Regualtions for Hedge Funds: Distributing a Hedge Fund in Scandinavia
Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
The hedge fund industry in Europe has in the recent years been characterised by rapid growth and by greater access to retail investors. Reasons to the market expansion are that national regulators and fiscal authorities have given possibility to retail investors to invest in hedge funds due to considerably lower entrance amount in funds. Investors’ participation in the hedge fund market and the access to the products is determined by national regulation and fiscal rules applied to each investor and each type of fund. The European regulatory environment is at present complex, but rapidly changing. Compared to the global and European market the Scandinavian market for hedge funds is today rather small with only about 79 hedge funds registered within the region. This paper will compare and explain regulations for hedge funds in the Scandinavian countries. The purpose of the study is to analyse on which of the Scandinavian markets it would be most advantageous for a Swedish hedge fund manager to expand its operation and establish a hedge fund i.e. the manager’s possibilities and limitations to an establishment in the other Scandinavian countries. After comparing the regulations for hedge funds in the Scandinavian countries one can see that the regulations among the countries are in several aspects rather similar. Some differences worth to be mentioned is to whom hedge funds are intended. Norway with its new regulations is for example expected to have the strictest limitations with high minimum investment requirements in order to only be intended for professional investors. To analyse on which of the Scandinavian markets it would be most advantageous for a Swedish hedge fund manager to expand its operation and to establish a hedge fund the study also looks at other country specific factors such as the economy of the countries and the market situation for hedge fund products. Among the studied countries Sweden shows the best economic situation and is in the short term i.e. during next coming year expected to continue do so. However Norway is the most outstanding country with its relatively small population and a well-performing industry. What can be expected from the future is that investments in hedge funds from retail investors will increase and this primarily due to the growing number of funds-of-hedge funds which are aimed to simplify the investments for such investors. However the major part of non-professional investors is rather unfamiliar with hedge funds and will continue place their capital in ordinary mutual funds. Our recommendations to a Swedish hedge fund manger wanting to establish a hedge fund in Scandinavia is therefore to establish its fund in Norway since the Norwegian market for onshore hedge funds at present is unexciting but expected to rapidly grow as soon as the Norwegian parliament pass on the new legislation.
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IdentifiersURN: urn:nbn:se:su:diva-6504OAI: oai:DiVA.org:su-6504DiVA: diva2:196581