The South African hedge fund industry has marked a banner year in 2024, with assets under management (AUM) growing by 34%, reaching ZAR185.1bn as of December 2024 – a significant leap from ZAR138bn seen at the end of 2023, according to a report by CityWire.
This growth comes alongside a record-breaking milestone: the industry saw net inflows surpassing ZAR10bn for the first time, totalling ZAR13.3bn in 2024, more than double the ZARR6.2bn seen in 2023. Retail investors were the driving force behind these robust inflows, underscoring growing confidence in hedge funds as an essential part of investment portfolios.
Speaking at a recent presentation, Hayden Reinders, convenor of the Asisa Hedge Fund Standing Committee, described 2024 as a “phenomenal” year for asset growth, noting that it was the best year recorded in terms of both inflows and performance.
“The retail hedge funds and platforms have seen significant investment by the stakeholders, especially hedge fund managers,” said Reinders. “The industry’s efforts to align hedge funds with daily investment models and platforms have been fruitful.”
South Africa became the world’s first country to implement comprehensive hedge fund regulations in 2015, offering two distinct categories: retail hedge funds and qualified investor hedge funds. Retail hedge funds are subject to stringent regulations regarding investment risks and are open to all investors with a minimum lump sum of ZAR50,000. On the other hand, qualified investor hedge funds require a minimum investment of ZAR1m, targeting investors with a strong understanding of hedge fund strategies and risks.
In 2024, South African retail hedge funds saw a surge in interest, with net inflows of ZAR11.8bn, while qualified investor hedge funds experienced net outflows of ZAR70m.
The most popular hedge fund strategy among both retail and qualified investors was long-short equity, attracting ZAR6.16bn in net inflows from retail investors, with qualified investors contributing ZAR479m.
Multi-strategy funds ranked second, attracting ZAR4bn in net retail inflows and ZAR7.2m from qualified investors.
