Hedge fund definition presents a catch-all concern
The recently announced industry standard for defining a hedge fund presents a catch-all concern to unaware fund managers.
With the release of Regulatory Guide 240 'Hedge funds: improving disclosure', some fund managers may be shocked to find they are, by the Australian Securities and Investments Commission's (ASIC's) definition, operating as a hedge fund, Zenith Investment Partners head of alternatives research Daniel Liptak said.
Some infrastructure, property, real estate and agricultural managed funds currently meet at least two of the five criteria that constitute a hedge fund, which includes any managed fund that uses leverage, derivatives and short-selling.
According to Liptak, funds that are flagged by ASIC may be treated differently by platforms.
"For investors there's two possible outcomes - they'll either run a mile or they'll say, 'well we've been in a hedge fund all this time and nothing has gone wrong', so it (the definition) could be a positive," he said.
The disclosure requirements themselves could also be a positive outcome for domestic operators because most will be able to meet the principles - albeit with minor changes to their existing systems - while offshore funds with large institutional clients may struggle.
Recommended for you
Licensing regulation should prioritise consumer outcomes over institutional convenience, according to Assured Support, and the compliance firm has suggested an alternative framework to the “licensed and self-licensed” model.
The chair of the Platinum Capital listed investment company admits the vehicle “is at a crossroads” in its 31-year history, with both L1 Capital and Wilson Asset Management bidding to take over its investment management.
AMP has settled on two court proceedings: one class action which affected superannuation members and a second regarding insurer policies.
With a large group of advisers expecting to exit before the 2026 education deadline, an industry expert shares how these practices can best prepare themselves for sale to compete in a “buyer’s market”.
