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
Women are expected to inherit US$124 trillion through the intergenerational wealth transfer, but Capital Group has found they are twice as likely to rely on social media for advice over a financial adviser.
Challenger Investment Management has raised $350 million during the offer period for its new ASX-listed investment structure.
A week after Lonsec downgraded multiple funds from Metrics Credit Partners, rival research house Zenith Investment Partners has opted to retain its ratings for the same funds.
Strong adviser engagement has helped Praemium reach $1 billion in inflows on its Spectrum offering, with a deal with Western Australian wealth firm Euroz Hartleys expected to add as much as $2 billion.
