The South African hedge fund industry experienced a remarkable 17% growth in assets under management in 2025, driven by retail investor inflows and shifting preferences towards multi-strategy portfolios.
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The South African hedge fund industry closed 2025 on a strong note, with assets under management rising to R216 billion, excluding fund of funds. This marked a 17% increase from R185 billion at the end of 2024, according to annual statistics released by the Association for Savings and Investment South Africa (Asisa).
The assets were spread across 219 hedge funds managed by 13 companies with hedge fund schemes.
Hayden Reinders, convenor of the Asisa Hedge Funds Standing Committee, says net inflows of R6 billion contributed to the growth, but the real driver was market performance. He highlights a significant shift in 2025: “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.”
According to Asisa, when hedge funds were regulated a decade ago, they were divided into two categories: SA Retail Hedge Funds and SA Qualified Investor Hedge Funds. For most of that period, qualified investor funds dominated, ending 2024 with 56% of assets. Retail hedge funds, however, are tightly regulated in terms of risk and investment scope, and are accessible to investors who can afford a minimum lump sum of R50 000. Qualified investor funds, by contrast, require a minimum of R1 million and are aimed at investors with a deeper understanding of hedge fund strategies and risks.
Reinders notes that retail investors drove the bulk of inflows in 2025, with retail hedge funds recording R9.1 billion in net inflows. Qualified investor hedge funds, meanwhile, saw net outflows of R4.3 billion.
Asisa says investor preferences also shifted. Hedge funds are classified by strategy: Long-Short Equity, Multi-Strategy, Fixed Income, and Other. Historically, long-short equity portfolios were the most popular, but in 2025, investors leaned towards multi-strategy portfolios. Retail long-short equity hedge funds recorded net outflows of R1.7 billion, while qualified investor long-short equity funds saw outflows of R5.6 billion.
Multi-strategy hedge funds, which blend various asset classes and strategies, attracted record inflows of R7.5 billion from retail investors and R1.1 billion from qualified investors. Retail fixed income hedge funds also drew R3.3 billion in net inflows, while flows into the retail “Other” category were flat. In the qualified investor space, fixed income hedge funds reported modest inflows of R226 million, while the “Other” category saw outflows of R46 million, it says.
Looking ahead, Asisa says, the National Treasury’s recent Budget Review acknowledged that collective investment schemes and retail hedge funds remain well-regulated and important for savings. Revised proposals on taxation are expected to encourage savings and provide greater certainty. Reinders says this is likely to benefit retail hedge funds and encourage further participation. The Treasury also indicated that qualified investor hedge funds will be considered separately in tax regime engagements, with further industry consultation planned.
“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,” says Reinders.
The hedge fund industry enters 2026 with momentum, buoyed by strong retail inflows, evolving investor preferences, and the promise of regulatory clarity.
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