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Regulator sets out priorities

The FSA has called on advisers and clients to ensure they have their priorities straight over what they want to get out of investing in a fund of hedge funds.

It believes some advisers are overly concerned with having limitless knowledge of the issue to ensure they are not in breach of treating customers fairly when there are more pressing issues.

Head of EU policy Tim Grange told a Money Marketing round table meeting on hedge funds last week that although there needs to be some level of understanding for clients, the most important thing is they realise that, as with most products, there are a variable number of outcomes they could deliver.

He says: “It is a bit like the analogy of the car, you need to pass a test to drive one but that does not necessarily mean that you need to know how the brakes and the clutch work.”

Grange said the FSA had a choice of whether to ban or accommodate these products in the retail market and it would prefer not to stem any tide of progress. He said: “A number of strategies within Ucits III that are possible, although yet to be taken up, do mimic the assets of a hedge fund. In a sense, the horses have bolted, you can either try to stop them or let them exist in the most highly regulated part of the market.”


Threshold too low for performance charging

Investment managers say it is the fact that relatively low outperformance can trigger big performance-related fees which make some hedge funds more expensive as most other charges are only slightly higher than long-only funds.Most managers at Money Marketing’s hedge fund round table meeting acknowledged that hedge funds were slightly pricier than traditional funds but say […]

Band of bothers

Planning Strategy – Increases in the nil-rate band have failed to keep up with house price inflation so how can homeowners plan for IHT caused mainly by their residence? By Scottish Widows senior technical manager for savings and investment Anne Young.

Channel challenge may find advisers out of their depth

With the FSA’s initial thoughts on the retail distribution review only a week away from publication, there are already indications that it is likely to affect what products can be sold through what channels. Funds that utilise Ucits III powers, such as vehicles that use derivatives to a high degree, may get caught up in […]


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