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
Australian fund managers are actively seeking to launch Cayman versions of their funds to attract offshore flows, with Regal Partners set to launch its latest offering this month.
As private markets gain traction in Australia but only a limited pool of talent is available, three recruiters explore whether fund managers should consider looking overseas to find top talent.
With an explosion of private credit managers appearing in the market, two alternatives experts believe a consolidation is needed to maintain the quality of the sector.
Bentham Asset Management has become the latest fund manager to expand its distribution team as it reports increased interest in its credit strategies.
