In the ever-changing world of investment, Hedge Funds have emerged as a strong defensive tool. Recent factors, including increased accessibility and a fluctuating equity landscape, have reignited interest in hedge funds. This resurgence is prompting investors to reconsider their gameplans and contemplate integrating Hedge Funds into their strategies.
Strong performance through unique strategies
Amplify has been at the forefront of this Hedge Fund resurgence. In just under four years, it has seen its hedge fund assets grow from R1.4 billion to an impressive R4.5 billion. The core internal has attributed this success to the strong performance and unique strategies offered by their Hedge Funds.
The team emphasises the importance of blending Hedge Funds in a portfolio, as it can help mitigate many of the risks associated with them. Amplify’s range of funds caters to a spectrum of risk appetites, from cautious to aggressive, spanning across long-short equity, fixed income, and multi-asset strategies. This diverse offering transforms Amplify into a one-stop shop for investors seeking to safeguard their portfolios.
These funds employ distinct strategies, target various segments of the yield curve, and maintain low correlation with each other, making them ideal tools for blending. In this way, hedge funds serve as the defensive linchpin that shields portfolios from market volatility.
Safeguarding portfolios in difficult markets
In a world where market volatility seems to be the norm, hedge funds are increasingly providing significant protection. Many investors anticipated rampant inflation and looming recession in global markets not long ago, only to find themselves swiftly revising their strategies. Managing risks has become a formidable challenge for Fund Managers, given the growing trend of geopolitical events and the fluctuation of inflation, interest rates, and economic growth.
Hedge Funds offer a smoother ride through these turbulent times. Integrating Hedge Funds into a portfolio grants investors exposure to returns that are uncorrelated with traditional equity or bond holdings while concurrently reducing risk. With the flexibility to take both long and short positions and employ derivatives, Hedge Fund Managers possess the extra tools necessary to enhance defensive play to worthwhile ends.
The right, cautious blend
Amplify’s Hedge Fund range encompasses a cautious selection of four fixed income funds, along with a market-neutral fund with low correlation not only with each other but also with major market indices like the ALSI and ALBI. This makes Amplify’s Hedge Funds a perfect complement to a traditional portfolio.
The cautious blend offers less risk than the ASISA MA Low Equity category, while essentially doubling the returns. It has consistently outperformed benchmarks like CPI plus 3% and plus 4% and has experienced significantly fewer drawdowns than the low and medium equity category averages.
By reducing portfolio volatility and mitigating substantial drawdowns, investors employing Hedge Funds need to exert significantly less effort than those who suffer substantial losses. In essence, they are winning by not losing, which is a worthwhile strategy indeed.