Brits want wider access to hedge funds

Just 10% of the UK public think hedge funds should only be made available to professional investors, with the majority favouring wider public access, according to research carried out by 72 Point Limited on behalf of F&C Investments.

The survey of 3091 respondents also reveals that contrary to popular belief, more people recognise that hedge funds are designed to reduce risk than those who think they are high risk, specialist investments.

"We are very encouraged by the research which clearly demonstrates a very supportive attitude from the UK investor towards hedge fund investing," said Francois Barthelemy, Partner of F&C Partners, F&C's fund of hedge fund business.

"It seems there is little support for wider restrictions with only 10% of the UK public favouring a hedge fund regime restricted to professional and high net worth individuals. This compares with 55% of respondents who favour direct public access to hedge funds and a further 35% who think wider access should be given but only through specialist managers," said Barthelemy.

"Investors are becoming more sophisticated in their investment choices and recognise the benefits of hedge funds as a risk reducing tool in their investment portfolios, with 64% answering they are no more risky than investing in shares. Provided that hedge funds are managed by teams of professionals, there is no reason why they should be considered any more risky than the average equity or fixed income investment," he said.

The survey also revealed that whilst 14% of investors wanted traditional fund performance goals which were relative to the indices and some 34% wanted returns relative to cash, the majority (52%) wanted absolute returns regardless of whether markets moved up or down.

"The low correlation of hedge funds to markets makes them a great risk diversifier. We believe that at times of market volatility, a portfolio of hedge funds offers the best risk/return profile available," added Barthelemy.

However, public awareness of hedge funds continues to be very low. F&C's research also unveiled that more than three quarters of investors are unaware that they can gain access to hedge funds through stock exchange listed companies which invest in a selection of hedge funds.

"Fund of hedge funds, managed by a team of specialists with the necessary expertise to do a detailed screening, due diligence and face-to-face research process, provide a great solution for retail investors wishing to gain exposure to hedge funds. The closed ended structure is also well suited to underlying asset classes such as hedge funds and their oversight by independent Boards gives shareholders additional comfort that their interests are being looked after.

"With the FSA's consultation period regarding the marketing of hedge funds in sight, we hope that in the future we will be able to work with the Regulator towards raising awareness of hedge fund investment among retail investors," he concluded.