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Swiss Offer Model for U.K. Hedge Fund Retailizatio

By Staff Writer

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LONDON (HedgeWorld.com)–A survey conducted by a former director of the U.K. Financial Services Authority has found a growing appetite among key financial advisers, hedge fund managers and the investment officers of pension funds, for the retailization of that country’s hedge fund market.

The 60 interviews for this survey, conducted between March and May 2003, focused on perceptions of the risks and value of hedge fund investment, while also examining the role of funds of funds and their managers in the possible extension of hedge fund investment to retail customers, according to the sponsors of the survey, RSM Robson Rhodes LLP and Intrinsic Asset Management Ltd.

The survey was conducted and its executive summary authored by Oonagh McDonald, currently a director of Skandia Insurance Co. Ltd. and a member of the Gibralter Financial Services Commission and formerly a director of the FSA.

Ms. McDonald found that her interviewees looked to Ireland, Switzerland, France and Germany for models as to how the United Kingdom might allow wider investment in certain hedge funds.

She focused particularly upon the Swiss experience. “The Swiss have allowed such investments since 1994. Their rules provide some interesting pointers to the form U.K. regulation could take. The main elements in the Swiss regulatory framework include a detailed description of all the special risks involved and a glossary of terms, where funds of hedge funds are offered for sale to the general public…. There must be a right of redemption at least four times a year.”

In a statement accompanying the executive summary, a partner in RSM Robson, Raymond O’Neill, said that he too believes it is “the appropriate time for certain hedge fund investments to be made available to the retail investor, on the basis they are properly educated on what hedge funds can offer.”

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