Investing money in the new world order

As South Africa’s longest-running hedge fund manager, Peregrine Capital has been safeguarding and growing client wealth since 1998. In 2025, the investment team drew fully on this experience to navigate an exceptionally volatile global environment shaped by profound geopolitical shifts and rapid technological change.

Last year marked a decisive turning point in global geopolitics, likely signalling the formal end of the post-Cold War era that has shaped markets and international relations for more than three decades. Under President Donald Trump, the US shifted away from its traditional role as a defender of the existing global order towards a more unilateral, America-first stance.

This transition was reflected in a more adversarial approach to global trade, withdrawals from international institutions, increased geopolitical assertiveness, rising defence spending, and tighter immigration policies. These developments unsettled markets and contributed to a more fragmented global landscape.

Global markets came under pressure early in the year after the US introduced punitive tariffs, triggering sharp volatility across risk assets. As markets rapidly repriced risk, investor sentiment deteriorated sharply.

Protecting client capital

“Periods of market stress are precisely when disciplined risk management matters most,” explains Jacques Conradie, CEO of Peregrine Capital. “Our tried-and-tested approach once again proved its value. Following in-depth analysis, the investment team implemented downside protection through short-term put options on the US market, effectively insuring portfolios against declines. This strategy helped limit drawdowns during the sharp sell-off that followed the so-called ‘Liberation Day’ tariff announcements.”

Opportunities created by volatility

While volatility posed risks, it also created opportunities. Peregrine Capital selectively increased exposure to high-quality companies, particularly in the US, where the sell-off was most pronounced. AI remained a core investment theme for the funds.

“We remain very optimistic about the long-term impact of AI,” says Conradie. “However, we remain mindful that capital expenditure across the sector has accelerated rapidly, and revenues and earnings will need to catch up over time. We continue to assess carefully where spending may be running ahead of near-term returns.”

Delivering on the mandate

Against this backdrop, Peregrine Capital’s flagship funds once again delivered on their mandates. The High Growth Fund and Pure Hedge Fund delivered net returns of 14.67% and 10.6%, respectively.

“During the year, the High Growth Fund crossed the 200-times money* threshold since inception, and Pure Hedge crossed the 100-times money** threshold since inception, underscoring the power of long-term compounding,” says Conradie. “Our mandate is clear: to compound capital consistently over time while avoiding major drawdowns. The performance delivered in 2025 reflects this.”

Peregrine Capital also launched the Peregrine Capital Vision Fund, a US dollar-denominated fund designed for investors seeking exposure to the firm’s highest-conviction global ideas.

“The Vision Fund allows us to take more concentrated positions, accepting higher volatility in pursuit of long-term return potential,” Conradie explains.

The Vision Fund delivered a 28.96% net return in 2025, benefiting from exposure to select global technology and innovation-driven investments.

2026 investment outlook

Looking ahead, Peregrine Capital expects global volatility to persist as geopolitical tensions, fiscal imbalances, and structural economic changes continue to unfold.

“In this environment, assets that can act as ‘stores of value’ are becoming increasingly important and are another investment theme we are taking seriously,” says Conradie.

Strong performances in gold and platinum group metals have supported South Africa’s economy. The firm sees scope to increase exposure selectively, particularly in mining and resource companies, where fundamentals remain attractive.

“These tailwinds in commodity prices should support fiscal revenues and create policy flexibility, potentially allowing for further interest-rate cuts into 2026, which we believe will add growth locally. The positive outlook for South Africa’s economy is our final investment theme we cover,” Conradie adds.

Globally, Peregrine Capital continues to own a portfolio of growing businesses at reasonable valuations, while maintaining a cautious stance towards the US amid expanding fiscal deficits.

“Our team remains invested alongside our clients and is collectively the largest investor in our funds. This alignment of interests is central to how we manage capital and remains a defining feature of Peregrine Capital,” Conradie concludes.

To read the 2025 Investor Letter, click here; for more information, watch this video.

