Forbes has released a list of the top five hedge fund trends expected in 2007, which focuses on SEC amendments and a change in the demographics of investor profiles.
First, with the change of hedge investors profiles from individual to institutional, fund managers are expected to have more formal procedures and controls.
The newly proposed accredited investor rule, No.501 (a), will have an impact, eliminating some of the current “qualified investors.” The new rule is an amendment to the private offering investor rules in the Securities Act of 1993, which says hedge funds are not allowed to offer services to anyone who has less than $200,000 in individual income or $300,000 in joint spousal income in the most recent two years. It also includes those with a million dollars in invested assets.
A third trend will be the continued argument and confusion about the level of hedge fund oversight.
Another amendment to the SEC’s Investment Advisers Act will outlaw hedge funds deceiving and misleading their clients. The proposed rule will apply to all advisers, whether or not they’re registered under the Advisers Act.
Rounding out the bottom of the top five is more M&A activity in hedge funds, as bigger-name companies get involved.