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Alternative Market Briefing

Other Voices: How the JOBS ACT will benefit hedge fund investors

Thursday, May 02, 2013

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Donald Steinbrugge
This article was authored by Donald A. Steinbrugge, Managing Member of Agecroft Partners LLC, a third-party marketer based in Richmond, VA, U.S.

It has been recently covered in the media that Mary Jo White, who became SEC chairman on April 10, is pushing to adopt the JOBS ACT without major changes and potentially adding additional investor protections at a later date. While this new legislation would for the first time allow general solicitations and advertising to the US general public by hedge funds, hedge funds will still only be able to accept investments from accredited investors.

This legislation has been strongly contested by consumer advocates that remain concerned that hedge funds are risky and that unsophisticated investors might be taken advantage. However, a quick review of the ordinary investment vehicles available to the general public and their respective risks of capital loss compared to the same risk for hedge funds would quickly reveal that hedge funds do not present the amount of risk as perceived by the general public. To the contrary, many sophisticated investors are now actually allocated to hedge funds to reduce the overall risk in their portfolio.

Instead of focusing on hedge funds, these consumer advocates groups should be concerned that many individuals are buying: 1. 30 year treasury bonds that could sustain significant market value losses if interest rates begi......................

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