Italian hedge fund experts have heralded as a 'fundamental step' rules that took effect in mid-May to halve the minimum investment in onshore hedge funds to E500,000.
Alberto La Rocca, chief investment officer of Pioneer Alternative Investments, said the rules from Italy's Central Bank represented a 'fundamental step into a more mass affluent type of industry rather than limiting to the high net worth industry.'
While the minimum would still be too high for many, he added this may not be a bad thing, and the recent lowering was a step in the right direction.
'Due to the nature of the (hedge fund) business it is a good move for all the players to stick at least to the affluent type of investor if not with high net worth.'
Italy's first onshore regulated hedge fund was launched nearly two years after a Ministry of Finance decree in May 1999 made them legal, and appointed both the Bank of Italy and national depository Commissione Nazionale per le Societa e la Borsa (Consob) as regulators.
La Rocca expects to see a co-ordinated approach by the various Central Banks in European jurisdictions 'for the common regulation of hedge funds' across the continent.
'In other jurisdictions such as Hong Kong and Singapore, they have also reduced the minimum investment, so even if in the US we are seeing debate about mis-selling or fraud issues, in Europe the industry is taking off and this is a very good sign.'
Dublin-based Pioneer Alternative Investments is overseen by Italian parent firm UniCredito Italiano.
Pioneer's purchase last year of London's Momentum Asset Management expanded its operations into funds of hedge funds and an expertise in structured notes, which La Rocca said were already being offered to individuals mainly through private banking channels.
'In Ireland, the hedge fund industry has a E250,000 minimum, while retail funds of hedge funds have a minimum of E12,500 and any structure with a capital guarantee has (no) minimum,' he says.
However, La Rocca does not feel hedge funds will ever become an easy product for the retail market, adding it was in the industry's interests not to lose focus on product performance with the opening of potential new consumer markets.
'Performance production is about exploiting arbitrage opportunities in the market that would by definition not be there if we had to put a huge amount of capital to work. It need not be detrimental to product performance if regulators made capital protection of more transparent structures a pre-requisite for retail distribution in the future,' he added.
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