AIC optimistic AIFD can be overturned

The AIFD - due to come into force in the UK in 2012 - sets out a blueprint for a regulatory reform of the sector and aims to minimise the risks associated predominantly with highly leveraged hedge funds. But, according to the AIC, the directive is fundamentally flawed because its plan to cap the amount funds can borrow will actually increase risk, thereby defeating its primary objective. "Capital leverage has been identified as the reason for the financial crisis, but this idea to impose a leverage cap on alternative investment funds will actually make matters worse," says AIC acting ...