Kanaan Asset Managers

These are graduate financial advisors with Category II or IIA fund management licenses, the same as the fund management licenses held by the fund managers of large institutions like Old Mutual, Liberty Life, Allan Gray, etc. However, there is a vast difference between them and us. We do not manage funds in the true sense of the word as they do, and we do not see ourselves primarily as fund managers, although we are referred to as DFAs. We manage funds in Mauritius through our administrator, International Assurance (IAL) LTD; one such fund is called Equities Offshore. The other funds, as mentioned, are either funds of funds or wrap funds, which we manage by selecting funds according to the mandate of the applicable wrap fund or fund of fund. In the case of our two hedge funds of funds, we also perform appropriate due diligence for 3 months or sometimes even longer before buying them. We continually check whether the underlying funds of our funds are complying with local and international regulations.

We believe that good financial advice cannot be given properly without professional investment management. Professional financial advice for clients consists of advice regarding their immediate, intermediate, and retirement capital requirements. Immediate capital requirements cannot be calculated without a reasonable idea of the average return on clients’ savings or investments up until retirement. There are many funds with lengthy performance track records, which can give an indication of the future return of the fund. However, in the case of all these funds, we do have a problem with the well-known brand names – their fund management styles satisfy only the needs of certain clients where a 'buy-and-hold' management style is followed.

The big brand fund managers are well-known for their notion regarding investments, namely, “You cannot time the markets.” That means that when share markets crash (which happens every ±10 years in a free market), you should not cash in your investments in growth funds, just to switch back to growth funds when the market is doing well again. They argue that since nobody knows the day and the date of the crash in advance, the risk is too great that you will switch to cash too late when the market has already dropped by 20% or 40%. Since nobody knows where the lowest point of a crash will be, there is a strong possibility that you will only switch back with your cash to growth funds once the market has already grown by 20% or 40%, essentially moving backwards.

The “buy-and-hold” approach is also known as a passive fund management style or the bottom-up approach, according to which you do not sell during market crashes. The big fund managers see a crash rather as an opportunity to buy additional high-quality shares that are losing value. Investors in these types of funds usually find, a few years after a crash, once markets have recovered, that their investments are much better off than previously.

This approach, however, is not suitable for risk-averse people and those close to or already in retirement who have not saved enough to source income from stable funds like a savings account or money market accounts with low rates of return, usually after tax less inflation. Most people at retirement worldwide need to have most of their capital in growth funds, with only their emergency fund in stable funds or one year’s salary in stable funds. This presents a problem because when growth funds go down during a severe market correction or crash, sometimes by more than 60%, for many months or even years, they will start to dig into their capital.

Andre Delport, the founder of Kanaan Asset Managers, discovered that he has a good instinct for timing the big share market crashes, which he accurately predicted during the 1987 share market crash, the Far East Pacific Crash of 1998, the IT Bubble Crash, and the Credit Crunch Crash of 2008. As a result, in 2003, a group of four brokers from Durban approached him suggesting a company called Xhilirator Asset Managers Pty Ltd, through which they would have marketed Kanaan Trust's funds of funds for voluntary and compulsory contributions to other IFAs.

The success of Kanaan Asset Managers, later known as Xhilarator Asset Managers Pty Ltd, in timing the big crashes became well-known even among other brand name professional fund managers. As a result, one of the well-known fund management companies in South Africa invested R15 million of their cash flow in one of our funds of funds in 2006. By the end of 2007, just before the 2008 Credit Crunch Crash, the fund manager of Ovation Pty Ltd contacted us to inquire about our market view. We informed them that we had switched to cash, just before the 2008 Credit Crunch Crash. Because we managed to time the big crashes, our two funds of funds performed very well, for example, during the Far East Pacific Crash of 1998 when world markets crashed by more than 60%, the Kanaan fund of funds for voluntary contributions grew by 56% net of fees, and the Kanaan compulsory contribution fund of funds grew by 52% net of fees. Both funds, until the 2008 crash, had given an average rate of return of more than 15% per annum, which can be confirmed upon request.

