June 23, 2006

New SEC For Fund of Funds

According to the new regulations announced by the Securities and Exchange Commission (SEC) for “fund of funds” arrangements, investors in funds of hedge funds will benefit through greater transparency in the expenses incurred. Fund of funds fee tables will have to detail their charges and the charges of any fund they invest in. The new rules come into effect from the start of next year, and will allow funds to employ practices that are currently permitted only on individual exemptions. Accordingly, stock or bond funds can now invest in a money market fund, fund of funds that invest solely in funds of the same fund group have more flexibility, and funds that invest minimum amounts in unaffiliated funds have more latitude in structuring their sales charges. Chron.Com reports:

Fund of funds investments involve funds that invest in the shares of other mutual funds or hedge funds. U.S. securities laws impose restrictions on such arrangements to prevent abuses.

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June 23, 2006 in Regulation | Permalink




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