Pension funds fear hedging clampdown in Austria

Local Ucits rules use narrow definition of a hedge


What is a hedge? Regulators grappled with this nebulous question back in 2009, while drafting the fourth Undertakings for Collective Investment in Transferable Securities Directive (Ucits IV) – Europe's attempt to create uniform standards for funds. They eventually decided a hedge has to lead to a "verifiable reduction of risk at the Ucits level" and be of the same asset class.

The definition is important, as the amount of derivatives exposure a Ucits fund can have is limited, and a hedge can

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