We became aware of the possibility of the Credit Crunch Crash of 2008 already during 2002 when various economists started to warn that first world countries were allowing credit to become too easily available to the average person, to the extent that a plumber could buy a house with a credit card, as well as a second and even a third house, creating a property bubble. These economists warned that if first world countries of the so-called free market did not start to control credit, they would be forced to intervene in the share markets to protect many big companies from going bankrupt, like their political opponents, the socialists and the communists, for the first time in the history of the free markets.

7.1 An alternative method of risk management

They predicted the so-called Quantitative Easing, where first world governments would start to accrue debt to protect their markets from huge crashes, which would disturb the 10-year interest rate cycle. This made it thereafter impossible for fund managers like ourselves to time these big crashes, leading us to investigate an alternative method of risk management using hedge funds.

7.2 Fine tuning the alternative method has taken more than 10 years

However, we noticed that during the 2008 Credit Crunch crash, even hedge funds crashed worldwide, except for a few that had performed well during the previous crashes of October 1987, the Far East Pacific Crash of 1998, the IT Bubble Crash of 2000, Credit Crunch Crash of 2008, and the Ukraine Crash of 2022. However, one could not invest in most of them because the successful hedge funds tend to become too large and therefore close to new business. We had to wait for windows of opportunity when, for example, a large pension fund would withdraw from one of these hedge funds. It is only since August 1, 2021, after more than 10 years, that we managed to assemble a full range of high-quality hedge funds for our Moriah Global fund of funds. These underlying funds have had a collective Cumulative Average Rate of Return (CAR) net of fees since January 1, 2018, of 26.29%, up to March 31, 2022, with a relatively low Down Standard Deviation (DSD) of only 3.33%. However, as we could only eliminate the underperforming hedge funds during August 2021, the CAR of Moriah Global has increased to only 8.72% net of fees per annum in USD to March 31, 2022, since December 1, 2012, and in ZAR 15.08% net of fees per annum, which is also above average, as shown below in paragraph 7.2."

7.2 Moriah Global USD and ZAR

CAR (Cumulative Average rate of Return)

STD (Standard Deviation)

For more up to date information see the Moriah Global Factsheet and the Moriah Global ZAR Factsheet 

The growth of Moriah Global since August 1, 2021, is a short period, but it is nevertheless impressive, taking into account the very good growth month after month in the face of COVID-19, and even worse, the war that started in Ukraine during February 2022. Growth figures can be confirmed by the administrator of Moriah Global, IAL (International Assurance Ltd.), online at, online@ialpcc.com +230 269 4400, or https://www.international-assurance.com/contact-us),

However, the very good growth rates, as shown in paragraph 8.1 below, prior to August 1, 2021, cannot be confirmed as the names and particulars of the underlying funds are privileged business secrets.

Potential for the future:

To illustrate the realistic potential for the future of our Moriah Global Fund of Funds with its current underlying hedge funds, we included the collective growth of the current underlying funds since August 2021 in USD and ZAR under paragraph 8.1.

Below, you will see the historical growth of the underlying hedge funds of Moriah Global (acquired up to August 1, 2021), since January 1, 2018. This means that Moriah Global has not had the same growth month after month and year after year before August 2021 as shown below. This is because Moriah Global could only acquire all the above-mentioned underlying funds by August 1, 2021. The previous performances of the present underlying funds, before August 2021, starting four years ago on January 1, 2018, show what Moriah Global's CAR would have been if it could have had access to its current underlying funds since then: namely 25.52% in USD net of fees per annum, and in ZAR 32.38% per annum!