IMPORTANT INFORMATION

Performance information shown reflects historical returns and is provided for informational and comparative purposes only. Returns are shown net of all applicable fees and expenses, with income reinvested, and are based on a lump sum investment made on the inception date of the relevant fund or strategy. Returns are as at December 31 2025, unless otherwise stated.

The Peregrine Capital Vision Fund Segregated Portfolio (“Vision Fund”) is approved under section 65 of the Collective Investment Schemes Control Act, No. 45 of 2002 (“CISCA”) as a regulated collective investment scheme in hedge funds and is subject to the regulatory requirements applicable to such schemes. While the Vision Fund, the Pure Hedge Fund and the High Growth Fund are regulated collective investment schemes, they differ in investment mandate, portfolio construction, asset allocation, risk profile, use of leverage and derivatives, liquidity terms, and fee structures. Any comparison between these funds is provided for informational purposes only and should not be construed as indicating equivalence of investment objectives, risk characteristics, or expected outcomes. Performance differences may arise due to, among other factors, differing levels of concentration, global versus domestic exposure, hedging techniques, leverage, regulatory and mandate constraints, and prevailing market conditions. Past performance of the funds is not indicative of future performance.

Peregrine Capital Collective Investments (RF) Proprietary Limited (“PCCI”) is a registered and approved manager of collective investment schemes in hedge funds. Peregrine Capital Proprietary Limited (“Peregrine Capital”) is an authorised Financial Services Provider under the Financial Advisory and Intermediary Services Act, No. 37 of 2002, and has been appointed as investment manager or sub-investment manager of the relevant portfolios.

Collective investment schemes are medium to long term investments. The value of participatory interests or investments may go down as well as up. Collective investment schemes are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees and charges and maximum commissions is available on request from PCCI or Peregrine Capital. Neither PCCI nor Peregrine Capital provides any guarantee with respect to the capital or return of any portfolio. PCCI retains full legal responsibility for the applicable portfolios and may close portfolios to new investors in order to manage them in accordance with their mandates.

The High Growth Fund: Performance fees are payable on positive performance using a participation rate of 20%. A high watermark is applied, which ensures that performance fees will only be charged on new performance. There is no cap on the Rand amount of performance fees.

The Pure Hedge Fund: Performance fees are payable on positive performance, in excess of the hurdle, using a participation rate of 20%. A high watermark is applied, which ensures that performance fees will only be charged on new performance.

The Vision Fund: Performance fees are payable on positive performance using a participation rate of 20%. A high watermark is applied, which ensures that performance fees will only be charged on new performance.

There is no cap on the USD amount of performance fees. Performance has been calculated using net asset value to net asset value numbers with income reinvested. Individual investor performance may differ as a result of initial fees, the actual investment date, reinvestment timing, distribution dates, or applicable taxes. Where periods longer than one year are shown, returns may be annualised. Annualised performance represents the average return per year over the relevant period. Actual annual figures and detailed performance calculations are available on request. Performance histories are contained in the relevant minimum disclosure documents, which are available on request or from our website.

*200x refers to the Peregrine Capital High Growth QI Hedge Fund. R1m invested at inception is worth more than R200m today, since inception (February 2000).

*100x refers to the Peregrine Capital Pure Hedge QI Hedge Fund. R1m invested at inception is worth more than R100m today, since inception (July 1998).

The calculation of all net returns from February 1 2000 until November 30 2016 relates to the Peregrine High Growth Fund, prior to its inclusion under CISCA. Thereafter, the data relates to the Peregrine Capital High Growth QI Hedge Fund (“High Growth Fund”). The calculation of all net returns from 1 July 1998 until 30 November 2016 relates to the Peregrine Pure Hedge Fund, prior to its inclusion under CISCA. Thereafter, the data relates to the Peregrine Capital Pure Hedge QI Hedge Fund (“Pure Hedge Fund”).

Data to December 31 2025 | Source: Peregrine Capital, Morningstar, Bloomberg.