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5 Sep 2007

Hong Kong SFC Says Hedge Funds Not For Everyone

The Hong Kong Securities and Futures Commission (SFC) reminded investors in a press release today that although hedge funds are often marketed as “all weather” funds for different market conditions, their strategies do not always work for all market conditions.

The SFC also published an updated leaflet on hedge funds as part of its investor education leaflet series. The publication explains the basic concepts and risks of hedge funds. It stresses that hedge funds are only suitable for those who can understand and bear the risks involved.

When considering a hedge fund, according to the leaflet, investors should read the offering documents to have a clear view of the investment strategies and risks, ask questions, and avoid signing anything that they don’t understand.

In addition, investors are reminded that although unauthorized hedge funds cannot be offered to the public, they may be offered to private clients. When offered an unauthorized hedge fund, investors should note that the fund’s structure and operations are not subject to SFC regulatory requirements.

The English and Chinese versions of the leaflet are now available at the SFC office, and can be viewed in the “publications” section of the SFC-operated investor portal.

The Securities and Futures Commission (SFC) is an independent non-governmental statutory body outside the civil service, responsible for administering the laws governing the securities and futures markets in Hong Kong and facilitating and encouraging the development of these markets.