Scrutiny of the bounty

Last month, the German government approved a bill that will permit the creation of hedge funds domiciled in Germany and authorise retail investment in hedge funds for public distribution. Subject to approval by parliament, the law will become effective at the start of 2004. The move echoes other regulators’ efforts across the globe during the past few years to open up hedge fund investment to the man in the street.

But in the US, one recent point of focus at the Securities and Exchange Commission has been on an altogether more controversial topic within the hedge fund industry: risk disclosure. And it seems that debates about the extent to which hedge fund managers should disclose trading information may have missed the point. In a provocative personal opinion piece, Barry Schachter argues that on closer examination, the scope for useful quantitative risk disclosure seems very narrow (page S8).