Managed Investment Schemes: Hedge Fund Disclosures
Where a Responsible Entity (RE) for a hedge fund or fund of hedge fund offers product to retail investors in Australia, ASIC has released RG 240 (effective 1 February 2014) which requires greater disclosures to be made by RE’s.
The RG includes a definition of a hedge fund to assist RE’s in determining if the RG is applicable to the funds they operate. This definition indicates a fund is one that is promoted as a hedge fund or that exhibits two or more of the following characteristics of a hedge fund:
A fund of hedge funds is one which has 35% of the fund’s assets invested in schemes whose assets meet the above definition or is promoted as a hedge fund of funds.
For each fund that you act as RE for we recommend comparing the fund mandate, investor base and investing activities to the above definition to determine if RG 240 is applicable.
The disclosures are required for benchmarks being valuation and periodic reporting as well as disclosure principles as follows;
There is a transition period in which the new disclosure statements can be displayed on the RE’s website and existing PDS’s remain in circulation. New PDS’s will need to comply with RG 240.
As a RE you will need to include internal procedures to ensure existing new funds are tested for the definition of a hedge fund, and then establish procedures to comply with the disclosure requirements or state why they are not being followed. ESV can work with your responsible officer and compliance team to ensure your internal policies and procedures comply with the RG. Should you require such assistance, please contact Tim Valtwies on 02 9275 0133 or contact your applicable ESV engagement partner.
Article by Tim Valtwies