After delivering a strong return for 2019, Momentum Investments received the coveted award for the best fund of hedge fund in the 2019 Fund of Hedge Funds category for its Momentum RCIS ZAR Diversified Qualified Investor Fund of Hedge Fund at the 2019 HedgeNews Africa Awards held in Cape Town last week.
Now in its 11th year, the prestigious industry event recognises hedge fund managers that have steered through variable markets to deliver convincing gains. The awards are based on risk-adjusted returns for the 2019 calendar year, using an established methodology that comprises net returns and Sharpe ratio as a measure of volatility.
The Momentum RCIS ZAR Diversified QI Fund of Hedge Fund is a diversified multi-strategy hedge fund targeting a cash-plus return objective. Portfolio manager, Kamini Naidoo, says that the fund was constructed using an outcome-based investing philosophy.
“The focus is on providing an enhanced risk-adjusted return achieved through accessing alternative risk premia. The intent is to provide the investor with diversification and an uncorrelated alpha stream to that of traditional investment strategies. The award is testament to the benefit of the strategy, in uncertain and complicated markets” says Naidoo.
Hedge funds can be a strategic addition to a portfolio for those looking to access a diversifying and risk-reducing strategy due to their ability to preserve capital in periods of market stress. It also has a historically low correlation with traditional equities and bonds. Hedge funds shouldn’t be seen as a separate asset class, but should rather be considered in the context of the sources of their risk and returns. Therefore, by balancing the hedge fund allocation with exposure to traditional investments, investors can be more resilient in any set of market conditions.
Momentum Investments’ philosophy involves targeting a specific return over a chosen period and the company defines risk as the likelihood that the investment fund won’t deliver the return it’s targeting. It may sound like semantics. However, it means risk doesn’t have to be reduced to three simple definitions of ‘low’, ‘medium’ or ‘high’ anymore, but can be described in sync with clients’ goals: Will they or won’t they achieve their goal and, if they miss it, by how much will it be?
This outcome-based investing approach, has gained ground in countries like the UK and the US. Momentum Investments has followed this approach with its institutional clients, such as retirement funds, since 2011 and now individuals are also benefitting greatly from the skills and expertise the company gained with this approach.