South African Retail Investors May Soon Have Access To Hedge Funds

by Philip Morton, Investors Offshore.com

03 September 2001

According to Rob Barrow, the Chief Executive of the South African Financial Services Board, hedge funds could be sold to private investors in much the same way as unit trusts from next year, if the new Collective Investment Schemes Bill is passed. At present, as hedge funds are unregulated in South Africa, retail investors are not permitted to invest in them.

Mr Barrow, who was speaking at a hedge fund conference last week said that in order for the FSB, which regulates non-banking financial services to be satisfied, the burgeoning hedge fund industry will need to convince them that the risks can be managed responsibly, and the products will be marketed in such a way as to make these risks clear to investors.

At the same conference, Kevin Shames, CEO of recently acquired financial services firm Mercury, said that South African investors would most likely see a fund-of-funds type of product, offered through approved fund managers. Mr Shames said that the introduction of hedge funds to the retail market would be a good thing for local investors due to their traditional high performance, and pointed out their popularity with the country's top asset managers. 'Financial services companies are starting to dedicate their own capital to build up an investment track record,' he explained. 'There is quite a lot of activity happening as we speak. There are between 40 or 50 funds in South Africa, with probably R4-billion under management.'

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