Here in the United States, you don't hear about Africa too often when it concerns the hedge fund world. But a study by PerTrac and HedgeNews Africa contends that African Fund of Funds could provide a safe haven for investors in an increasingly volatile landscape.
According to research conducted over the last two years, PerTrac and HedgeNews Africa said that African Fund of Funds not only outperformed the broader market during down periods between July 2009 and June 2011, they also had less correlated and volatile returns.
Such funds outpaced the Standard & Poor's Total Return Index in down markets by 42.93 percent, the study said, and bested the MSCI EAFE Net Index by 38.55 percent in similar conditions. The MSCI EAFE Net Index is a benchmark used by U.S. investors to measure international equity performance.
HedgeNews Africa added that its index of monthly rate of return ranged between negative 2 percent and 2 percent over that two-year period. Over that timeframe, the S&P 500 TR and MSCI EAFE-Net saw their returns range between negative 10 and 10 percent.
"This coupled with the fact that the composite experienced more profitable periods during this two-year period than either the S&P 500 TR or the MSCI EAFE-Net, indicates a different risk profile for the composite and perhaps one that is less correlated to the movements of the broad market," the study said. As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio