Singapore, 15 June 2001- MAS today issued new guidelines which will allow hedge funds to be sold to the public, subject to a minimum initial subscription of $100,000 per investor and other requirements. These guidelines were introduced in response to interest expressed by the financial industry. The intention is to provide more investment choice for those who understand the higher risks associated with the prospect of significantly higher returns from such funds. The guidelines, which have been included as Appendix 6 in the Handbook on Unit Trusts ("APP 6"), take effect from today.
2 The key requirements for public offers of hedge funds include:
a minimum initial subscription of $100,000 per investor;
adequate and prominent disclosure in the prospectus of the high risks of investing in hedge funds; and
investment managers and/or investment advisers of hedge funds must have expertise in managing such funds.
3 In explaining its rationale for issuing the guidelines, the MAS said, "Hedge funds differ significantly from traditional retail funds. For instance, hedge funds may leverage significantly or sell short to improve performance. They may also use derivatives more extensively and invest in higher-risk instruments. In recognition of their more aggressive investment strategies, MAS has put in place specific guidelines to govern offerings of such funds."