Protea Capital Management is an investment management firm domiciled in South Africa, investing globally. The firm follows a proprietary “quantamental” investment approach, combining traditional fundamental analysis with quantitative investment techniques. Assets under management across four hedge funds as at mid-2025 is approximately R1-billion.
History
The first Protea hedge fund available to institutional and high-net-worth clients was launched in 2016, followed by the launch of two retail hedge funds in An international Malta-domiciled hedge fund was launched in 2022, offering investors the opportunity to invest in USD/EUR/GBP. The international fund is approved by the FSCA under Section 65 of the Collective Investment Scheme Control Act for public sale in South Africa.
Investment strategy
All portfolios are managed as long/short equity hedge funds, aiming to generate above-average risk-adjusted returns while avoiding deep drawdowns. The core strategy across all Protea hedge funds is to be long undervalued equities and short overvalued equities, while ensuring that there is sufficient diversification to guard against inappropriate risk concentration. Each Protea hedge fund has a distinct geographical focus.
The Protea South Africa FR Retail Hedge Fund focuses on the South African equity market, while the Protea Global FR Retail Hedge Fund and Protea International Hedge Fund SICAV Plc focus on global developed equity markets. The Protea Worldwide Flexible FR Qualified Investor Hedge Fund focuses on equity markets worldwide, ie both South Africa and global developed markets.
Employees of Protea Capital Management collectively represent a significant investor in the Protea hedge funds, ensuring strong alignment with the interests of all other investors.
Investment team
The “quantamental” investment approach is a “Man + Machine” process which makes extensive use of automation, relying less on human judgement than traditional approaches. The portfolio manager is Jean Pierre Verster, who is also the founder of Protea Capital Management. He holds the CA(SA), CFA and CAIA designations. Dr Shinhye Chang, a senior data scientist, forms part of the investment team.
Assets under management across four hedge funds as at mid-2025 is approximately R1-billion.
Hedge Fund Products
Protea South Africa FR Retail Hedge Fund
Availability: Direct investment or via all major LISP platforms
Subscription and redemption: Daily Minimum direct investment: R50 000 lump sum or R2 000 monthly
Hurdle rate: 3-month STeFI
High-water mark: Yes
Basic service fee: 1.25% pa (excl VAT)
Performance fee: 20% (excl VAT) of the excess performance (after deducting the base management fee) above the perpetually increasing hurdle.
Protea Global FR Retail Hedge Fund
Availability: Direct investment plus via all major LISP platforms
Subscription and redemption: Daily
Minimum direct investment: R50 000 lump sum or R2 000 monthly
Hurdle rate: 3-month STeFI
High-water mark: Yes
Basic service fee: 1.25% pa (excl VAT)
Performance fee: 20% (excl VAT) of the excess performance (after deducting the base management fee) above the perpetually increasing hurdle.
Protea Worldwide Flexible FR Qualified Investor Hedge Fund
Availability: Direct investment or via select local LISP platforms
Subscription and redemption: Monthly
Minimum direct investment: R1-million
Hurdle rate: 3-month JIBAR
High-water mark: Yes
Basic service fee: 1.25% pa (excl VAT)
Performance fee: 20% (excl VAT) of the total performance (after deducting the base management fee) above the high-water mark, subject to the hurdle rate.
Protea International Hedge Fund SICAV Plc
Availability: Direct investment or via select international LISP platforms
Subscription and redemption: Weekly
Minimum direct investment: USD100 000/EUR100 000/GBP 100 000
Hurdle rate: None
High-water mark: Yes
Basic service fee: 1.25% pa (excl VAT)
Performance fee: 20% (excl VAT) of the total performance (after deducting the base management fee) above the high-water mark.
Contact information:
- Jean Pierre Verster, Edrich Jansen, Deborah Brennan, Cecile Hechter
- Telephone: 011 822 2154
- Email: info@proteacapitalmanagement.com
- Website: www.proteacapitalmanagement.com
Protea Capital Management (Pty) Ltd is an authorised Financial Services Provider (FSP49796) under the Financial Advisory and Intermediary Services Act (No.37 of 2002) (FAIS), acting in the capacity of investment manager. FundRock Management Company (RF) (Pty) Ltd (the “Manager”) is authorised in terms of the Collective Investment Schemes Control Act (CISCA) to administer Collective Investment Schemes. This information is not advice, as defined in FAIS.
