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Retail access to hedge funds: Yes or no?

FierceFinance- Hedge fund regulation is a hot topic right now. But we’ve heard only a little about that perennial issue: whether retail investors should be allowed more–or less–access to funds. Current proposals, driven by the credit crunch, would make it harder to qualify as an accredited investor. AllAboutAlpha suggests that current proposals would result in a drop in the pool of retail assets by about 50 percent.  

Perhaps this is not a bad time to revisit the idea. The age-old thought has been that most retail investors generally lack the sophistication necessary to really invest safely in hedge funds. But AllAboutAlpha notes a recent article by Houman Shadab of George Mason University that argues retail investors are actually hurt by restrictions on investing in hedge funds. He makes a number of good points, one of which is the idea that most hedge funds are not as complex as publicly traded corporations. In some cases, understanding various financial and other companies requires a certain amount of knowledge. 

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