Nautilus receives approval for retail hedge fund offering
JOHANNESBURG, 25 May 2016 – Hedge fund manager Nautilus has received approval from the Financial Services Board (FSB) to offer a set of hedge fund products to the public. Nautilus, a subsidiary of the Johannesburg Stock Exchange, is one of only a handful of managers to have received approval to date, in terms of the revised legislations published last year, making it possible for retail investors to access hedge funds. These funds were previously available to professional and institutional investors only.
Nautilus has been operating as a managed account platform for the past eight years, administering a number of hedge fund portfolios in a very similar way to that of a hedge fund manager. It is the only hedge fund manager that is completely independent from hedge fund service providers or investors, giving it total autonomy and neutrality in decision-making. Nautilus was bought by the JSE in 2011 and is a wholly owned subsidiary of the stock exchange.
“We are very excited about this development and what it means for our company and the industry growth. The hedge fund industry in South Africa has tremendous scope for growth, as it is still largely underdeveloped here with only R74bn assets under management (as at end December 2015) compared to the more than R43.8trn* invested in hedge funds globally,” says Alexia Kobusch, Managing Director of Nautilus.
She believes a major reason for investors’ apparent hesitance to hedge fund exposure is misconceptions about the industry. “The main goal of a hedge fund is to manage risk in an investment portfolio. Hedge funds tend to have uncorrelated returns to the rest of the market. The FSB has created a well-regulated framework for investors to access this kind of investment in a responsible manner,” says Kobusch.
Regulation 28 of the Pension Fund Act allows for retirement funds to invest 10% of their portfolios into the hedge fund category, with 2.5% allowed for a single portfolio and 5% for a fund of hedge fund portfolio. The returns on investment in a hedge fund are taxed similarly to that of unit trusts.
Nautilus offers both retail hedge funds and qualified investor funds. “Retail hedge funds are available to the general public and have to comply with a more rigorous set of regulations. The minimum investment is R50,000 when using Nautilus. Qualified funds are offered to more sophisticated investors, where the investor is required to demonstrate a certain level of financial knowledge and skill. The minimum investment for these funds is R1 million, which is a regulatory requirement,” says Kobusch.
Nautilus has 24 portfolios available to investors, covering equities, fixed income, and commodities, as well as a blend of these asset classes through multi-strategy portfolios.
*Calculated at US$1 = ZAR15.64
Nautilus is an authorised financial services provider.
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