of hedge funds, their contribution to an overall wealth management strategy, and the merits of different products. only by winning and maintaining the trust of investors can the hedge fund industry seize the unique opportunities that are opening up in singapore and the region. for its part, mas will maintain its calibrated approach towards the regulation of hedge funds and hedge fund managers. mas will also continue to build on the three pillars of enhanced disclosure, enabling and flexible regulation and enlightened investors to establish sound regulatory standards for the industry and foster market development. in each of these areas, we will need to work closely with industry players like yourselves. i consider this conference to be a useful step in promoting such cooperation. thank you.

trade in derivatives, whereas traditional funds have limited scope for borrowing and dealing in derivatives. further, retail investors may be lulled into thinking that hedge funds are low risk investments based on studies showing hedge fund returns to be less volatile than mutual fund returns. such statistics must be carefully considered especially since hedge fund returns are anything but normally distributed. indeed, they are negatively skewed and exhibit high kurtosis. a fat - tail event, such as the russian default in 1998, was enough to scuttle any profits long term capital management might have projected with its elaborate models. retail investors may not realise that hedge funds also display other characteristics that make them riskier than traditional funds. for one thing, hedge funds have an average life span of 3. 5 years, with one - third of newly - established funds folding before those three years are up primarily due to poor performance. further, hedge funds are usually subject to a lock - up period and, after that, fixed redemption windows, unlike unit trusts which are typically redeemable every trading day. this is not a preamble to a blanket prohibition on the marketing of retail hedge funds. retail hedge funds will continue to be permitted under a comprehensive regulatory framework. mas ’ approach is to balance investor needs and investor protection on three pillars – enhanced disclosure, enabling regulation and enlightened investors. “ accredited investor ” refers to an individual with net personal assets exceeding s $ 2 million or a corporation with total net assets of more than s $ 10 million. “ qualified investor ” means an individual with net personal assets exceeding s $ 5 million, a corporation with total net assets of more than s $ 10 million, a collective investment scheme that is marketed only to accredited investors, or a collective investment scheme that is not marketed in singapore. brooks, c. and h. m. kat, 2001, “ the statistical properties of hedge fund index returns and their implications for investors ”. to enhance disclosure in prospectuses for offers of investments ( including hedge funds ), part xiii of the sfa which came into effect in july this year introduced new prospectus checklists, prospectus registration procedures and advertising regulations. a prospectus must contain all material information that a reasonable investor would require to make an informed investment decision, such as the investment objective and specific investment risks of a fund, the fees and charges, and the track record of the fund manager. for the market to exercise discipline on prospectus disclosure, prospectuses that are lodged with mas are posted on the