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How the brave and the bold can hedge their bets.

Posted On Friday, 06 December 2002 10:01 Published by eProp Commercial Property News
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A new fund for for those with the right appetite.

Michael BermansCorpcapital is about to launch a real estate hedge fund for SA investors. It is the first alternative investment market in SA property and and one of a handful of such funds in the world.

Fund manager Michael Bermans trading strategies include: long or short trading based on fundamental research and technical analysis; spread trading, say between the property loan stock sector and government debt like the RSA 153; and relative trades based on one listed fund outperforming another.

There are also opportunities in dividend stripping in the run-up to distribution payments and arbitrage, particularly as we enter a period of consolidation in the listed property sector, says Berman.

The other such funds are in the US. Berman says the Corpcapital fund places more emphasis on combining hedging techniques with theory rather than pure hedging.

He has been developing the fund this year with cash supplied by Corpcapital geared nine times. This means R1m cash becomes a R10m investment.

We have had some losses, admits Berman. But overall returns have been high and have improved over the months. For instance, annualised returns since inception of the fund in April have been 117%, against 4,61% for the listed real estate sector.

Berman must report daily on performance to Corpcapital directors because of the gearing and high risk of the fund.

The real estate hedge fund adds a fourth string to Corpcapitals property bow, along with listed funds ApexHi, Hyprop and Redefine.

It will be open from early next year for brave investors with a minimum of R1m. Describing it as an informed risk rather than a high risk, Mike Aitken, director of property fund manager Corovest, says the fund will probably attract the sort who understand the principles of such a fund and are prepared to take that risk.

He adds: Eventually, when the hedge fund has developed a track record, the established property funds might also invest.

Last modified on Friday, 25 April 2014 18:29

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