Laurium Capital harvested gains from diversified sources in its South African hedge funds last year, and remains broadly positive going into 2026, while cautioning investors against a passive approach.
“We were pleased with our diversified attribution last year, and the contained volatility across our funds,” says Matthew Pouncett, who is co-portfolio manager on the hedge funds alongside Laurium’s founders Murray Winckler and Gavin Vorwerg.
“Gold and platinum’s meteoric rise have substantially changed the shape of the SA market. These single commodity miners now comprise about 30% of the local index, posing substantial risks if gold does not perform its usual risk-off hedge role. Investors need diversified sources of return both to protect portfolios and to profit.”
Its Laurium Enhanced Growth Prescient RI Hedge Feeder Fund was the top-performer amongst its hedge fund range, adding a net 22.4% in 2025 with volatility constrained at 8.9%.
The retail fund is approaching the three-year mark, delivering a net annualised 25.2% since inception in March 2024, while the Laurium Enhanced Growth Hedge Fund, a dollar-based UCITS fund, has added 19.7% annualised since December 2023 (20.5% in 2025).
The funds run along similar lines to the long-running Laurium Aggressive Long Short Prescient QI Hedge Fund, albeit with a more defined global allocation at around 10%. Laurium Aggressive has returned 15.3% annualised since launch in January 2013 (21.3% in 2025).
The RIF and the UCITS fund offer rand and dollar-based structures respectively, with the latter hedging against rand risks while the retail fund is broadly accessible locally via various platforms.
Elsewhere in the hedge fund range, the more conservative Laurium Long Short Prescient RI Hedge Fund has returned an annualised 10.6% since inception in August 2008 (18.3% in 2025) while the Laurium Market Neutral Prescient RI Hedge Fund has added a net annualised 10.6% since January 2009 (15.5% in 2025).
In its latest quarterly comment, Laurium noted that last year’s 50% rally in the gold price was unusual in that gold typically rises in a risk-off environment, or a period of low or negative real yields.
Central bank buying was the major driver of gold-price gains in 2025, in an otherwise healthy risk-on environment, with loosening financial conditions and rising stock markets, while real yields remained at normalised levels of around 2%.
“Resources drove significant gains in the local market last year. We had a diversified portfolio in our long book so we benefited from moderate gold and platinum holdings and related small positions, but we will never have a position in precious metals equivalent to the current index weight because the sector is susceptible to deep drawdowns,” says Pouncett.
The funds also benefited from banks and industrial stocks, containing losses from the retail sector, which declined by 30–40%.
The main portfolio detractors were short positions, although some were profitable.
Laurium now has assets of R5.7 billion across its hedge funds, out of company-wide assets of R83.7 billion, which includes global, Africa, multi-asset and long-only funds.
Its hedge funds start with a house view based on intensive bottom-up research, with portfolio construction differing depending on each fund’s risk-return objectives.
“For example, our Enhanced Growth fund is run net long but that is relative to our absolute return objective, not to the index,” says Pouncett.
“For investors, it will look different to any other equity exposure – and for DFMs and IFAs it is a great way to get diversified growth.”
“Our market-neutral fund also offers an idiosyncratic return profile and is ideal for annuity portfolios where investors need to draw down capital every month and reduce sequence risk.
That is the beauty of hedge funds – you can manage gross and net exposure and optimise the risk profile for different risk and return requirements.”
Laurium hedged out “deep downside risks” in its platinum and gold holdings by buying inexpensive downside index protection, with low implied volatility.
It was also long SA Inc, retaining exposure while adding Top 40 put protection on a see-through basis.
“We see upward pressure for gold but it is difficult to predict,” says Pouncett.
“Previous gold rallies have been followed by deep drawdowns. Investors need to protect their portfolios and you are not getting that in a typical long-only equity fund in today’s world, given the make-up of the market.”
Heading into the year, Laurium is broadly constructive on risk assets with the South African economy showing “tentative signs of life”, including improving port volumes, better momentum on fixed investment spending and easing interest rates.
Recent business and consumer surveys have also risen, while terms of trade are supportive with export commodities (gold and platinum) outperforming import commodities (mainly oil) resulting in a strong rand and easing financial conditions.
“The dislocation between bond yields and stock ratings means risk premiums in SA equities remain compelling,” says Pouncett.
“We also see short opportunities in industries with shifting competitive landscapes. There were some earnings disappointments from SA Inc last year, with some own goals in the retail sector.
Certain counters will battle to grow earnings sustainably.”
The team remains very aware of geopolitical tail risks, including local government elections at the end of the year, which will put the major GNU parties head to head, and an ANC elective conference in 2027, another key risk event with binary outcomes.
“SA Inc’s relationship with the US is also on a precarious footing, which could have a big impact on our financial markets,” says Pouncett.
“Our base case for the year is that equities will deliver decent returns, but investors should take care.
An absolute-return mindset with the ability to manage risk while taking advantage of upsides appears compelling and we remain excited about what 2026 is likely to bring for our strategies.”
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