The UK regulator has warned that there could be an increased risk of mis-selling.
Some regulators are skeptical about the merits of UCITS hedge funds, according to a report published by PricewaterhouseCoopers, From black box to open book: Hedge fund trust and transparency.
Andrew Crain, manager of London-based Financial Services Authority’s alternative investments and asset management team, explains: “As we see the market for UCITS-type products with hedge fund attributes proliferate, there may be an increased risk of mis-selling or misunderstanding.
“Structural differences between UCITS products and the underlying hedge funds they are attempting to replicate can also lead to differences in risk and return characteristics.”
The report adds that UCITS hedge funds have