Despite agreeing with their introduction, AIMA says it sees potential restrictions on potential proposals for notice periods and leverage. The group also says difficulties will arise in the areas of illiquid investments, repayment standards and liability of the manager in master/feeder fund structures.
AIMA also says that there are descrepancies with the tax framework relating to treatment of investment returns as capital gains and income.
The group also says it is crucial that there is a compatibility between tax regimes covering FAIFs and offshore funds as until that is resolved the regime does not present the attraction for the existing fund of hedge funds to move onshore.
AIMA deputy CEO Andrew Baker says: ““AIMA is encouraged by the FSA and HM Treasury’s latest recommendations to enable UK retail investment in FAIFs. On the whole, the proposed rules are appropriate and proportionate, and a strong signal from the UK government that hedge funds are to be regarded as mainstream investments.
In AIMA’s opinion, there remain important areas to be refined before the regime is likely to be workable and successful for both the industry and the intended retail investors. However, we are confident that considerable progress towards a successful outcome is being made, and we will continue to support the FSA in this process.”