People need education on hedge funds

People in the finance and investment industry have a "duty" to get informed about hedge funds as the possibility that in future they will be marketed directly to investors opens up.

According to independent adviser Bestinvest, the Financial Services Authority's (FSA) review of hedge funds could create a "business opportunity" for independent financial advisors (IFAs) and wealth managers.

If the review planned by the FSA concludes that hedge funds can be marketed directly at investors, Datamonitor predicts that the hedge fund market would grow from £6.3 billion in 2007 to £37 billion by 2012.

And it's easy to see why they could be appealing to investors, as they are designed to make money regardless of the economic performance of the market.

But, despite the prospects, Bestinvest analyst John Davey believes there is not enough understanding of the investment vehicles.

He said: "I spoke to a journalist who said he wouldn't invest in them because he didn't understand them, so I'd imagine that his readers don't either. If the FSA is to review the ban then there is really a duty for everyone involved in IFAs and wealth managers to bring their knowledge up to speed."