Distributor status will make the funds more tax-efficient for UK investors as it avoids the high levels of income tax charged on returns, which will instead be treated as capital gains.
RWC Partners is confident its hedge funds will qualify and has already reported interest from funds of funds in Ajay Gambhir’s European RWC samara hedge fund. RWC samsara, a European long and short equity fund, is up 3.5 per cent this year, while the RWC Pilgrim fund, a UK long short equity fund, is up by 10.5 per cent. The multi-asset RWC strategic opportunities fund is up over 8 per cent on a year to date basis and also achieved a positive return in 2008.
RWC Partners head of sales Dan Mannix says: “FSA-regulated funds of funds are now allowed to buy funds that are not regulated by the FSA, but they have to have distributor status. Historically, hedge funds have not had either FSA regulation or distributor status.
“Our hedge funds will still be unregulated but distributor status means they will be more tax-efficient for UK investors, including regulated funds of funds.”