Although seen largely as risky and speculative, hedge funds act as an ‘insurance policy’ if used appropriately
In July 2022, National Treasury published new regulations pertaining to the maximum allocation retirement funds can make to certain asset classes, including hedge funds.
Following the amendments to Regulation 28 of the Pension Funds Act in July 2022, retirement funds are allowed to allocate up to 10% of their capital to hedge funds. The maximum allocation to a single hedge fund is 2.5%, while that of a fund of hedge funds is 5%.
Previously, hedge funds were grouped together with private equity funds as an asset class.
Pros and cons
The change in allocation limits allows for retirement funds to get the full benefit that hedge funds typically offer, including…
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