Hedge funds 'not for man on the street'

Date: Wednesday, November 22, 2006
Author: Londonstockexchange.com

It is doubtful whether retail sales of hedge funds will be offered to "the man in the street" anytime soon, according to new claims.

The Alternative Investment Management Association (AIMA) says that the hedge fund industry tends to avoid any kind of retail sales, targeting high net worth individuals instead, since they are qualified investors who can understand the risks involved.

Furthermore, regulatory authorities in the US are considering tightening their definition of a high net worth individual, which could make it more difficult for everyday people to invest into hedge funds, the association reports.

Gordon McAra, spokesperson for AIMA, remarked: "There have been opportunities to sell them to these people, and in fact the [Financial Services Authority] recommended it but there has been no rush by hedge fund managers to do that and I suspect there won't be."

However, during the start of 2007, the UK financial regulator will begin consulting on the possible introduction of funds of hedge funds authorised for retail investors.

Clive Briault, managing director for retail markets at the FSA, said that it "seems sensible" to allow funds of hedge funds to be sold onshore, through an authorised vehicle.