In a welcome development for the hedge fund industry, it may
soon be possible to market retail hedge funds to the public. This
is according to proposals published by the National Treasury and
the Financial Services Board (FSB).
Although hedge funds are currently not directly regulated under
South African law, indirect regulation results in hedge funds only
being available to a select group of experienced investors. This
has limited the size of the local hedge fund industry which is
estimated at R31 billion, compared to US$ 2 trillion for the global
hedge fund industry.
Hedge funds have been much maligned since their inception but
the level of scrutiny and criticism has increased since the
financial crisis. At the same time, there has been a global
democratisation of hedge fund strategies with members of the public
increasingly interested in investing in hedge funds.
