A long road lies ahead for the hedge fund industry as it adapts to a new existence in the regulated collective investment scheme (CIS) space.
In the past 18 months considerable time and resources have been spent on completing the conversion of portfolios to comply with Financial Services Board regulations, and industry attention is now being turned to winning retail clients.
The biggest challenge to attracting new inflows is the comparatively unknown nature and benefits of hedge funds in the retail space. It is only natural that the absence of familiarity with this asset class will contribute to some apprehension. The industry therefore appreciates that it needs to do some serious work to overcome investor nervousness. A starting point toward achieving that is to gain the confidence of independent financial advisers and getting funds accepted onto CIS platforms by Linked Investment Services Providers (Lisps). "With appropriate financial advice, adding a hedge fund component to an overall portfolio as an asset allocation strategy makes a lot of sense. But I still believe there needs to be more education to the retail space on how hedge funds should form part of a portfolio," says Cornelis Batten, CEO of RealFin Collective Investments.
The message the industry has been consistent in communicating is that the nature and reputation of local hedge fund...
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