The South African hedge fund industry concluded 2025 with assets under management of R216 billion (excluding fund of funds), a 17% increase from R185 billion at the end of 2024.
The annual hedge fund statistics released by the Association for Savings and Investment South Africa (ASISA) show that these assets were invested in 219 hedge funds managed by 13 management companies with hedge fund schemes.
Hayden Reinders, convenor of the ASISA Hedge Funds Standing Committee, says while net inflows of R6 billion for the 12 months to the end of December 2025 contributed to the growth in assets under management, the main driver was market performance.
Reinders says a noteworthy development in 2025 was the South African Retail Hedge Funds category overtaking the South African Qualified Investor Hedge Funds category in size, with 56.6% of assets under management in retail hedge fund portfolios at the end of December 2025.
When South African (SA) hedge funds were regulated 10 years ago, they were categorised as either SA Retail Hedge Funds or SA Qualified Investor Hedge Funds. From 2015 through the end of 2024, the SA Qualified Investor Hedge Funds category held the largest share of assets, ending 2024 with 56%.
According to Reinders, retail investors contributed the bulk of the hedge fund industry’s net inflows in 2025, with the SA Retail Hedge Funds category recording R9.1 billion in net inflows. SA Qualified Investor Hedge Funds, on the other hand, recorded net outflows of R4.3 billion.
Investor trends
SA Retail Hedge Funds and SA Qualified Investor Hedge Funds are classified by investment strategy: Long-Short Equity, Multi-Strategy, Fixed Income, and Other.
Reinders says historically, long-short equity portfolios have been firm favourites with both retail and qualified investors. In 2025, however, hedge fund investors preferred Multi-Strategy portfolios over the other classifications.
Reinders reports that SA Retail Long Short Equity Hedge Funds recorded net outflows of R1.7 billion in 2025, while their SA Qualified Investor counterparts reported significant net outflows of R5.6 billion. Long Short Equity Hedge Funds are portfolios that predominantly generate returns by pairing long equity positions with short selling to benefit from both price rises and declines.
SA Multi-Strategy Hedge Funds attracted record net inflows of R7.5 billion from retail investors and R1.1 billion in qualified money. Multi-Strategy Hedge Funds are portfolios that do not rely on a single asset class to generate investment opportunities but instead blend various strategies and asset classes with no single asset class dominating over time.
SA Retail Fixed Income Hedge Funds attracted net inflows of R3.3 billion. These portfolios invest in instruments and derivatives sensitive to movements in the interest rate market. Flows into the SA Retail Other Hedge Fund category were flat. These portfolios apply strategies that do not fit into the other classification groupings.
Reinders notes that in the qualified investor space, SA Fixed Income Hedge Funds reported net inflows of only R226 million, while SA Other reported net outflows of R46 million.
|
Net flows |
||
|
SA Retail Hedge Funds |
SA Qualified Investor Hedge Funds | |
| SA Long Short Equity | -R1.7 billion | -R5.6 billion |
| SA Fixed Income | R3.3 billion | R226 million |
| SA Multi-Strategy | R7.5 billion | R1.1 billion |
| SA Other | R10 million | -R46 million |
| Total | R9.1 billion |
-R4.3 billion |
The outlook for 2026
The National Treasury, in the recent Budget Review, acknowledged that collective investment schemes (CIS) and retail hedge funds remain well-regulated and an important avenue for savings. Revised proposals on the taxation of these portfolios would therefore aim to encourage savings and to provide tax certainty. Reinders says while details have not yet been released, this announcement is likely to be good news for SA Retail Hedge Funds and likely to encourage retail investors to continue including hedge funds in their portfolios.
The National Treasury also indicated that SA Qualified Investor Hedge Funds will be considered separately from the proposed CIS tax regime engagements and amendments around CIS and retail hedge funds. According to Reinders, further engagement with the industry, as intended by the National Treasury, will contribute to much-needed certainty.
“We are also optimistic that the Financial Sector Conduct Authority will resume its review of Board Notice 90. In its current form, BN90 prevents long-only unit trust portfolios from investing in hedge funds even though they are also regulated as collective investment schemes, and future engagement may also allow further investment into retail hedge funds, which would be welcomed by the industry.”