8.1 Moriah Global FoF (Potential)

Above, you will notice that in ZAR, Moriah Global has a CAR of 32.38% per annum, and for 2021, when you look at the Year-To-Date (YTD) column, it was 30.32%, even taking COVID-19 into account. When you look at the percentage per month column, you will see that for January 2022 it was 8.69%, for February 2022, 8.21%, and for March 2022, an unbelievable 20.98% in USD net of fees, even taking the war in Ukraine into account. The returns of Moriah Global FoF, as per our factsheets available under “funds” on the homepage menu, can be confirmed by our administrator IAL in Mauritius. Although the above-mentioned Moriah Global potential growth with current funds since January 1, 2018, can also be confirmed by IAL, note that IAL is not allowed to mention the names of the underlying funds to the public or other DFAs that might be in competition with us.

It is important to note that there are ups and downs. You will notice that when you click on "funds" on our homepage and then on Moriah Global, you will see on the factsheet that the fund did 21.4% in ZAR (11.70% in USD) for 2021, and by September 31, 2022, it had already grown to 79.63% (58.26% in USD). However, in USD, it depreciated for October 31, 2022, by -3.98% (-2.45% in ZAR), for November 2022 by -7.31% (-13.08% in ZAR). It nevertheless ended the year with 48.54% (38.20% in USD), but we also need a more stable hedge fund of funds for purposes of emergency or for clients who need their retirement income, called Stable Offshore FoF.

8.2 Stable Offshore FoF (Potential)

In South Africa, we created a Stable SA wrap fund that tries to compete with local savings accounts and has been doing more than 4% per annum up to March 2022, competing well with local savings accounts that have been struggling to give 3% per annum. For example, a client that needs R50,000 per month, we would invest R600,000 per annum of his money in Stable SA, from where he will draw his R50,000 per month. We will then strategically withdraw R600,000 per annum, not from his investment in Moriah Global that can fluctuate, but from his investment in Stable Offshore, which consists of hedge funds that do not aim for extraordinary returns but try to compete with offshore money markets. These underlying hedge funds have been giving collectively since January 1, 2018, an impressive 5.98% per annum in USD up to March 31, 2022, as shown in the spreadsheet below.

Above, you will see that the CAR is 5.98% with a very low Down STD of only 2.29%, and in ZAR, the CAR is 12.58%. Above, you will notice that Stable Offshore achieved 5.49% in dollars for 2021 and 14.62% in ZAR due to the Rand's depreciation, but for February -0.28% in USD, which is the second time in the history of this fund that it had a negative month.

Above, you will notice, as in the case of Moriah Global's historical growth with current funds since August 2021, we have done the same, for the same reasons as mentioned in paragraph 8.1 above. The real CAR of Stable Offshore since July 1, 2020, up to the end of April 2022, was 4.76% net of fees in USD and in ZAR 10.91% per annum net of fees, which is not very reliable due to the short period of less than 2 years since we started Stable Offshore on September 1, 2021. Because of this, we have shown you the longer-term performance record of the present underlying funds over the period of more than approximately 4 and a half years.

For more up to date information see the Stable Offshore Factsheet.

Download Stable Offshore ZAR Factsheet.

8.3 Equities Offshore FoF (Potential)

Below, you will see the spreadsheet of Equities Offshore with a very high CAR of 19.28% but a relatively low, Down STD of 6.53% up to March 31, 2022, which is unrealistic for a growth fund like this, and we expect it to be much higher in the future.

For more up to date information see the Equities Offshore Factsheet.

Download Equities Offshore ZAR Factsheet.

Our Equities Offshore, which consists of fourth revolution shares and unit trusts like Tesla of Elon Musk, sometimes grows exceptionally well, like during 2020 with 743%, but can also go badly negative, like the -11.36% for January and the -7.08% for February. It is for younger clients for the longer term as it is a buy-and-hold fund where we do not try to time the markets. We manage a range of shares like Amazon, Shopify, Visa, Berkshire of Warren Buffet, but also offshore unit trust funds that invest in these fourth revolution shares, like BNP Paribas and JP Morgan.

Above, we have shown the potential growth of Equities Offshore with current funds since August 2021 for the same reasons as mentioned in paragraph 8 above. The real Equities Offshore FoF has a short history, starting only on January 1, 2021, with a CAR over that period of -4.81% net of fees in USD.