Reuters.uk – The Financial Services Authority said it was considering letting retail investors have access to hedge fund investments and would consult next year on how to help consumers understandthe risks.
Allowed investments will probably include funds of hedge funds that invest in portfolios of hedge funds to spread the business and investment risks.
“Retail investors can currently gain access to products with hedge-fund investment characteristics through a variety of means, including listed funds of hedge funds,” said Clive Briault, FSA managing director for Retail Markets, on Thursday.
The retail investor also has access to funds offered on the Internet from European jurisdictions, products linked to hedge fund returns and funds launched under new European rules that allow limited use of financial derivatives.
“Given the reality of the contemporary retail market, it seems sensible to permit the marketing of funds of hedge funds through an authorised, onshore vehicle,” Briault said.
The hedge fund industry welcomed the regulator’s initiative and agreed that fund of hedge funds were the best way forward.
“Fund of hedge funds are less risky than single manager hedge funds,” said Ian Collier, director at Dexion Capital.
“Generally speaking portfolios of hedge funds are much less risky than portfolios of equities.”
