The founding partner of Fairtree Capital, Andre Malan, co-managed the first equity market neutral hedge fund in South Africa from 1998 to 2003, before launching the Fairtree Market Neutral Fund in November 2003, which was essentially the genesis of Fairtree Capital. After a management buyout, Fairtree Capital (Pty) Ltd was established in 2006.
Q: Tell us about Fairtree Capital’s history.
A: On the back of the successes of a market neutral strategy, Fairtree Capital leveraged the investment and risk management skills in the business across other equity strategies and asset classes. This resulted in a product portfolio that includes a number of different equity, credit, interest rate, volatility, commodity and multi asset mandates. Fairtree’s top quartile investment skill set is clustered around specialist fund management capabilities, in which portfolio managers can fully express their investment views. Over the past few years, Fairtree has successfully launched long-only mandates in equities, credit and multi asset absolute return strategies, attracting capital from a range of South African and global institutional investors. Fairtree Capital currently manages R22 billion on behalf of our clients, with our largest single investor being the Norwegian Sovereign Wealth Fund, the largest state-owned fund in the world. Our business is built on three core values:
product integrity, excellence and growth.
These form an integral part of our investment philosophy and approach, by ensuring that we deliver on our promise to investors, execute everything in excellence and focus on growing our investor capital while creating an environment for our staff to grow and prosper individually.
Q: What makes Fairtree’s product offering unique?
A: As an owner-managed asset manager, we are structured to encourage independent thinking and we truly believe that different perspectives create unique results for our clients. We have purposefully expanded Fairtree to offer a wide range of complementary strategies from award-winning hedge funds and multi-strategy funds through to traditional long-only portfolios and recently we launched two private equity ventures.
The breadth and depth of our solution set is unique and that, coupled with our focus on building lasting client partnerships, enables us to build personalised client solutions that meet and hopefully exceed our clients’ needs.
Fairtree Capital’s institutional grade operational, risk, and research infrastructure creates an environment for skilled portfolio managers to focus all their attention on managing our clients’ capital, without the typical distractions of a corporate environment.
Q: What impact do you think the recent hedge fund regulation will have on the local hedge fund industry and how has Fairtree Capital prepared for this?
A: We are excited about the prospect that hedge fund portfolios will now be formally regulated. This move will hopefully contribute to debunking some of the myths surrounding hedge funds, and ultimately result in greater investor understanding and confidence. We hope that these regulations will encourage more investors to consider alternative investments and hedge funds in particular within their asset allocation. As a business, the impact of the regulations will be minimal.
We have always run fairly conservative products which will fit quite easily into the new regulatory framework. We have decided to partner with IDS as a hosting MANCO and will, therefore, co-name all of our hedge funds on their platform.
Q: What investment approach do you favour and why?
A: Fairtree Capital’s investment philosophy is to construct robust portfolios, which aim to maximise returns for our clients while exhibiting a relatively low level of volatility in returns. To generate these superior risk-adjusted returns one needs intellectual capital, a robust investment process, team work and focus. At Fairtree, we believe that investing is ultimately an art, which requires the discipline of steadily applying a successful investment process over time. A combined investment team of 36 investment professionals is responsible for deploying the investment process across a range of products. A successful investment process seeks to find the balance between a cross-pollination of ideas and absolute independent thinking. We believe that a rigid bureaucratic decision-making process hampers one’s ability to maximise investor returns in an increasingly volatile world.