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Definition Of ‘Hedge Fund’ Under Review In Australia

ASIC has received  industry submissions  seeking to refine the definition of ‘hedge fund’. There are concerns the current definition affects a number of funds that do not exhibit the same risks to investors as ‘true’ hedge funds.

A hedge fund is currently defined as…

  • promoted as being a ‘hedge fund’, or
  • exhibits   two   or  more   of  the   following characteristics…
    • complexity    of   investment    strategy    or structure
    • use of debt
    • use   of   derivatives   (subject   to   limited carve-outs)
    • use of short selling, or
    • has rights to charge a performance fee.

Hedge funds are (generally) precluded from using the  shorter  product  disclosure  statement (PDS) regime and have higher disclosure benchmarks to improve investor awareness of product risks.

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