Hedge fund fun for everyone

Date: Friday, October 27, 2006
Author: John Gray, Canadian Business Online

 From the October 9--22, 2006 issue of Canadian Business magazine

Regular investors after a piece of the supersize returns that hedge funds boast of should be allowed to put their money in the popular investments. That's one of the 65 recommendations in a report released in October by the Investment Dealers Association's Task Force to Modernize Securities Legislation in Canada. However, the report recommends that funds looking for retail investors should be regulated, and required to disclose the fees paid to advisers, the qualifications of fund managers, and any side agreements that may exist with large investors.

"Hedge funds are a new asset class that are loosely regulated and are still not well understood by most investors," says Colleen Moorehead, former president of E*Trade Canada and a member of the task force. Under current regulations only "accredited investors" — or those with large sums of money, usually about $150,000 — can invest directly in the funds. But the recommendations make a kind of sense. With the recent implosion of the Amaranth hedge fund, why should it be only the ultra-wealthy who get the chance to see their investments wiped out?