AIMA Responds to IOSCO Fund of Hedge Funds Consultation Paper

Date: Monday, July 30, 2007
Author: AIMA News

London 30^th July 2007. The Alternative Investment Management Association (AIMA), the leading global hedge fund and alternative investment industry association, has responded to the International Organization of Securities Commissions’ (IOSCO) Consultation Report “Call for Views on Issues that could be addressed  by IOSCO on Funds of Hedge Funds”.

The Consultation Report, published in April 2007, looks, in particular, at the question of what would be the appropriate means of regulating funds of hedge funds for retail investors.

In its response, AIMA supports a high-level principles based approach to the regulation of funds of hedge funds. The hedge fund industry is innovative and fast moving. AIMA believes the flexibility of a principles based regime has benefits over prescriptive (or proscriptive) rules which could be out of date within a few years - as a result of the evolution of new investment instruments and strategies.

AIMA also believes that the UK FSA’s recent proposals on Funds of Alternative Investment Funds (FAIFs) offer a practical way forward  while at the same time providing adequate consumer protection. These proposals place the regulatory emphasis on the performance of due diligence by the fund of hedge funds manager.

Matthew Jones, Manager in AIMA’s Regulatory Department commented:

“AIMA understands and supports the need for adequate consumer protection. It also believes that this can be achieved using the FSA’s recent proposals as a basis. Retail investors should not be excluded from the innovative and leading-edge investment opportunities that funds of hedge funds offer”.