Funds Winning With South Africa
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The year-long run up in gold prices and the tanking dollar have been the wind beneath the wings of the two top performing multistrategy fund of funds, the $10 million Iconic Matador and the $15.3 million Iconic Absolute Return Funds. The two funds are up 37.73% and 28.67% this year, versus the Hedgefund.net multistrategy fund-of-funds index return of 5.36%. Moreover, they far outpace the next closest fund, the Liongate MultiStrategy fund’s return of 17.09%.
The two Cape Town, South Africa based funds, founded in May and April of last year, respectively, invest in exclusively South African hedge funds. Although which hedge-fund managers the fund is invested with could not be determined – the fund’s portfolio managers did not return e-mails – the fund’s profile on the Hedgefund.net index mentions investments in long-short equity managers. Given the relatively small size of the South African capital markets – hedge-fund standbys like asset-backed and mortgage bonds are in their infancy and the convertible bond market is relatively illiquid – the funds are almost by default likely to have a good deal of their investments in managers playing the South African currency and stock markets.
This has been a winning bet this year. The gold producer and exporter heavy Johannesburg Stock Index – the nation’s primary stock market – has increased 17% from January after conversion to the dollar. The resources component of the index is up 19%. By contrast, the benchmark Standard and Poor’s 500 index is down 1% through the end of November. Given the continued weakness of the dollar versus other currencies – largely driven by continued American budget deficits and the Federal Reserve’s interest rate increases – gold is likely to remain in its 15-month bull market. In addition, the specter of American inflation looms large, with the consumer price index nearly doubling year-over-year, to 2.6% from 1.3%.
Another way the Iconic fund-of-funds likely made money, according to the Hedgefund.net profile, is investing in hedge fund managers who play the currency markets, most likely via futures. The South African currency – the rand – has appreciated nearly 40% against the dollar over the past two years, driven by the global bull-market in gold and, to a lesser extent, diamonds.