5 years on a risk-adjusted basis in 2024.
VALUE FOR MONEY – Old Mutual Multi-Managers have strong relationships and are able to negotiate cheaper rates with the underlying hedge fund managers.
ASYMMETRIC RETURNS – This means investment outcomes where the upside potential (potential for profit) is greater than the downside risk (potential for loss). The fund offers higher returns with lower volatility than some of the most popular hedge funds. More importantly the fund has high returns and less volatility than the SWIX.
SUITABLE FOR LIVING ANNUITIES – The drawdowns are also much lower than that of some of the popular Hedge funds. This makes the fund an option to include in a living annuity solution to manage and limit the sequence risk and preserve capital for clients. Determining the optimum allocation to hedge funds in a living annuity solution for South African investors involves balancing the need for downside protection with the goal of achieving better returns. The client need for diversification, risk tolerance, market conditions and their investment goals will ultimately determine the allocation. While there is no one-size-fits-all answer, a balanced approach typically involves allocating around 5% to 15% of the portfolio to hedge funds. This can provide downside protection and enhance returns without significantly increasing risk. The Old Mutual Multi-Managers Discretionary Fund Manager team currently offers a range of “off the shelf” model portfolios with an allocation to hedge funds suitable for both pre- and post-retirement clients.
BLENDING OF MANAGERS DONE BY OUR INVESTMENT EXPERTS – Using Old Mutual Multi-Managers Fund of Hedge Fund assists financial planners to access a diversified blend of hedge funds without trying to blend the various hedge fund strategies and managers themselves. An intimate understanding of the various hedge strategies is needed and how they behave in different market conditions to be able to blend different managers effectively. Our investment team of experts follows a rigorous quantitative and qualitative screening process to ensure that the blend of managers will be able to deliver strong, uncorrelated returns with sufficient risk management and downside protection.
THE FUND OBJECTIVE
The fund has a moderate risk profile with a focus on capital preservation, while targeting asymmetric returns – maximising risk while minimising downside risk. The return target is STEFI plus 4% over rolling 3-year periods. We focus on long-term stability and maintaining a low visibility to monthly returns, ensuring that investors benefit from a strategic approach designed for steady growth with an emphasis on minimising risk.
THE UNDERLYING MANAGERS
Through our hedge fund, financial planners will have access to five underlying managers with proven track records and uncorrelated investment returns, especially in down markets.
- MarbleRock – Fixed income and commodities manager providing exposure to global and local fixed income, currencies and select commodities. Managed by an experienced team who use a top-down approach across asset classes globally for diversified, uncorrelated returns.
- All Weather Capital – Market neutral strategy with 20-30% directional exposure. The fund aims to profit from both rising and falling prices in one or more markets while minimising specific market risks by employing strategies such as long positions, pair trades, special opportunities and shorts. They maintain a neutral position across sectors, industries and countries.
- 36One Retail HF - is a single-strategy, equity long/short hedge fund with a moderate net equity bias. The fund attempts to exploit differences in stock prices by being long and short in closely related stocks that have similar characteristics.
- Peregrine HG – Follows a proven investment approach with consistent results. The fund is a multi-strategy hedge fund with an equity bias - The fund managers look for undervalued securities that offer strong upside potential over the medium to longer term. They maintain a high net exposure to the market with a long bias.
- Oystercatcher RCIS long/short HF – Also a long/short equity fund, but more aggressive than 36One as it aims to outperform equity returns and benchmarked against the All share index (ALSI). The fund targets primary growth stocks with high growth potential and allocates capital in many independent appropriately sized positions (no concentrated portfolios). Since this is a more aggressive strategy, Old Mutual Multi-Managers tend to have a lower allocation than the rest of the managers.
WHAT ARE THE PRIMARY OBJECTIVES AND BENEFITS?
The primary objectives of investing in a hedge fund are:
- Absolute Returns and Better Protection: Hedge funds aim to generate positive returns regardless of market conditions. They are designed to deliver consistent performance, even in bear markets.
- Diversification: By employing a variety of strategies, hedge funds can provide diversification benefits to an investor's portfolio. This reduces the overall risk and can improve the risk-adjusted return profile of a portfolio.
- Access to Advanced Strategies: Hedge funds use sophisticated investment techniques and strategies that are not typically available to retail investors. These can include arbitrage, global macro, long/short equity, event-driven, and more.
- Potential for High Returns through Risk-Adjusted Performance: Hedge funds have the potential to deliver higher returns compared to traditional investment vehicles due to their flexibility and access to a broad range of investment opportunities.
However, it is important to note that investing in hedge funds also comes with higher risks, higher fees, and less liquidity compared to other investment options.
WHAT INVESTMENT VEHICLES IS IT AVAILABLE ON?
This fund will be available on:
- Old Mutual Wealth Life Wrapped Investment
- Old Mutual Wealth Retirement Annuity Investment
- Old Mutual Wealth Preservation Investments