HedgeCo.net – In its proposals, the FSA has laid out its thinking on how alternative investments and, in particular, funds of hedge funds can become available to retail customers.

AIMA views the proposals as a positive step forward as a number of its members has long argued that retail investors should be able to benefit from access to new opportunities for risk diversification and portfolio growth. AIMA also welcomes the operational safeguards that the FSA will require to be taken to ensure that investor protection is on a par with other authorised investments.

Commenting on the report, Matthew Jones, Manager Regulatory Department, said “There is a common goal shared by the industry and the FSA to optimise the investment environment for investors and we believe this is a positive step forward.

The FSA is right to conclude that retail investors should be given the opportunity to invest in market-leading investment products that can deliver absolute return performance in all markets, so giving a better opportunity for risk diversification.

However, as the FSA found with its QIS regime some time ago, the be all and end all for these products is the question of how they will be taxed and we are pleased to read that the FSA is confident that an appropriate taxation regime will be developed by HM Treasury, in discussion with the FSA.”

A copy of the FSA’s proposal (Funds of Alternative Investment Funds – FAIFs) can be found at http://www.fsa.gov.uk/pubs/cp/cp07_06.pdf