From the fringe to the forefront

South African investors are increasingly opening their portfolios to a broader spectrum of assets, including alternatives – a category once viewed as niche, opaque and reserved for institutions. As global trends influence local behaviour, interest in alternative investments is on the rise, with growing emphasis on diversification, risk mitigation and new sources of return.

According to Wade Witbooi, Managing Director at Amplify Investment Partners, the appetite for alternatives locally is starting to mirror developments seen in global markets. “In the global investment landscape, there is increasing interest in alternative asset classes – not purely because they reduce volatility through different pricing mechanisms, but because they offer additional sources of returns,” he says.

Hedge funds gain ground

One segment of the alternatives market gaining traction in South Africa is hedge funds. Amplify, which has deep experience in this space, has witnessed increasing net inflows and greater accessibility for investors.

“We’ve seen a notable shift in the local market. Hedge funds are no longer as elusive as they once seemed,” says Witbooi. “Fee structures and fund formats have evolved, and access via retail-friendly structures has improved. As managers continue to demonstrate value through their investment styles, we expect this trend to persist.” 

This evolution is being supported by regulatory changes and technological improvements, which make hedge funds more available on retail platforms. Yet, awareness and education remain barriers.

From boutique to mainstream: A familiar journey

Much like the evolution of boutique managers over the past decade, alternatives are slowly moving from the periphery toward the core of investors’ portfolios. “Ten years ago, boutique asset managers were considered risky or unconventional. Today, many of them are central to investors’ strategies. Alternatives are on a similar path,” notes Witbooi.

He adds that the hesitation from investors isn’t necessarily due to product shortcomings. “It’s about comfort and understanding. Alternatives introduce nuances to portfolio construction, and investors naturally take time to build trust in new ideas.”

Amplify’s approach to alternatives

Amplify Investment Partners has positioned itself as an innovative asset manager focused on bringing high-quality, differentiated investment opportunities to market. Drawing on the institutional research capabilities of Sanlam Multi Managers, Amplify’s model blends deep industry expertise with a commitment to accessible investing.

“While we focus strongly on hedge funds, our broader mandate includes uncovering and partnering with skilled asset managers across alternative strategies,” says Witbooi. “What sets us apart is our track record of finding, vetting and incubating new and unique investment opportunities, all underpinned by institutional-grade research and governance.”

Bridging the education gap

When asked what still holds investors back from greater adoption of alternatives, Witbooi is clear: “It’s a combination of education, access, and perception.” He explains that while hedge funds are now more accessible through retail structures, investors still often see them as complicated or risky. “That’s where we come in – helping close the gap between product innovation and investor understanding. Alternatives don’t need to be seen as overly complex. They simply need to be explained better and positioned properly within portfolios.”

Volatility and the value of diversification

In today’s volatile markets, the case for including alternatives in a diversified portfolio becomes even more compelling. “Hedge funds don’t require markets to move in one direction to generate returns,” says Witbooi. “They’re driven more by the manager’s view on individual instruments than the broader market. This gives them the potential to perform independently of market swings.”

Alternatives, therefore, can act as a stabilising force. “We’re not saying hedge funds will rescue a portfolio during downturns, but they can help smooth the return profile and reduce overall portfolio risk,” he adds.

Beyond hedge funds: Expanding the opportunity set

“Private market assets often face criticism for being illiquid or less transparent,” explains Witbooi. “But fundamentally, they’re exposed to the same macroeconomic and operational risks as their public counterparts – the key difference lies in their pricing frequency and mechanisms.”

Private markets tend to price assets less frequently – often quarterly – and that can create the illusion of reduced volatility. But Witbooi is quick to clarify that this doesn’t mean they’re inherently safer or risk-free. “Investors need to understand that the risks are there, they’re just presented differently.”

Breaking the illiquidity stigma with alternative investments

One of the biggest misconceptions about alternatives is that they’re all illiquid, overly complex and difficult to access. Witbooi points to hedge funds in South Africa as a success story of how regulation, innovation and education can change that narrative.

“Since hedge fund regulation was introduced in 2015, we’ve seen a rise in liquid retail structures that offer better access. It’s shown that with the right vehicles and investor confidence, alternatives can become much more mainstream,” he says.

Globally, there is a move towards more flexible fund structures – such as evergreen funds and semi-liquid vehicles – that aim to “retailise” access to private markets. These developments could open the door to greater inclusion of alternatives in retirement savings and discretionary portfolios.

The role of financial advisers

When it comes to driving greater uptake of alternative investments, financial advisers are a critical link in the chain. But many remain hesitant to move beyond traditional investments, often due to unfamiliarity or perceived complexity.

Witbooi sees this as a major area of opportunity. “Advisers are key to educating clients, building confidence, and making allocation decisions that include alternatives. But they need support, from asset managers like us, from platforms, and from the broader industry.”

Amplify works closely with advisers to provide educational tools, performance analytics, and access to vetted managers and products. “It’s not just about selling a product, it’s about demystifying it and showing how it fits into a broader strategy,” says Witbooi.

A future beyond the familiar

Alternative investments are no longer the exotic outliers of the financial world. As regulatory frameworks mature, access improves, and investors grow more informed, the role of alternatives in balanced portfolios is only set to grow. “We believe alternatives are a critical piece of the future investment puzzle,” says Witbooi. “And we’re committed to helping advisers and investors alike understand how to use them effectively. Not as a silver bullet, but as a valuable part of a diversified strategy.”