LONDON (Reuters) – Institutions such as pension funds should carefully check out the hedge funds they invest in and understand that they may be risking their capital if a fund collapses, the Financial Services Authority said.
Tom Huertas, the FSA’s head of wholesale bank regulation, said at the Reuters Corporate Finance Summit that hedge funds were a positive development in financial markets and they broadened investment options for institutions.
“In terms of what’s called a blow-up…we expect institutional investors to be professional buyers and to do their own due diligence and…recognise that they are at risk for the entire amount of their investment,” Huertas said.
