South Africa’s Amplify Investment Partners has expanded its hedge fund suite with the launch of two new retail investor-focused funds – the Amplify SCI Property Retail Hedge Fund, and the Amplify SCI Active Equity Retail Hedge Fund, according to a report by CityWire.
The fund’s which debuted in February and November last year, respectively, bring the firm’s total hedge fund count to nine.
According to Wade Witbooi, Head of Amplify, these new offerings underscore the firm’s commitment to uncovering unique investment opportunities and delivering diversified, risk-adjusted returns for investors.
With the introduction of these funds, Amplify’s assets under management (AUM) have surged from ZAR46.7 billion at the end of 2023 to ZARR62 billion.
The Active Equity Retail Hedge Fund, which was formerly known as the Amplify SCI Multi-Strategy Retail Hedge Fund, has transitioned from a multi-strategy approach to a long-short equity hedge fund, now managed by AG Capital, which replaced Obsidian Capital. AG Capital is jointly owned by Anchor Group and its own management team.
The newly launched Property Retail Hedge Fund is managed by property boutique Catalyst Fund Managers, which oversees ZAR27bn in AUM, including over ZAR1bn in alternative listed real estate investments across South African and global hedge funds.
The fund follows a long-short variable-bias strategy, focusing on both local and global listed real estate. Catalyst uses a discounted cash flow approach adjusted with a bond hurdle rate to identify relative value opportunities, complemented by opportunistic trades including: discounted vendor placements; merger or takeover arbitrage; corporate actions like IPOs; secondary offerings; and scrip dividends.
According to Catalyst portfolio manager Marcus Erlank, the fund prioritises risk-adjusted returns, considering factors such as earnings stability, real estate portfolio quality, capital structure, and management strength.
Amplify believes that listed real estate remains an under-researched asset class, offering arbitrage and mis-pricing opportunities. The fund seeks to deliver annualised returns of 12% to 15% over three to five years, with low correlation to broader markets.
The fund’s portfolio allocation is expected to be one-third in local listed property, one-third in global listed property, and one-third in cash or equivalents.
The Amplify SCI Active Equity Retail Hedge Fund takes a momentum-driven approach with a fundamental overlay, primarily investing in South Africa’s top 40 equities with a long bias.
According to AG Capital portfolio manager Richard Arnesen, the fund avoids overcrowded trades and focuses on generating returns irrespective of market direction. Its core objectives include: capital preservation; minimising drawdowns; and delivering consistent risk-adjusted returns.
The fund maintains a high-conviction, concentrated portfolio of 15 to 20 positions, leveraging an extensive risk management toolbox.
AG Capital’s Rainbow FR Retail Hedge Fund, which employs the same team, strategy, and process, has delivered an annualised five-year return of 18.81%, outperforming the JSE/FTSE All Share Index’s (Alsi) 13.1%, with a smaller maximum drawdown of 6.5% versus Alsi’s 21.4%.