Trusting the “quantamental” process
Blue Chip speaks to Jean Pierre Verster, CEO at Protea Capital Management, who offers insight into the diversity of their portfolios.
How would you describe your investment philosophy as it pertains to managing hedge funds?
Our philosophy has been refined by combining unique insights of different investment greats. We believe that one can learn important lessons from various successful investors who have applied quite different investment philosophies over the years.
We believe that, over time, a company’s share price will converge with its value. However, in the short term, price can diverge significantly from value. This is why we take a risk-conscious and diversified approach, in order to generate superior risk-adjusted returns while avoiding deep drawdowns.
Our philosophy is the foundation for our “quantamental” investment analysis process, in terms of which we combine qualitative fundamental analysis with quantitative analysis techniques.
What process do you follow to decide what instruments you will invest in?
The “quantamental” approach is a “Man + Machine” process which makes extensive use of automation, relying less on human judgement than traditional approaches.
The qualitative part of our process entails reading widely, assessing the management team of a company, understanding the product/service and where it fits in within the economic ecology, scuttlebutt (using alternative sources to get a different viewpoint) and constantly being aware of psychological biases.
The quantitative part of our process entails using algorithms to automatically forecast the financial statements of the companies we analyse, ”translating” the forecasted future financial statements into fair value using universal valuation principles, and presenting the data graphically. We then evaluate past “fit” of price versus value and adjust key variables to ensure reasonability of the model’s projections. The last step is to rank expected returns for all companies in our universe and to construct a diversified portfolio of long and short positions from the ranking table.
What do you see as your competitive advantage?
Our “quantamental” process allows for both breadth and depth of analysis. Our portfolios are therefore more diversified than most, improving robustness. The extensive use of automation assists us in guarding against behavioural biases and avoiding expensive mistakes. Since our process is based on universal valuation principles, we can apply it worldwide in order to seek out attractive investment opportunities globally, not just in the local equity market.
How do you manage risk in your hedge fund(s)?
We are significant investors in our own hedge funds, and therefore manage the money of outside investors like we do our own. This ensures a responsible and commonsense approach towards risk. We assume risk where we believe the potential return is worthwhile, but we actively avoid any catastrophic risk. The goal is to generate superior risk-adjusted returns while avoiding deep drawdowns.
What has been your biggest mistake in managing your hedge fund(s) and what was the impact?
We had a tough year in 2022, when the Nasdaq index fell by more than 30%. Our global hedge fund fell by much less but also generated a negative return that year. We learnt that options do not always offer the expected protection against drawdowns, especially when markets don’t simply fall sharply but grind lower in a more orderly fashion. As a result, three years ago, we shifted more towards maintaining a high number of small individual shorts, which has assisted in delivering strong returns.
| About Jean Pierre Verster After roles at Melville Douglas Investment Management and 36ONE Asset Management, Jean Pierre partnered with Fairtree Asset Management in 2016 to launch the Protea range of hedge funds. In 2019, he founded Protea Capital Management as a stand-alone investment management business. Between 2015 and 2024, Jean Pierre also served as an independent nonexecutive director at Capitec Bank Holdings and its subsidiaries, where he was chair man of the audit committees. He holds the CA(SA), CFA and CAIA designations. |
Collective Investment Schemes are generally medium-to long-term investments. The value of participatory interests (units) may go down as well as up. Past performance is not necessarily a guide to future performance. Collective investments are traded at ruling prices and can engage in scrip lending and borrowing. A schedule of fees, charges and maximum commissions, as well as a detailed description of how performance fees are calculated and applied, is available on request from the Manager. The Manager does not provide any guarantee in respect to the capital or the return of the portfolio. Excessive withdrawals from the portfolio may place the portfolio under liquidity pressure and in such circumstances, a process of ring-fencing of withdrawal instructions and managed pay-outs over time may be followed. Commission and incentives may be paid, and if so, are included in the overall costs. The Manager may close the portfolio to new investors in order to manage it efficiently according to its mandate. Prices are published daily on the Manager’s website.
