Key differences between retail and qualified investor hedge funds and other unit trusts relate to:
The differences between unit trust funds and the two types of hedge funds, and the strategies they can use, are tabulated below:
|
FUND
|
Unit Trust Fund | Retail Hedge Funds | Qualified Investor Hedge Funds |
| What investment strategies are allowed and what is the investment risk? | Unit trust funds do not leverage or gear and they do not short securities. These funds can only use derivatives to protect the fund against a fall in the market. You can never lose more than the value of your fund.  |
Retail hedge funds funds can short securities and use derivatives to leverage or gear the fund up to two times the value of the fund. These funds can invest in unlisted instruments. Depending on the strategy, these funds may be more volatile than unit trusts. You can never lose more than the value of your fund. |
Qualified investor hedge funds can short securities and use derivatives to leverage or gear the fund within the limits of their mandate as approved by the FSCA. Depending on the strategy, these funds may be more volatile than retail hedge funds. You can never lose more than the value of your fund. |
|---|---|---|---|
| How often will the fund report what it is invested in (its holdings) to the FSCA | Monthly | Monthly | Up to quarterly |
| What is the maximum the fund can hold in unlisted securities? | 10% of the fund | A maximum of 20% in unlisted transferable equity securities, as long as these securities are negotiable, can be independently valued, and do not compromise the ability of the portfolio to meet its liquidity terms. | No restrictions |
| How quickly I can get my money out? |
Within 48 hours |
It can take up to a month depending on how often the fund allows you to invest and disinvest (with the FSCA’s approval) | It can take up to three months depending on how often the fund allows you to invest and disinvest (with the FSCA’s approval) |
| How often is the value of the units calculated? When a fund holds securities that are difficult to value it will calculate the price or net asset value less frequently. | Daily |
Daily or monthly, depending on how often the fund has chosen to allow you to disinvest (with the FSCA’s approval) | Daily, monthly or quarterly depending on how often the fund has chosen to allow you to disinvest (with the FSCA’s approval) |
