F&C Investments has welcomed the FSA's proposal to widen access to funds of hedge funds but says it is "essential" retail investors seek professional advice before investing in them.
The regulator yesterday proposed allowing retail consumers access to retail funds of hedge funds and other alternative investments, increasing the likelihood the products could be included in portfolios by the end of the year.
However, the FSA also appeared to suggest such products should only be distributed with financial advice.
Francois Barthelemy, head of fund of hedge funds at F&C, agrees with that sentiment, saying the complicated style of the investments would require additional advice.
“There is certainly a place for hedge funds in the portfolios of retail investors,” he says.
“However, there is no doubt these investments do use more sophisticated techniques than traditional long-only retail funds.
“It is therefore essential that retail investors not only take professional advice before committing money, but that they also invest in vehicles managed by specialists who have the expertise to do the necessary research and due diligence.
“In this respect, funds of hedge funds are likely to be the most appropriate route for the retail investor.”
Barthelemy says the FSA’s bid to allow the UK public greater access to alternative assets is good news for investors.
“While the hedge fund universe now contains a wide range of strategies, rightly speaking the goal of hedge funds should be to mitigate any risks arising from market movements and to deliver absolute returns, whatever the overall markets are doing,” he says.
“Whilst more sophisticated high net worth individuals and institutional investors have reaped the rewards from hedge fund investment for almost six decades, retail customers have lost out and been largely confined to investments which are fully exposed to market volatility.”
F&C today announced it is planning to launch a closed-ended fund of hedge funds, the F&C Event Driven fund, which it intends to list in May.
The product, which will include funds that get involved in mergers, takeovers and distressed securities, is being targeted at institutional investors, discretionary private client portfolio managers, and investment intermediaries.
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