Accessibility/Mobile Features
Skip Navigation
Skip to Content
Editorial News
Business
Classified Sites

The Canadian Press - ONLINE EDITION

Looks like a hedge fund? SEC examining potentially riskier 'alternative' mutual funds

WASHINGTON - Federal regulators are scrutinizing a type of mutual fund that's potentially riskier than conventional funds and is growing in popularity, prompting concerns over possible harm to ordinary investors.

The Securities and Exchange Commission has disclosed that it's conducting a "national sweep exam" of so-called alternative mutual funds, focusing in a first phase on 15 to 20 groups of funds. The SEC official who heads the agency's investment fund division says the review looks at the funds' ready assets and oversight of them by fund boards.

The regulators also are examining data on the use of riskier investment strategies by alternative funds compared with what they disclose to investors, the SEC official, Norm Champ, said in a speech in June.

The alternative funds use investment strategies similar to those employed by hedge funds, which can include commodities and complex derivatives as well as ordinary stocks.

The Financial Industry Regulatory Authority, the security industry's self-policing body, has issued an "investor alert" telling people to be aware of the characteristics and risks of alternative funds. "Alternative funds are not your typical mutual funds," the FINRA alert is titled. It warns that investors should "carefully consider not only how an (alternative) fund works, but how it might fit into their overall portfolio before investing."

The alternative funds have attracted growing interest, especially in the retail market. Alternative funds had more than $300 billion in assets as of May 31, according to Champ. Although they accounted for only 2.3 per cent of mutual funds overall as of December, investor inflows into alternative funds last year represented 32.4 per cent of the inflows for the entire mutual fund industry. That is five times more than in 2012.

  • Rate this Rate This Star Icon
  • This article has not yet been rated.
  • We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

    You can also register and/or login to the site and join the conversation by leaving a comment.

    Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.

Sort by: Newest to Oldest | Oldest to Newest | Most Popular 0 Commentscomment icon

You can comment on most stories on brandonsun.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

There are no comments at the moment. Be the first to post a comment below.

Post Your Commentcomment icon

Comment
  • You have characters left

The Brandon Sun does not necessarily endorse any of the views posted. Comments are moderated before publication. By submitting your comment, you agree to our Terms and Conditions. New to commenting? Check out our Frequently Asked Questions.

letters

Make text: Larger | Smaller

Brandon Sun Business Directory
The First World War at 100

Social Media

Canadian Mortgage Rates