Mon, Feb 8, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Asia Pacific Intelligence

ASIC achieves defining moment on hedge funds

Thursday, November 07, 2013

A note from Australia's Lexology reported on the Australian Securities and Investments Commission (ASIC) long-awaited changes to the definition of a 'hedge fund' (and 'fund of hedge funds') for the purposes of determining the application of the shorter Product Disclosure Statement (PDS) regime, and the application of enhanced PDS disclosure under ASIC Regulatory Guide RG240. The firm writes that the original 'hedge fund' definition was unclear and too broad which had the unintended consequence of capturing many types of funds that should not have be treated as hedge funds.

Alex Wise, Head of Fund Services at Select Asset Management comments: "Initially the definition was wide enough to catch many equities managers who consider themselves active or long only, the new draft has gone a long way to address some of these issues".

Lexology comments that the troubled history of this definition is reflected in the number of delays in its finalisation. "The shorter PDS regime applying to simple managed investment products commenced on 22 June 2012. At the last minute, ASIC issued interim relief to exclude 'hedge funds' from the application of the shorter PDS regime and to allow those 'hedge funds' that had prepared shorter PDSs until 22 June 2013 to transition back to a long form PDS."

Wise says:  "For many years disclosures of hedge fund strategies to retail investors have fallen significantly below what is disclosed offshore.  The additional disclosure is good news for retail investors who want to allocate to hedge funds.  The disclosures encompass many standard disclosures that offshore funds include, including some very simple things like "who is the administrator".

The transition date had to be extended to 1 February 2014 as it became clear that the original definition of 'hedge fund' was too broad and unworkable. ASIC has since consulted significantly and widely with industry to refine the definition.  It is intended that that the re-worked definition of 'hedge fund' will allow the more accurate targeting of the types of funds which pose more complex risks for investors. As ASIC Commissioner Greg Tanzer stated, "Our changes will benefit the industry by relieving some lower-risk funds from the more extensive disclosure obligations imposed on a hedge fund."

"ASIC have done a pretty good job, there's still some strange guidance such as; if you mention the word "hedge fund" anywhere in any marketing materials you are automatically a hedge fund! But on the whole the disclosure will be welcomed by retail investors" Wise says.

Aussie law firm Hall and Wilcox has published a table listing the principal differences between the old and new definition. Source.

Wise concludes: "There is still a strong market for retail hedge funds in Australia due to sophistication at certain advisors and planners.  The key factor for offshore managers wishing to set up in Australia will be working with experienced partners in retail alternatives".

 
This article was published in Opalesque's Asia Pacific Intelligence our monthly research update on alternative investments in the Asia-Pacific region.
Asia Pacific Intelligence
Asia Pacific Intelligence
Asia Pacific Intelligence
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Avenue Capital's Marc Lasry: We like European bank loans, Comment: A bunch of hedge fund managers are chasing the 'dream of crushing a major structural problem'[more]

    Avenue Capital's Marc Lasry: We like European bank loans From CNBC.com: European banks are under immense pressure, but at least one prominent hedge fund has found what it thinks is a good opportunity in the wreckage. Marc Lasry, co-founder and chief executive of hedge fund Avenue Capital

  2. Credit Suisse cherry picks hedge fund ideas[more]

    From FT.com: Credit Suisse Asset Management plans to cherry pick profitable concepts from hedge funds with the launch in Europe of a “best ideas” strategy. The investment arm of the Swiss bank said the strategy will separate it from other funds blighted by “overcrowding problems”. It comes at a time

  3. Investing - Hedge funds bet on risks in U.S. blue-chip debt, Hedge funds bets against bank credit risk paying off, Tiger Global still likes Internet names, gets pointers from Jeter[more]

    Hedge funds bet on risks in U.S. blue-chip debt From WSJ.com: Hedge funds are betting the next bond sector to crack will be the $4.5 trillion market for the safest U.S. corporate debt. New York’s Perry Capital has placed a $1 billion wager against investment-grade bonds issued by 10 comp

  4. Short Selling - Hedge fund manager Kyle Bass is shorting real estate—again, Top US hedge fund has €80m short position in Paddy Power Betfair[more]

    Hedge fund manager Kyle Bass is shorting real estate—again From Fortune.com: He also predicted the mortgage crisis in 2008. Hedge fund manager Kyle Bass, who runs Dallas-based Hayman Capital, tanked the stock of a little-known real estate financier Friday by revealing that he is shorting

  5. HFRU Hedge Fund Composite Index down -2.58% in January[more]

    Global financial markets posted sharp losses in January led by declines in Oil and global equities, though steep intra-month losses in both were narrowed by strong gains in final trading days of the month. Global equities posted steep declines for the month led by Biotechnology, Energy, Financial, E