The FSB approved the first collective investment schemes in hedge funds after announcing its concern a few months ago that it had not received any applications from such schemes.
The new schemes, one a Qualified Investor Hedge Fund (QIHF) and the other a Retail Investor Hedge Fund (RIHF), are registered under the Novare Collective Investments management company. The schemes comprise 35 portfolios between them, and have been registered with effect from 27 November 2015.
This represents a milestone in the CIS industry as this is the first time that a regulated hedge fund will be marketed as a product offering.
The FSB is considering a further 20 applications from management companies wanting to register collective investment schemes in hedge funds. These applications comprise 17 QIHFs and 13 RIHFs and represent in excess of R95 billion in assets under management (AUM). The total AUM of these funds represents an increase of over 50% in AUM when compared to the previously unregulated hedge fund industry.
The FSB employed a team of finance and investment professionals headed by Udesh Naicker to oversee the registration of the management companies and the hedge fund industry at large.
Guidelines on applications and possible pitfalls were published in September. New applicants are advised to study this information to ensure compliance with requirements.