The FSA has today unveiled a new regime allowing UK retail consumers to invest in funds of hedge funds and other alternative investments but has warned advisers they must understand the products before making a recommendation.
Funds of Alternative Investment Funds' (FAIF) can invest up to 100% of their assets into other collective investment schemes and the new rules allow the products even greater flexibility as to the proportion of assets in particular types of underlying scheme. For example, a FAIF could invest up to 100% of its assets in a selection of hedge funds based in non-EU countries. However, following its consultation paper on FAIFs, published in February 2008, the FSA has built additional consumer protection measures into the regime which comes into effect on 6 March 2010. This includes require...
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