Investment trusts are to be shaken up under proposals from the Financial Services Authority that could allow UK investors direct access to hedge funds.
In a consultation paper on the revision of its listing rules last week the FSA is seeking to adopt a principles-based approach, removing the rule that investment trusts can only practice shorting for the purpose of efficient portfolio management. Investors will therefore be able to invest directly in hedge funds instead of relying on funds of funds.
However, in return companies will face additional reporting rules including a controversial requirement to notify shareholders of any significant changes in their risk profile.
