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22 NOVEMBER 2017
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HEDGE FOF NEWS – 22 NOVEMBER 2017

 

It is true that the returns of Kanaan Hedge Fof (YTD) year to date is disappointing. The return for October 2017, nett of fees, only 0.78%. However, investors must remember the original reason why they had invested in a Hedge Fund of funds. It is of course to prevent  that you have all your eggs in one basket with the main asset class equities, namely unit trust funds of funds, shares, pension funds

 

You may recall that Kanaan Hedge FoF does not correlate with the main asset class, equities.

 

When you look at the graphic analyses of the fund below, over the past 12 years, you will see that the dark blue graph, which represents the hedge fund of funds, did not crash during 2008 Credit crunch Crash, when equities crashed with more than 51% for that year. We were not in time to switch to cash  in the case of our Kanaan Balanced FoF, which crashed with more than 8%.

Here you will notice that Hedge FoF crashed during 2013 when equities moved up. However, even taking the bad performance of the past two years into account, above you will see that nett of all fees, the annualised return since inception is still 11.21%, far above the purple line, which represents inflations and almost three times better that an investment in ABSA’s Money Market, which is represented by the green line.

 

Please also remember that Unit Trust Fund of Funds price daily, because of which the reaction to good news is very quick there, where Hedge funds price only once per month and some of the underlying funds, in fact, has quarterly strategies and longer. The slow turn around have been discussed with the various underlying funds of Kanaan Hedge FoF and all of them have convinced us that they are already at the turning point.

 

See below four of the underlying funds of Kanaan Hedge FoF, which clearly shows how they have been turning around since 1 October 2017.

Here you will notice that 36One has already turned around with 5.16% for October 2017 and the estimate for the first two weeks of November 2017 is already at 1.2%.

 

Steyn Capital did 1.17% during October 2017 and where Polar Star fund had a very bad -5.31% for September 2017 and -1.2% for October 2017, it’s estimate for the first two weeks in November 2017 is already at 3.25%. We see a similar situation with the other funds as well.

 

Friendly greetings

 

Andre Delport

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