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Regulator issues hedge fund selection guidance


Date: Thursday, September 10, 2009
Author: HedgeCo.Net

The Italian regulator, Consob, has issued guidance to fund of hedge fund managers on the selection of target funds for their portfolios.

Over the last few months have been subject to constant redemption requests in order to satisfy investors’ needs for liquidity and to accomodate a repositioning of their portfolio risk levels.

The presence of illiquid financial instruments in these hedge portfolios has frequently made it difficult for to satisfy redemption requests. In many cases redemption gates were adopted, which limit the amount of redemptions permissible in a certain period. Many hedge fund managers also set up so-called ’side pockets’ in which to manage the illiquid elements of their portfolios.