IT'S A DILEMMA for regulators. Conventional fund
managers have clearly failed retail investors, so should
financial watchdogs make it easier for a new breed - hedge
fund managers - to woo them? Good hedge funds might do a much
better job of properly risk-managed absolute-return investing
than the index huggers at the large, established shops. But
then hedge funds also have an alarming habit of setting up and
closing down a few months later. Are they, in short, suitable
managers of retail investors' money?
Some regulators, such as the Financial Services Authority in the
UK, think not. But other countries - including Ireland, the US,
Singapore, Hong Kong, Italy and most recently France - have already
authorized liberalization of marketing rules, though they are yet
to see a rush of retail capital to hedge funds.
Institutions are nonetheless making moves to take advantage of
new rules.
Hedge funds have been outperforming equity indices for...
