February 2015

Kanaan Fund of Hedge Funds - More Good News

We have emphasized the importance of diversification on numerous occasions: Not only in the sub-categories of the main asset classes, equities, but also amongst all 4 of the important main asset classes, more or less equally -

1. Equities

2. Alternative Assets (Hedge Funds)

3. Property

4. Offshore Assets

Some of our clients have been “mislead” by financial advisors, who said that it is illegal to invest in Hedge Funds, or that Hedge Funds are high-risk investments. I found these remarks quite surprising. The first thing an IFA should do when he thinks that I client was invested in an illegal or pyramid scheme, by another IFA, is to immediately check whether the IFA has the required licence; at least a Cat I, to advise and sell financial products. Anyone can easily check it on the FSB’s website. Had IFA’s followed above mentioned procedure they would have noted that not only do we have a Cat I license to advise and sell products, but we also have a Cat II license, which authorises us to manage unit trust funds and a Cat IIA license, which further authorises us to manage Hedge Fund of Funds.

In South Africa, there are more than 14 000 Financial Advisors, approximately only 300 of these financial advisors have Cat II licenses, while only approximately 50 have Cat IIA licenses.

The Kanaan Fund of Hedge Funds which we manage, had another great month. The growth for January was 2.24%, which is in-line with our higher growth expectations for 2015.

See attached hereto a comparison of the performances of the 44 Fund of Hedge Funds in South Africa, on pg. 27 of the Hedge News Africa magazine. You will notice that the Kanaan Fund of Hedge Funds came 3^rd over the 3 month period, 2^nd of the 6 month period, 3^rd over the 12^th month period and 4^th over the annualised compound period, since inception, which is 15.93% over a ten year period.