Demystifying SA’s retail investment surge

You can also listen to this podcast on iono.fm here.

DUDUZILE RAMELA: South Africa’s retail-hedge fund revolution is said to be reaching its tipping point. At the end of December 2025 retail hedge funds overtook qualified investor hedge funds in total assets under management for the first time since the industry was formally regulated a decade ago. Retail funds now account for 56.6% of the R216 billion in hedge fund assets.

We speak now with Hayden Reinders, head of business development at Prescient Fund Services, and convener of the Asisa Hedge Funds Standing Committee.

Thank you very much, Hayden, for your time this morning. Looking at the flow of data from 2025, what story does it tell us?

HAYDEN REINDERS: Good morning and thank you for having me on your show. The story tells us that the evolution of hedge funds in South Africa continues to be a great success story. We’ve seen a move to investors who really are starting to understand and appreciate the value of a regulated hedge-fund product.

Read:
Why hedge funds belong in every smart investor’s portfolio
Unlocking growth: The rise of hedge funds in SA’s investment landscape
Asisa announces new standard for investment portfolios

DUDUZILE RAMELA: When hedge funds were brought under the Collective Investment Schemes Control Act framework in 2015, what was the state of play then?

HAYDEN REINDERS: There were a lot of unregulated vehicles – mostly partnership structures – and they weren’t marketed but were always attractive to high-net-worth individuals, big corporates, lots of people investing who are seeing more in the private market space and looking for full returns.

But they were mainly driven by structures that were not really governed by any form of regulation but governed more towards individuals’ due diligence requirements and allocators’ preferences. It was very much based on global best practices for hedge funds but wasn’t very accessible at the time.

DUDUZILE RAMELA: As you say, the retail category grew steadily in 2025. Retail assets crossed the threshold to become the larger half of the industry. What do we put this down to?

HAYDEN REINDERS: That’s really exciting. We’ve seen this growth over a number of years, but a lot of it is driven by the fact that your retail hedge fund base has grown out of the hedge-fund industry. Predominantly it was driven by qualified investors, so it came out of that unregulated space where, as I said, high net worths were driving it, corporates were driving it.

But what has changed in the last couple of years is that hedge funds have become more accessible and more understandable to the man in the street, a lot more accessible via platforms, and have become a lot more accessible based on knowledge share and advisors and brokers – and everybody just appreciating the value that they can bring.

Read: Regulation boosts local hedge fund industry

People were able to actually access them for a lot smaller sizes of smaller investment numbers, as well as [for] really solid performance, consistent performance, over the last couple of years.

DUDUZILE RAMELA: And the fund has delivered consistently strong results, according to the HedgeNews Africa South African Single Manager Composite. The sector delivered a median return of 15.7% in 2025.

HAYDEN REINDERS: That’s correct. So the hedge fund industry has been driven by a lot of managers who are hedge-fund managers, but a lot of them also offer your long-only or traditional unit trust vehicles.

So what’s happened is most of those are really rock solid, good fund managers; they’ve always been accessible and have always had products that crossed between ‘traditional’ and’ hedge’.

Read:
Hedge funds still flourishing locally
CIS industry restores assets to above R3trn, hedge funds boom

So it makes sense that you’ve got this highly regulated environment, the best ecosystem, the best managers with great brands out there that people know and recognise, and so they’ve more tools in the toolkit to go out and sell their products. It makes sense with the volatility in markets that we see now that the good managers continue to do well.

DUDUZILE RAMELA: And in terms of strategy, multi-strategy hedge funds attracted the strongest retail inflows, drawing R7.5 billion. What is this reflective of?

HAYDEN REINDERS: That was quite an interesting thing that we saw, because that’s been driven over the years by long shorts. I think what’s changed is most people didn’t realise that there are different types of hedge funds and so, as exposure to hedge funds has gained traction to your retail investor base, they have also now been excited by different types of hedge funds.

Long-short is really an ability to go long and short, but your fixed-income funds are another type. And then multi-strategy allows you to blend and do a few things all in one.

So I think that flexibility has opened up the market a bit more for the hedge funds and, especially in volatile times, you want to have them a little more accessible to you within the means of the regulations.

So I think that was quite an exciting development that we saw.

Read: SA insurers surpass R5trn assets milestone

DUDUZILE RAMELA: Total hedge fund assets, including Fund of Funds, now stand at R274 billion. That’s up from R217 billion a year earlier. What is this reflective of?

HAYDEN REINDERS: We’ve seen more and more people enter the space. But what we have also seen is that originally when hedge funds became regulated there were more portfolios. While there have been new participants coming in, the funds have actually performed and done well. So it’s mainly driven by performance but also by flows and new exciting managers that have consolidated in the space.

Read: How women are breaking glass ceilings through financial empowerment

As well as that, we’ve seen with the new market participants that there’s more accessibility. For example, you can have a platform solution and join a hedge fund instead of starting up your own kind of regulated platform. So the co-name platforms have contributed greatly to that success, where you can plug and play and join in.

So I think all those factors have helped benefit the growth in the total industry.

DUDUZILE RAMELA: We’ve got some regulatory developments that could shape the next chapter of the industry’s growth. Talk us through those and where you see it going.

HAYDEN REINDERS: That’s really exciting, I suppose it started [with] the key driver [being] the Budget speech that we just went through. Treasury has indicated that there will be consistency and there’ll be certainty around how your retail hedge funds are taxed in line with your traditional unit trusts, so that that is very positive engagement and talks well to the motif of saving in South Africa.

Read/Listen:
Difficulties with the new proposed taxation of unit trusts
Asisa says CIS tax proposals must focus on boosting savings
Everest Wealth’s 65% hedge fund return: Too good to be true?

And then from an actual regulatory point of view, what the funds can invest in and how they can be consistent, that is driven by Board Notice 90. And the Financial Sector Conduct Authority has also indicated that it will be engaging with the industry over the coming year to align Board Notice 90 across retail hedge funds and your traditional funds.

So both developments from a tax and regulation point of view are very positive for the continual savings industry in South Africa.

DUDUZILE RAMELA: Hayden, hedge funds still represent a relatively small share of total assets under management across the broader South African savings industry. What does this tell us? Is there room for more growth?

HAYDEN REINDERS: That is always the thing. The hedge funds really do well, but it’s not necessarily a story everyone always hears. There has been continual growth and continual traction, but the hedge-fund industry continues to be very small.

Read: Was this SA’s best fund last year?

So with accessibility being increased [with] performance and more visibility, I really do hope that the industry continues to grow. And based on how it has, I hope it continues that trend.

DUDUZILE RAMELA: Thank you so much for your contribution this morning. Hayden Reinders is head of business development at Prescient Fund Services and convener of the Asisa Hedge Funds Standing Committee.

Listen to the full MoneywebNOW podcast every weekday morning here.

#Demystifying #SAs #retail #investment #surge